Consider the Situation Where an Activity-Based Costing System Is in Use

question 11

Multiple Choice

Consider the situation where an activity-based costing system is in use rather than a conventional volume-based costing system.Which of the following statements is/are true?

• A) The relevant cost decision model would be inappropriate if activity-based costing is used.
• B) The relevant cost decision model is still appropriate,but a different decision criterion must be used.
• C) The data collection and analysis step is going to be affected by the use of non-volume-related cost drivers.
• D) The relevant cost decision model would be inappropriate if activity-based costing is used AND the data collection and analysis step is going to be affected by the use of non-volume-related cost drivers.

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Definitions:

Owner's Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of shareholders or owners.

Balance Sheet

A balance sheet is a financial statement that reports a company’s assets, liabilities, and shareholders' equity at a specific point in time, offering a basis for computing rates of return and evaluating its capital structure.

Assets

Resources owned or controlled by a business or an individual that are expected to produce future economic value.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits.