In Comparison to an Activity-Based Costing System,traditional Allocation Systems Would

question 6

Multiple Choice

In comparison to an activity-based costing system,traditional allocation systems would most likely distort which of the following costs?

• A)product costs.
• B)activity costs.
• C)department costs.
• D)plant costs.

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Definitions:

Retail Inventory Method

An accounting method used to estimate the ending inventory balance of a retail store by applying a cost-to-retail price ratio to the sales for the period.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.

Gross Profit Method

An inventory estimation technique that uses the historical gross profit margin to estimate the cost of goods sold and ending inventory.

Physically Counting

The manual process of counting inventory items one by one to verify the quantity on hand.