To Provide Better Decision Making Information About Products, ABC Systems

question 70

Multiple Choice

To provide better decision making information about products, ABC systems can be set up with separate activity pools and cost rates for:
I. Different levels of the ABC cost hierarchy
II. Committed and flexible costs within each cost pool
III. Different customers based on profitability levels

• A) I and III only
• B) II and III only
• C) I and II only
• D) I, II, and III

---

Definitions:

Support Department Allocations

The process of distributing the costs of support departments (e.g., human resources, maintenance) to producing departments based on their usage of services.

Operating Income Before

Income generated from normal business operations before deductions such as taxes and interest.

Responsibility Accounting Reports

Financial reporting tools designed to track revenue and expenses associated with specific departments or operations, highlighting the financial performance and accountability of departmental managers.

Profit Centers

Designated segments within a company for which the managers are responsible for both revenues and expenses, effectively measuring each segment's profitability.