Activity-Based Costing Is a Method of Cost Allocation That Is

question 59

Multiple Choice

Activity-based costing is a method of cost allocation that is useful for assigning ____ costs to products or services.

• A) direct materials
• B) direct labor
• C) overhead
• D) direct materials and direct labor

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Definitions:

Income Summary

An account used in the closing process that summarizes the results of operations by collecting all revenue and expense account balances before determining the net income or loss.

Retained Earnings

The cumulative amount of profits that have been reinvested in the business rather than distributed to shareholders as dividends.

Dividends

Dividends disbursed to members holding shares in a corporation, generally originating from the profits of the business.

Salary Expense Accrual

An accounting practice of recognizing salary expenses incurred in a period that has not yet been paid out in order to accurately reflect the company's liabilities.