Chapter 10 Activity Based Costing Flashcards
Activity based costing systems assume that:
- Activities consume overhead cost
- overhead cost are insignificant
- All of these are correct
- products consume overhead cost
Activities consume overhead cost
Traditional product costing systems such as job costing and process costing usually usually assume:
- products consume overhead cost
- Activities consume overhead cost
- overhead cost are insignificant
- All of these are correct
Products consume overhead cost
Which method for allocating manufacturing overhead cost is usually more accurate?
- Job order costing
- activity based costume
- Unit based costing
- Process costing
Activity based costing
Which of the following is the correct sequence of the five steps of implementing and using an activity based costing system?
- Identify measurable cost drivers, assign overhead, identify overhead activities, analyze individual overhead cost in terms of those cost activities, and use the cost data to make decisions
- Identify overhead activities, analyze individual overhead cost in terms of those cost activities, identify, measurable, cost drivers, assign overhead, and use the cost data to make decisions
- Use the data to make decisions, analyze individual overhead cost in terms of activities, identify, measurable, drivers, assign overhead, and identify overhead cost activities
- Identify overhead activities, identify, measurable, drivers, assign overhead, analyze individual overhead cost in terms of those cost activities, and use the cost data to make decisions
Identify overhead activities, analyze individual overhead cost in terms of activities, identify, measurable, cost, drivers, assign overhead, and use the cost data to make decisions
Usually activity-based costing would be significantly more accurate than traditional product costing in a:
- Multiple product firm or products are quite similar
- 1 product firm
- Multiple product firm that has separate manufacturing facilities for each product
- Multiple product firm where product products are quite different
Multiple product firm where products are quite different
If activity based costing is used security, guard, wages would be classified as:
- Product line activity
- Unit level activity
- facility support activity
- Batch level activity
Facility support activity
If activity based costing is used, receiving docs will be classified as a:
- Unit level activity
- facility support activity
- Batch level activity
- Product line activity
Product line activity
Which of the following would most likely not be considered a facility support activity?
- Property taxes
- Depreciation on headquarters building
- Executive salaries
- Factory equipment
Factory equipment
The traditional overhead cost cost all allocation system assumes a simple relationship between overall overhead cost
- Cost of Goods sold
- number of headquarters staff
- a single measure of activity
- Beginning materials inventory
A single measure of activity
Which of the following is an example of a cost driver?
- procurement
- Maintenance
- Machine set up
- engineering
Machine set ups
If a cost activity does not have any production related cost driver that matches up with changes in the amount of overhead cost associated with the activity then:
- Direct labor hours should be used as a cost driver
- number of items produce should be the cost driver
- Any basis can be selected as a driver
- No cost driver should be selected; the cost should be treated as common cost
No cost driver should be selected; the cost should be treated as common cost
Company a allocates one type of overhead cost on the basis of movement of materials. The number of movement of materials processed is an example of a(an):
- Cost pool
- pool rate
- overhead rate
- cost driver
Cost driver
Inactivity that affects a particular cost is a(an):
- cost pool
- Pool rate
- cost driver
- overhead rate
Cost driver
