What Are Three Advantages of Activity-Based Costing Over Traditional Volume-Based

question 209

Multiple Choice

What are three advantages of activity-based costing over traditional volume-based allocation methods?

• A)Ease of use,more accurate product costing,and more effective cost control.
• B)Fewer allocation bases,ease of use,and a direct correlation to production volume.
• C)More accurate product costing,more effective cost control,and better focus on the relevant factors for decision making.
• D)More accurate product costing,fewer cost objects,and a direct correlation to production volume.
• E)More accurate product costing,ease of use,less costly to implement.

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Definitions:

Straight-Line Method

A method of calculating depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.

Salvage Value

The estimated residual value of an asset at the end of its useful life, reflecting the amount it could be sold for or its disposal value.

Useful Life

The expected duration of time over which an asset is anticipated to be economically usable by one or more users.

Incremental Fixed Overhead

The fixed costs that will change as a direct result of a decision made by a company.