9) Which of the following is true with activity based cost accounting? A) Activity-based costing ignores the allocation of 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) The focus is on activities that account for a sizable fraction of indirect costs. D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

9) Which of the following is true with activity based cost accounting? A) Activity-based costing ignores the allocation of 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) The focus is on activities that account for a sizable fraction of indirect costs. D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

Name: 9) Which of the following is true with activity based cost accounting
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Description: 9) Which of the following is true with activity based cost accounting?A) Activity-based costing ignores the allocation of marketing and distribution costs.B) Activity-based costing is more likely to result in major differences from traditional costi

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Marginal costing is usually deployed when decisions about volume are being made. Discuss the situations when businesses need instead to work with a full unit cost and explore too the problems associated with deriving full unit costs.
8) A single indirect-cost rate distorts product costs because A) there is an assumption that all support activities affect all products in a uniform way B) it recognizes specific activities that are required to produce a product C) competitive pricing is ignored D) it assumes all costs are product costs
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The costs assigned to units in inventory are typically lower under absorption costing thanunder vanable costinaTRUEFALSE Operating profits move in the same direction as sales when variable costing is used ifselling prices, the sales mix and the cost structure remain the sameTRUEFALSE Absorption costing is more compatible with cost-volume-profit analysis than is variablecosting.TRUEFALSE Variable manufacturing overhead costs are treated as period costs under bothabsorption and variable costingTRUEFALSE Operating profit is affected by changes in production under both the variable costing andabsorption costing approachesTRUEFALSE In a manufacturing company using absorption costing, the fixed costs associated withidle production capacity are commonly included as part of the product cost.TRUEFALSE In activity-based costing, some manufacturing costs may be excluded from product costsTRUEFALSE The margin of safety can be defined as the amount by which sales can decrease beforelosses are…
) Why do product-costing systems based on a single, volume-based cost driver tend to over-cost high-volume products? What undesirable strategic effects can such distortion of product costs have?
Which of the following line items will not be found in the absorption costing income statement? Group of answer choices Variable manufacturing and non-manufacturing costs Contribution margin Gross profit Fixed manufacturing costs
A range of costing methods have been considered in the module. Which of the following statements is correct? Marginal costing is based on the distinction between direct and indirect costs whereas in full unit costing methods, costs are classified according to behaviour. Some businesses favour marginal costing because marginal cost per unit is lower than full cost per unit and thus the business will always make more profit if marginal costing is adopted. Full unit costing allows identification of profit per unit, whereas marginal costing identifies the contribution per unit. Activity-based costing always results in a higher cost per unit than absorption costing.
Which of the following statement is correct? A In a variable costing income statement, sales revenue is typically higher than in absorption costing income statement. B When production is not equal to sales, income under absorption costing differs from income under variable costing due to the difference in treatment ( product cost and period cost) of the fixed overhead cost under the two costing methods. C In variable costing system, fixed overhead cost is included as part of the cost of inventory. D In an absorption costing system, fixed overhead cost is treated as a period cost.
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Which of the following is not a potential advantage of variable costing relative absorptioncosting?a. Net income computed under variable costing is unaffected by changes productionlevels.b. It is easier to understand the impact of fixed and variable costs on computation of netincome when variable costing is used.c. The use of variable costing is consistent with cost-volume-profit analysis.d. Net income computed under variable costing is not closely tied to changes in sales level.
Which is typically not considered a crucial cost driver: 1. Marketing intensity 2. Capacity utilization 3. Scale economies 4.Production technologies 5. Input costs
Explain how absorption costing can enable a manager to increase production solely for the purpose of inflating profit but prevents a manager from doing this if variable costing is used.