In a Simple Activity-Based Product Costing System

question 74

Multiple Choice

In a simple activity-based product costing system:

• A) direct material, direct labour, manufacturing overhead and non-manufacturing overhead are assigned to products on an activity basis.
• B) direct material is traced using a traditional approach, while direct labour, manufacturing overhead and non-manufacturing overhead are assigned to products on an activity basis.
• C) direct material and direct labour are traced using a traditional approach, manufacturing overhead is assigned on an activity basis and non-manufacturing overhead is expensed as it is incurred.
• D) direct material, direct labour and manufacturing overhead are traced using a traditional approach, and non-manufacturing overhead is assigned on an activity basis.

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Definitions:

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing the net worth of the company to its shareholders.

Stock Split

An action by a company to divide its existing shares into multiple new shares to boost the stock's liquidity, although the overall value of the company remains unchanged.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Comprehensive Income

It encompasses all changes in equity during a period, except those resulting from investments by and distributions to owners.