chap003(3) - Chapter 003, Systems Design: Activity-Based...

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Chapter 003, Systems Design: Activity-Based Costing True / False Questions 1. Departmental overhead rates applied on the basis of a volume measure such as direct labor- hours or machine-hours will eliminate any distortions in unit costs due to product diversity. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Hard 2. Facility-level activities are activities that support specific products. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Medium 3. An activity-based costing system is generally easier to set up and run than a traditional cost system. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Medium 4. Activity-based costing uses a number of activity cost pools, each of which is allocated to products on the basis of direct labor-hours. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 3-1
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Chapter 003, Systems Design: Activity-Based Costing 5. In activity-based costing, a plantwide overhead rate is used to apply overhead to products. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Medium 6. Unit-level activities are performed each time a unit is made. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Easy 7. Costs classified as batch-level costs should depend on the number of batches processed rather than on the number of units produced, the number of units sold, or other measures of volume. TRUE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 1 Level: Medium 8. Activity rates in activity-based costing are computed by dividing costs from the first-stage cost assignments by the activity measure for each activity cost pool. TRUE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 2 Level: Hard 3-2
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Chapter 003, Systems Design: Activity-Based Costing 9. When a company changes from a traditional costing system to an activity-based costing system, the unit product costs of high-volume products typically change more than the unit product costs of low-volume products. FALSE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 3 Level: Hard 10. When a company changes from a traditional costing system to an activity-based costing system, costs will ordinarily shift from high-volume to low-volume products when the activity-based costing system includes batch-level or product-level costs. TRUE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting Learning Objective: 4 Level: Hard 11. When a company changes from a traditional costing system to an activity-based costing system, the unit product costs of low volume products typically increase more than the unit product costs of high volume products decrease.
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This note was uploaded on 12/02/2009 for the course ACC 201 taught by Professor Lewis during the Spring '09 term at NC Wesleyan.

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chap003(3) - Chapter 003, Systems Design: Activity-Based...

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