chapter 5 assignment questions Flashcards
A cost driver does NOT generally have a direct cause-effect relationship with the resources consumed
true or false
false
Non-value-added activities increase the cost of a product but not its market value
true or false
true
The most difficult part of calculating accurate unit costs is determining the proper amount of direct material cost to assign to each product
true or false
false
Traditional costing systems group costs according to activity cost pools
true or false
false
A cost driver is a factor or activity that has a direct cause-effect relationship with the resources consumed
true or false
true
Two benefits of ABC are that it leads to better management decisions and arbitrary allocations are completely eliminated
true or false
false
ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity
true or false
true
What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs
true or false
false
A well designed activity-based costing system starts with
a) identifying the activity-cost pools.
b) computing the activity-based overhead rate.
c) assigning manufacturing overhead costs for each activity cost pool to products.
d) analyzing the activities performed to manufacture a product
d) analyzing the activities performed to manufacture a product
Activity-based costing normally allocates overhead costs
a) to products only.
b) more accurately than traditional costing systems.
c) to services, where as traditional costing systems normally allocate overhead costs to products.
d) based on no more than three cost drivers
b) more accurately than traditional costing systems.
Which of the following is true of activity-based costing?
a) more cost pools
b) same base as traditional costing
c) less costly to use
d) eliminates arbitrary allocations
a) more cost pools
the primary benefit of ABC is it provides
a) faster management decisions.
b) enhanced control over overhead costs.
c) more cost pools.
d) more accurate product costing
d) more accurate product costing
Each of the following is a limitation of activity-based costing except that
a) it can be expensive to use.
b) it is more complex than traditional costing.
c) more cost pools are used.
d) some arbitrary allocations continue.
c) more cost pools are used.
What might be an impediment in changing from a traditionally based costing system to an activity-based costing system?
a) Management may not be in favour of a change.
b) Excessive costs may be incurred to assist in capturing costs.
c) Some costs would still have to be allocated arbitrarily after the changeover.
d) All of the above are impediments.
d) All of the above are impediments.
A non-value-added activity in a service enterprise is
a) taking appointments.
b) travelling.
c) advertising.
d) all of these.
d) all of these.
