Chapter 5 Lab Exercise Solutions

Chapter 5 Lab Exercise Solutions - Ch 5 Activity-Based...

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Ch 5 – Activity-Based Costing SOLUTION 1. Indicate whether the following statements are True or False: __ T __ Traditional overhead allocation methods typically use one or two volume-based cost drivers to assign overhead costs to products. __ T __ Traditional overhead allocation methods work best if the manufacturing environment includes mostly unit-level costs. __ F __ Traditional overhead allocation methods are most accurate when a company is highly automated and makes many diverse products. __ F __ Activity-Based Costing (ABC) is mostly concerned with allocating direct labor costs to products. __ T __ Activity-Based Costing (ABC) is mostly concerned with allocating overhead costs to products. __ T __ ABC is based on the concept of assigning overhead costs based on the activities that drive those costs. __ F __ Batch-level costs are incurred each time a unit is produced. Unit-level __ T __ A particular overhead cost (ex. indirect labor) can be traced to more than one activity. __ F
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Chapter 5 Lab Exercise Solutions - Ch 5 Activity-Based...

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