ACCT2301-002-Chap6-Additional-sp2009 - 1 ACCT 2301 Spring...

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1 ACCT 2301 Spring Semester 2009 February 24, 2009 Practice Problems – Activity-Based Costing 1. If substantial batch-level or product-level costs exist, then overhead allocation based solely on a measure of volume such as direct labor-hours: A. is a key aspect of the activity-based costing model. B. will usually overcost high-volume products and undercost low-volume products. C. will usually overcost low-volume products and undercost high-volume products. D. None of the above are true. 2. The cost of leasing the office space for an advertising firm is an example of a: A. unit-level cost. B. batch-level cost. C. product-sustaining cost. D. facility-sustaining cost. 3. Which of the following is the primary goal of process-value analysis (or activity-based management)? A. To allocate overhead costs to products using volume-based drivers such as direct labor-hours. B. To increase non-value added costs. C. To eliminate virtually all overhead costs. D. To identify and eliminate activities that do not add value to goods and services. 4. Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's purchasing department? A.
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ACCT2301-002-Chap6-Additional-sp2009 - 1 ACCT 2301 Spring...

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