In an Activity-Based Cost Management (ABM)system,facility-Level Costs Are Those That

question 20

Multiple Choice

In an activity-based cost management (ABM) system,facility-level costs are those that are incurred to:

• A) sustain the company's marketing program.
• B) maintain the plant's production capacity.
• C) support the research and development process.
• D) cause a change in the engineering plans for a product.

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Definitions:

Operating Activities

Involves the primary revenue-generating activities of an organization, such as sales and services, as reflected in its cash flow.

Selling Merchandise

The process of offering goods for sale to customers, often in a retail setting, which constitutes the primary revenue-generating activity of merchandising companies.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or during the normal operation cycle of the business, whichever is longer.