An Activity-Based Cost Allocation System

question 38

Multiple Choice

An activity-based cost allocation system:

• A) Is one form of a direct or variable costing system.
• B) Does not provide total unit cost data.
• C) Traces costs to products on the basis of activities performed on them.
• D) Does not provide for the allocation of any cost to products that cannot be directly attributable to those products.
• E) Does not involve the level of detail and the number of allocations that companies make with traditional allocation methods.

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Definitions:

Per-Bushel Profit

The financial gain earned by selling a bushel (a unit of measure for volume) of agricultural produce, after subtracting the cost of production.

Profits

The financial gain obtained when revenue from sales exceeds costs and expenses associated with operating a business.

Farmer

Someone who works in the agricultural sector, producing living items for nourishment or foundational substances.

Produce

To create or manufacture goods for sale or consumption.