For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions, press or click on the blank space provided. Show If you have difficulty answering the following questions, learn more about this topic by reading our Activity Based Costing (Explanation). Activity based costing is considered to be a traditional costing method. Under ABC, indirect manufacturing costs are predominantly assigned on the basis of direct machine hours. Which of the following would not be included in a product's cost for inventory valuation for the financial statements? Which would be the least favorable basis for allocating manufacturing overhead for a factory with automated equipment and a significant variation of services by its indirect labor? Which would be the most favorable basis for allocating manufacturing overhead for a factory with automated equipment and a significant variation of services by its indirect labor? Activity-based costing will provide greater accuracy when allocating costs than a manufacturer's machine hours when its products and customers are __________ diverse. When using machine hours for allocating manufacturing overhead (instead of activity-based costing), a low-volume item requiring a significant amount of special handling will be assigned too __________ manufacturing overhead. The cost to set up production equipment is best allocated directly to products via machine hours. Setup cost is an example of a batch-level cost. Manufacturing costs are often organized in the general ledger by function and department. When applying activity-based costing, these manufacturing costs will be sorted by activities. In activity-based costing, the manufacturing overhead cost per unit will depend partially on the number of units in a batch. In ABC the assumption is that __________ use resources or cause costs. If products are uniform and customers are similar in their demands, activity-based costing may not offer a significant advantage over machine hours when assigning overhead. A product with a high gross profit could be an unprofitable product. Activity-based costing can be used to allocate SG&A expenses in order to assist management with pricing and other marketing decisions. Want more practice questions? 42.Which of the following would be the most appropriate cost driver to allocate factory electricitycosts to products?A.Machinery depreciation expense.B.Machinery maintenance work orders.C.Machinery down-time.D.Machine hours.E.Machine productivity.Difficulty: 1 EasyLearning Objective: 05-02 Describe activity-based costing (ABC); the steps in developing an ABC system; and the benefits ofan ABC system43.Which of the following activity cost pools would most likely be allocated based on the numberof production runs?A.Machinery set-up costs.B.Raw materials warehousing costs.C.Factory heating costs.D.Factory janitorial costs.E.Indirect labor costs.Difficulty: 1 EasyLearning Objective: 05-02 Describe activity-based costing (ABC); the steps in developing an ABC system; and the benefits ofan ABC system44.Which of the following is most likely to be the cost driver for the packaging and shippingactivity?A.Number of setups.B.Number of components.C.Number of orders.D.Hours of testing.E.Number of production runs.Difficulty: 2 MediumLearning Objective: 05-02 Describe activity-based costing (ABC); the steps in developing an ABC system; and the benefits ofan ABC system
45.Activity-based costing systems:A.Accumulate overhead costs by departments.B.Are less complex and therefore less costly than volume-based systems.C.Can be used in manufacturing firms only.D.Have separate overhead rates for each activity.E.Eliminate multiple-stage cost allocation.Difficulty: 1 EasyLearning Objective: 05-02 Describe activity-based costing (ABC); the steps in developing an ABC system; and the benefits ofan ABC system46.All of the following statements regarding activity-based costing systems are true except they:A.Can provide more accurate product costs.B.Identify more costs as indirect costs than do traditional volume-based systems.C.Are likely to be more time-consuming than volume-based systems.D.Are used in both manufacturing and non-manufacturing companies.E.Are likely to have more overhead rates than volume-based systems.Difficulty: 1 EasyLearning Objective: 05-02 Describe activity-based costing (ABC); the steps in developing an ABC system; and the benefits ofan ABC system Upload your study docs or become a Course Hero member to access this document Upload your study docs or become a Course Hero member to access this document Which of the following is not a benefit of activityFewer cost pools used to assign overhead costs to products is not a benefit of activity based costing.
Which of the following is a benefit of activityActivity-based costing gives managers more accurate production costs. This can help businesses make more informed decisions about which products to produce or help them find cheaper methods of production. It can also help when determining pricing for individual products.
Which of the following is not considered to be a benefit of ABC?Reduction of prime cost is not the benefit of the activity-based costing system. Explanation: In an activity-based cost system, a unique measure of cost is applied to the products and manufacturing items.
Which of the following is not true about the benefits and costs of activityThe answer is (c) It requires few calculations to determine the costs of products and services.
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Which of the following is not considered to be a benefit of activity-based costing
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