Which of the Following Statements Is True

question 136

Multiple Choice

Which of the following statements is true?

• A) One of the lessons learned from activity-based costing (ABC) is that all costs are really a function of volume.
• B) The primary purpose of the plantwide and department allocation methods is allocating direct costs to specific products.
• C) A problem with activity-based costing (ABC) is that it requires more recordkeeping than other methods.
• D) Direct cost allocations are required for the plantwide and department allocation methods.

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Definitions:

Cost Of Capital

The total cost of funds used for financing a business, including debt and equity.

NPV

Net Present Value, a calculation used to determine the value of a project or investment by discounting future cash flows to the present.

Cash Flow

Total funds inflow and outflow within a business and its effect on liquid assets.

WACC

Weighted Average Cost of Capital; a calculation used to estimate the cost of financing a company's assets, blending debt and equity costs.