Which of the following points about the Activity-based costing (ABC) system is NOT a correct observation: a.Under ABC the unit cost of a product will necessary be less than the unit cost under traditional full (absorption) costing. b.Activities are considered resource drivers because they eat up resources necessary for the activities to happen. c.ABC may generate results that are not suitable for external reporting under IFRS/GAAP. d.Batch-level activities produce costs that may be in proportion to the number of units produced.

Using activity based costing, the overheads rate is determined for different activities on the basis…

Answered: Which of the following points about the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

) 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?
If computational and record-keeping costs are about the same under both FIFO and weighted-average costing, which method, if any, will generally be preferred? Multiple Choice Weighted-average costing FIFO costing None of these. The answer cannot be determined with so little information.
Which among the following is not true about traditional costing system? a. This method allocates greater proportion of overheads to high volume products b. This method avoids the phenomenon of product cost cross subsidization c. This method allocates smaller proportion of overheads to low volume products d. This method leads to cost smoothing
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.
Direct costs are classified by controllability. True False Can be true, can be false
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.
Which of the following statements regarding marginal costing is incorrect? Select one: O A. It is useful long-term planning technique OB. It assumes that fixed costs remain fixed over relevant activity ranges O C. It assumes that variable costs vary in proportion to activity O D. It assumes that costs can be classified as variable or fixed
“In decision making, full (absorption) costing approach has become entirely useless as it leads to wrong decisions”. Provide examples and evaluate the statement.
Under which costing system non manufacturing costs will not be included in calculating product costs? a. Absorption costing and Variable costing systems. b. Variable costing system only. C. Absorption costing system only. d. Activity based costing system only. e. None of the given answers
Briefly explain the potential negative consequences in pricing decisions from using a traditional, volumebased product-costing system.
TRUE OR FALSE Companies that use just-in-time processing techniques will have significant differences between absorption and variable costing net income
Do not give answer in image... explain your answer please

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

	a.	Under ABC the unit cost of a product will necessary be less than the unit cost under traditional full (absorption) costing.
	b.	Activities are considered resource drivers because they eat up resources necessary for the activities to happen.
	c.	ABC may generate results that are not suitable for external reporting under IFRS/GAAP.
	d.	Batch-level activities produce costs that may be in proportion to the number of units produced.