Which of the following statements about overhead allocation based on volume alone is correct? Select one: a. It will systematically overcost high-volume products and undercost low-volume products. b. It must be used for external financial reporting. c. It will systematically overcost low-volume products and undercost high-volume products. d. It is a key aspect of the activity-based costing model.

Which of the following statements about overhead allocation based on volume alone is correct? Select one: a. It will systematically overcost high-volume products and undercost low-volume products. b. It must be used for external financial reporting. c. It will systematically overcost low-volume products and undercost high-volume products. d. It is a key aspect of the activity-based costing model.

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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The objective of management, under absorption costing, is that each product recovers its full cost and leaves something towards profit as a return on investment. 1. provide the meaning of Absorption costing and Provide a numerical data and find the profit using the same method ?
Which of the following statements is true? O The first step in activity-based costing is to assign overhead costs to products using cost drivers ABC usually results in less appropriate management decisions Activity-based costing allocates overhead to multiple activity cost pools and assigns the cost pools to products using cost drivers O Traditional costing systems use multiple predetermined overhead rates
:Under activity-based costing, the process of assigning costs to cost objects is called First stage allocation .a O Calculation of cost object margin .b O None of the given answers .c O Third stage allocation .d O Second stage allocation .e O
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.
Advantages and disadvantages of Activity-Based Costing (ABC), Fixed Overhead Absorption, and Throughput Accounting.
The following statements have been made in relation to activity-based costing: 1. A cost driver is a factor which causes a change in the cost of an activity. 2. Traditional absorption costing tends to underestimate overhead costs for high-volume products. Which of the above statements is/are true? O A. 1 only O B. 2 only OC. Neither 1 nor 2 O D. Both 1 and 2
Under activity -based costing , second stage allocation would involve a. Calculating activity rates b. Assigning costs to cost objects c. Defining activity measures d. None of the given answers e. Assigning costs to cost pools
Which of the following is most likely to be true of the manufacturing overhead costs assigned to a product with relatively low volume and high complexity? O a. An ABC system will assign the same manufacturing overhead costs to the product as a volume- based system. O b. Avolume-based system will assign more manufacturing overhead costs to the product than an ABC system. O c. An ABC system will assign more manufacturing overhead costs to the product than a volume-based system. O d. An ABC system will assign manufacturing overhead costs to the product, while a volume-based system will not. e to search W 11:35 A D A dx ENG 22-05-2021 hp 141 brt se delete home end 96 - backspace num ask lock T 7V 8A 94 home Dg up K enter 5 0 pause ↑ shift 11 end alt ctrl SUt
Which of the following statements regarding activity-based costing (ABC) is NOT correct? a. Under ABC cost centres are replaced by cost pools b. Blanket overhead recovery rates (OAR) are replaced with cost driver rates c. ABC uses one common overhead recovery rate, such as labour hours. d. ABC tackles the problems of absorption costing by adopting a much more accurate way of charging overhead to cost units.
What is the key difference between Absorption Costing and Marginal Costing? A Absorption Costing treats Manufacturing Overhead as a period cost. B Marginal Costing treats Fixed Manufacturing Overhead as a period cost. C Absorption Costing only considers variable costs to calculate net income. D Marginal Costing only considers variable costs to calculate net income.