Consumption Ratios Are Useful in Determining

question 4

Multiple Choice

Consumption ratios are useful in determining:

• A) the existence of product-line diversity.
• B) overhead that is incurred at the unit level.
• C) if overhead-producing activities are being utilized effectively.
• D) if overhead costs are being applied to products.
• E) if overhead-producing activities are being utilized efficiently.

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Definitions:

Customers

Individuals or entities that purchase goods or services from a business.

Activities

The types of work, or actions, involved in a manufacturing or service process.

Differential Costs

Differential costs refer to the difference in total cost that will result from selecting one alternative over another in decision-making processes.

Opportunity Costs

The value of the best alternative forgone when a decision is made to pursue a particular course of action.