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In order to choose the proper activity base for a cost, managerial accountants must be familiar with the operations of the entity.

Activity Base

A measure or quantity (such as machine hours, labor hours, or materials used) that is directly associated with the costs incurred by an activity or process.

Managerial Accountants

Professionals specializing in accounting who analyze financial information to inform strategic business decisions, focusing on the management of internal financial processes.

Entity

Refers to any individual, company, organization, or legal body that has a recognizable, separate existence for legal or tax purposes.

  • Recognize the importance of selecting the proper activity base for costing purposes.
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Hannah LiguoriNov 23, 2024
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