An Activity-Based Costing System That Is Designed for Internal Decision-Making

question 105

Multiple Choice

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:

• A)some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
• B)some nonmanufacturing costs are assigned to products.
• C)first-stage allocations may be based on subjective interview data.
• D)all of these are reasons why an activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles.

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Definitions:

Logistic Regression Model

A statistical method used for analyzing a dataset in which there are one or more independent variables that determine an outcome. The outcome is measured with a dichotomous variable (where there are only two possible outcomes).

Indicator Variable

A variable, usually binary, used to represent the presence or absence of a categorical effect in regression models.

Groceries

Consumer goods, especially food and household items, sold by a grocer.

Log Odds

The logarithm of the odds ratio, used in logistic regression to describe the relationship between a binary dependent variable and one or more independent variables.