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A colleague has been discussing Activity Based Co states the following: (i) ABC is easier, quicker and cheaper to implemen absorption costing (ii) The main difference between ABC and traditiona costing is in the value of inventory (a) Both statement i and statement ii (b) Only statement i (c) Only statement ii

A colleague has been discussing Activity Based Co states the following: (i) ABC is easier, quicker and cheaper to implemen absorption costing (ii) The main difference between ABC and traditiona costing is in the value of inventory (a) Both statement i and statement ii (b) Only statement i (c) Only statement ii

FINANCIAL ACCOUNTING
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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1. A colleague has been discussing Activity Based Costing (ABC) and states the following: (i) ABC is easier, quicker and cheaper to implement than traditional absorption costing (ii) The main difference between ABC and traditional absorption costing is in the value of inventory (a) Both statement i and statement ii (b) Only statement i (c) Only statement ii (d) Neither statement I nor statement ii
Transcribed Image Text:1. A colleague has been discussing Activity Based Costing (ABC) and states the following: (i) ABC is easier, quicker and cheaper to implement than traditional absorption costing (ii) The main difference between ABC and traditional absorption costing is in the value of inventory (a) Both statement i and statement ii (b) Only statement i (c) Only statement ii (d) Neither statement I nor statement ii
2. A company is using Activity Based Costing to apportion its overheads between products. Product Z has a budgeted volume of 50,000. The company produces the product in batches of 1,000 and each batch has two inspections. It has calculated the absorption rates to be £1,200 per batch for set- up costs and £1,500 per inspection. What is the total budgeted unit overhead cost for product Z? (a) £2.10 (b) £2.70 (c) £4.20 (d) £84.00
Transcribed Image Text:2. A company is using Activity Based Costing to apportion its overheads between products. Product Z has a budgeted volume of 50,000. The company produces the product in batches of 1,000 and each batch has two inspections. It has calculated the absorption rates to be £1,200 per batch for set- up costs and £1,500 per inspection. What is the total budgeted unit overhead cost for product Z? (a) £2.10 (b) £2.70 (c) £4.20 (d) £84.00
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