ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT

ACTIVITY-BASED - CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT TRUE/FALSE 1 2 Companies that undercost products will most likely

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT TRUE/FALSE 1. Companies that undercost products will most likely lose market share. 2. When refining a costing system, a company should classify as many costs as possible as indirect costs. 3. Indirect labor and distribution costs would most likely be in the same activity-cost pool. 4. Activity-based costing helps identify various activities that explain why costs are incurred. 5. Traditional systems are likely to undercost complex products with lower production volume. 6. For activity-based cost systems, activity costs are assigned to products in the proportion of the demand they place on activity resources. 7. Misleading cost numbers are larger when unit-level assignments and the alternative activity-cost-driver assignments are proportionately similar to each other. 8. Information derived from an ABC analysis might be used to eliminate nonvalue- added activities. 9. Department-costing systems are a further refinement of ABC systems. 10. Simply because activity-based costing systems employ more activity-cost drivers, they provide more accurate product costs than traditional systems. MULTIPLE CHOICE 11. Overcosting of a product is MOST likely to result from: a. misallocating direct labor costs b. overpricing the product c. undercosting another product d. understating total product costs 12. The use of a single indirect-cost rate is more likely to: a. undercost high-volume simple products b. undercost low-volume complex products c. undercost lower-priced products 5-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
d. Both b and c are correct. 13. Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called: a. overcosting b. undercosting c. peanut-butter costing d. department costing 14. Refining a cost system includes: a. classifying as many costs as indirect costs as is feasible b. creating as many cost pools as possible c. identifying the activities involved in a process d. seeking a lesser level of detail 15. Traditional cost systems distort product costs because: a. they do not know how to identify the appropriate units b. competitive pricing is ignored c. they emphasize financial accounting requirements d. they apply average support costs to each unit of product 5-2
Background image of page 2
16. Which of the following statements about activity-based costing is NOT true? a. Activity-based costing is useful for allocating marketing and distribution costs. b. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. c. Activity-based costing seeks to distinguish batch-level, product-sustaining, and facility-sustaining costs, especially when they are not proportionate to one another. d.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/08/2012 for the course ACC 4304 taught by Professor Ralultapia during the Spring '10 term at Texas State.

Page1 / 14

ACTIVITY-BASED - CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT TRUE/FALSE 1 2 Companies that undercost products will most likely

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online