Chap5 Cost Accounting & Performance Measurement

Question 1

TRUE/FALSE:

Activity-based costing can be used with EITHER process or job costing

Answer 1

TRUE

Question 2

The Basic Assumption of Activity-Based costing( ABC) is that..

Answer 2

Products or services require the performance of activities, and activities consume resources

Question 3

What are By-Products?

Answer 3

These are output from the joint process that does not contribute significantly to the firm’s revenue and is not a product that the company is manufacturing by intent.

Question 4

What is a disadvantage of using a process costing system versus job-order costing?

Answer 4

A process costing system allocates costs to units on the basis of the costs that were incurred divided by the equivalent units produced. This requires the calculation of the percentage of completion of partially completed units, making it more cumbersome to apply than a job-order costing system.

Question 5

What is Labor usage variance?

Answer 5

It is the difference between the actual hours worked at the standard rate and the standard hours allowed, multiplied by the standard wage rate.