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

question 85

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 non-manufacturing costs are assigned to products.
• C)first-stage allocations may be based on subjective interview data.
• D)all of the above 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:

Price

The amount of money required to purchase a product or service.

Consumer Surplus

The discrepancy between what consumers are prepared and capable of paying for a product or service and what they end up actually paying.

Willing To Pay

The maximum amount a consumer is prepared to spend on a good or service, reflecting the perceived value or utility gained from the purchase.

Ticket

A token or voucher that entitles the holder to admission to an event, activity, or service.