An activity-based analysis that focused only on manufacturing overhead will
A)not improve GAAP-based financial statements.
B)improve GAAP-based financial statements.
C)improve statement sent to the SEC by publicly traded companies.
D)both improve GAAP-based financial statements and statement sent to the SEC by publicly traded companies.

Question

Quizplus · Accepted Answer

An activity-based analysis that focuses only on manufacturing overhead may provide useful information for internal decision-making and cost control, but it is not required by GAAP or necessary for financial reporting purposes. GAAP-based financial statements are prepared using traditional cost accounting methods such as job order or process costing. Therefore, a manufacturing overhead-based activity analysis would not improve GAAP-based financial statements.

An Activity-Based Analysis That Focused Only on Manufacturing Overhead Will