Which of the following are true regarding activity-basedcosting? a. A primary goal of using ABC is a more useful alloca-tion of manufacturing overhead to product lines. b. Under ABC, direct labor hours are never used to allo-cate overhead costs to activity pools or product lines. c. The use of ABC is indicated when it is suspected thateach of a firm’s product lines consumes approximatelythe same amount of overhead resources but the current allocation scheme assigns each line a substantially dif-ferent amount.
Which of the following are true regarding activity-basedcosting? a. A primary goal of using ABC is a more useful alloca-tion of manufacturing overhead to product lines. b. Under ABC, direct labor hours are never used to allo-cate overhead costs to activity pools or product lines. c. The use of ABC is indicated when it is suspected thateach of a firm’s product lines consumes approximatelythe same amount of overhead resources but the current allocation scheme assigns each line a substantially dif-ferent amount.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Which of the following are true regarding activity-based
costing?
a. A primary goal of using ABC is a more useful alloca-
tion of manufacturing
b. Under ABC, direct labor hours are never used to allo-
cate overhead costs to activity pools or product lines.
c. The use of ABC is indicated when it is suspected that
each of a firm’s product lines consumes approximately
the same amount of overhead resources but the current
allocation scheme assigns each line a substantially dif-
ferent amount.
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