Chapter 4--Activity-Based C - Chapter 4-Activity-Based Costing Chapter 4-Activity-Based Costing Student 1 Unit based costing first assigns overhead

Chapter 4--Activity-Based C - Chapter 4-Activity-Based...

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Chapter 4--Activity-Based CostingChapter 4--Activity-Based CostingStudent: ___________________________________________________________________________ 1. Unit based costing first assigns overhead costs to departmental pools and then assigns these costs to products using predetermined overhead rates. True False 2. Management information systems can be divided into a unit-based type and activity-based type. 3. Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level. 4. Unit-level drivers are factors that measure the demands placed on unit-level activities by products. 5. If applied overhead is greater than actual overhead it is called overapplied overhead. True False 6. Unit-based product costing assigns manufacturing and selling costs to products. 7. The difference between actual overhead and applied overhead is an underapplied overhead. 8. Overhead assignments should reflect the amount of overhead demanded by each product.
9. The justification for not using a departmental rate for overhead cost assignment is that it increases accuracy. True False 10. Non-unit-based drivers are factors that measure the demands that cost objects place on activities. 11. If overhead is a significant proportion of the unit manufacturing costs, the distortion caused by using multi-level drivers can be serious. 12. Activity-based costing uses only unit-level drivers for costing. 13. The activity-based cost assignment is the most accurate method of costing because it follows a cause-and-effect pattern of overhead consumption. True False 14. An activity-based costing system traces costs to activities and then to products and other cost objects. 15. The first step in designing an activity-based costing system is to identify activities. 16. A list of the activities identified in the design of an activity-based system is called an activity inventory. 17. Activity attributes are nonfinancial and financial information items that describe individual activities. True False 18. Product classification attributes define and describe activities and are the basis for product classification.
19. After identifying and describing activities, the next step is to determine the cost of the performance of each activity.

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