CH 5 Activity-Based Costing and Activity-Based Flashcards
1
Q
overcosting and effect
A
a product consumes a low level of resources but is allocated high costs per unit. seems less profitable than it really is.
2
Q
undercosting
A
a product consumes a high level of resources but is allocated low costs per unit. seems more profitable than it really is.
3
Q
Rationale for selecting a more refined costing system
A
- Increase in product diversity
- Increase in indirect costs
- advantages in information technology
- competition is foreign markets
4
Q
Cost hierarchies (4 levels) also ABC called
A
Unit level
batch level
product sustaining level
facility sustaining level
5
Q
ABC VS. simple costing schemes
A
ABC better, it produces more exact figures
ABC is only as good as its drivers
6
Q
Signals for implementing ABC
A
- most or all overhead costs are considered unit-level
- products that consume different amounts of resources
- Operations stuf disagreeing with accounting over manufacturing and marketing costs
7
Q
ABC is widespread in:
A
Health care, Banking, Telecommunication, Retailing, Transportation
