Chapter 20

Question 1

ABC/activity based costing

Answer 1

Alternative costing method for strategic management; divides production into activities, defines costs for activities, and allocates costs to objects based on activity consumption.

Question 2

activity

Answer 2

An event that gives rise to the consumption of resources.

Question 3

activity cost pool

Answer 3

The costs assigned to a particular activitiy

Question 4

batch-level activity

Answer 4

Activities that relate to each batch of production; independent of the number of units within the batch

Question 5

cost object

Answer 5

The output for which costing information is to be determined under ABC; can be product or service related, or customer, market, etc.

Question 6

cost of production report

Answer 6

A report used in a process costing environment to tabulate the costs incurred within a particular stage/department

Question 7

customer-level activity

Answer 7

Activities that relate to each customer; independent of the volume of goods and services provided to the specific customer.

Question 8

entity-sustain activity

Answer 8

Activities that relate to an entity’s ability to operate; independent of business volume

Question 9

equivalent units

Answer 9

A measure of physical units expressed in terms of finished units.

Question 10

market-level activity

Answer 10

A measure of physical units expressed in terms of finished units.

Question 11

market-level activity

Answer 11

Activities that relate to the number of markets in which an entity operates; independent of the number of products, customers, etc.

Question 12

process costing

Answer 12

Process costing is a method to allocate the total costs of production to homogenous units produced via a continuous process that usually involves multiple steps or departments.

Question 13

product-level activity

Answer 13

Activities that relate to the number of products produced; independent of the number of units produced.

Question 14

resource

Answer 14

The elements consumed by activities and cost objects.

Question 15

resource driver

Answer 15

The concept that activities create the need for resources which will be consumed in the production process.

Question 16

unit-level activity

Answer 16

Activities that relate to the number of units of output; each additional unit of production requires another activity.

Question 17

weighted-average process costing

Answer 17

A process costing technique where all units of production are assigned the same cost; determined by blending of current period costs with beginning inventory cost.