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Why is top management support needed when ABC is implemented?Labor and overhead activities•Activities should not be combined in activity based costing•Batch and product level activities•Highly correlated activities•Which of the following can be combined in activity-based costing?Identifying the activities that will form the foundation for the system:
often involves interviewing employees•involves a great deal of judgment•can be time-consuming•is usually the easiest step in the process•Identifying the activities that will form the foundation for the system:first-stage•fourth-stage•third-stage•second-stage•In activity-based costing, ______ allocation is the process of assigningoverhead costs to activity cost pools.strong support from a cross-functional team•top management design and implementation•a link to how people are evaluated and rewarded•A characteristic essential for successful implementation of ABC is:shipped orders•power to run machines•products designed•customer orders•Activities that could be combined into one batch-level activity are the numberof:2,000•4,250•1,700•2,500•If the activity rate for the customer order cost pool is $250 per order and thetotal for this cost pool is $425,000, the total number of customer orders is:True•False•True or false: In an activity-based costing system, it is best to combineactivities that are not highly correlated.
False•product profitability•customer profitability•first-stage allocation•second-stage allocation•Themostcommon management reports using ABC data are:transaction drivers•cost pools•allocation bases•activity rates•Total cost of each activity divided by the total activity is the computation of:Total estimated manufacturingoverheadis $900,000 andtotalestimated activity is30,000 machine-hours.Theplantwideoverhead rate is$30per machine hour.do nothing; product margin is equal to net income/loss•subtract overhead costs not assigned to products•add overhead costs not assigned to products•To reconcile ABC product margin to net income:undercosts; overcosts•overcosts; overcosts•overcosts; undercosts•undercosts; undercosts•Usually, traditional costing ______ high-volume products and ______ low-volume products.Activity rates are used to applyoverhead costs to productsand customersinthesecond-stage allocation.In activity-basedcosting, first-stage allocation assignsoverheadcosts to activity costpools.Focusingon activities to eliminate waste, decrease processing time, and reducedefects is the basisofactivity-basedmanagement.
True•False•True or false: Traditional cost systems tend to overcost standard products andovercost specialty products.increasing processing time•eliminating waste•pricing decisions•Reducing defects•Activity-based management is focused on:External reports are (more/less)detailed thaninternal reports.The most commonreports prepared using ABC data are the productandcustomerprofitabilityreports.