Activity-based costing is preferable in a system when multiple products have similar product volumes and costs with a large direct labor cost as a percentage of the total product cost with multiple, diverse products where management needs to support an increase in sales price

Activity-based costing is preferable in a system when multiple products have similar product volumes and costs with a large direct labor cost as a percentage of the total product cost with multiple, diverse products where management needs to support an increase in sales price

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 14MC: Activity-based costing is preferable in a system: when multiple products have similar product...

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Activity-based management includes both process value analysis and activity-based costing. Which of the following features is primarily associated with process value analysis? a. Defining root causes of each activity b. Identifying cost objects and activity drivers c. Calculating activity rate d. Assigning costs to cost objects
Striving to produce the same activity output with lower costs for the input used is concerned with which of the following dimensions of activity performance? a. Quality b. Time c. Activity sharing d. Effectiveness e. Efficiency
The second stage of customer-based activity-based costing entails the assignment of: a. resource costs to sales departments. b. resources costs to distribution channels. c. customer-related activity costs to products. d. customer-related activity costs to customers.
Which statement is correct? A. Activity-based cost systems are less costly than traditional cost systems. B. Activity-based cost systems are easier to implement than traditional cost systems. C. Activity-based cost systems are more accurate than traditional cost systems. D. Activity-based cost systems provide the same data as traditional cost systems.
Process costing works well whenever a. heterogeneous products pass through a series of processes and receive different doses of materials, labor, and overhead. b. material cost is accumulated by process and conversion cost is accumulated by process. c. homogeneous products pass through a series of processes and receive similar doses of conversion inputs and different doses of material inputs. d. homogeneous products pass through a series of processes and receive similar amounts of materials, labor, and overhead. e. None of these.
When operating in a constrained environment, which products should be produced? A. products with the highest contribution margin per unit B. products with the highest contribution margin per unit of the constrained process C. products with the highest selling price D. products with the lowest allocated joint cost
activity-based costing is preferable in a system a) when multiple products have similiar product volumes and cost b) with a large direct labor cost as a percentage of the total product cost c) with multiple, diverse products d) where management needs to support an increase in sales price
Which of the following is a benefit of activity-based cost management system? a.It makes it easy to identify the overall activities that bear an influence on cost. b.It is inexpensive. c.It enhances strategic planning. d.It ensures allocation of all costs on the basis of machine hours.
The allocation of indirect costs in an activity-based costing system a. may require other costs to be allocated to activities before the costs of the activities can be allocated to the products. b. is simplified because more costs are identified as direct costs. c. requires the use of heterogeneous cost pools. d. is simplified because a limited number of activities are identified as cost objects.
traditional product-costing systems are structured on multiple volume-based cost drivers. True or False?
What are three advantages of activity -based costing over traditional volume -based allocation methods ? а . Ease of use, more accurate product costing, and more effective cost control. b. More accurate product costing, fewer cost objects, and a direct correlation to production volume . c. More accurate product costing, more effective cost control, and better focus on the relevant factors for decision making . d. Fewer allocation bases , ease of use, and a direct correlation to production volume
1 Why are top management support and cross-functional involvement crucial when attempting to implement an activity-based costing system? 2 What are unit-level, batch-level, product-level, customer-level, and organization-sustaining activities? 3 What types of costs should not be assigned to products in an activity-based costing system?