The Following Equation Is Used for Determining Cost-Volume-Profit Relationships by Firms

question 2

Multiple Choice

The following equation is used for determining cost-volume-profit relationships by firms
Total Cost = (Unit-Level Cost ´ Number of Units)
+ (Batch-Level Cost ´ Batch Cost Driver Activity)
+ (Product-Level Cost ´ Product Cost Driver Activity)
+ (Customer-Level Cost ´ Customer Cost Driver Activity)
+ (Facility-Level Cost ´ Facility-Cost Driver Activity)

• A)using activity-based costing systems.
• B)using traditional costing systems.
• C)following generally accepted accounting principles.
• D)using game theory.

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Definitions:

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor.

Direct Materials Purchases Variance

Direct materials purchases variance analyzes the difference between the actual cost of materials purchased and the budgeted cost, impacting budgeting and cost control.

Variable Overhead

Those overhead costs that vary in total directly and proportionately with changes in production or activity level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead based on a standard rate.