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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Which of the following statement about Activity Based Costing is true? a) Costs which change with respect to the same activity will be in the same cost pool b) Total set-up cost is an example of a cost driver c) Cost pools group costs according to whether they are fixed or variable d) Activity based costing will produce one overall weighted average absorption rate
What is time-driven activity based management (TDABC)? How is it different from activity based costing (ABC) & why would TDABC be used instead of ABC?
Which of the following statements is true? Select one: O a. The most complex of the cost estimation methods is the high-low method. O b. Engineering approach approximates cost function by classifying each account as either variable or fixed based on the analyst's knowledge of how the account behaves. C The high-low method of deriving an estimated cost line uses all the data points available. O d. In approximating the cost function, the account analysis classifies costs based upon an industrial engineer's evaluation of production methods, and material, labor, and overhead requirements. O e. The high-low method is used to derive an estimated line of cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels.
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Activity Based Costing (ABC) is an alternative method for allocating costs to products by estimnating the amout of each activity a product uses. True False
Rand Company produces dry fertilizer. At the beginning of the year, Rand had the following standard cost sheet: Direct materials (8 lbs. @ $1.25) $10.00 Direct labor (0.15 hr. @ $18.00) 2.70 Fixed overhead (0.20 hr. @ $3.00) 0.60 Variable overhead (0.20 hr. @ $1.70) 0.34 Standard cost per unit $13.64 Overhead rates are computed using practical volume, which is 49,000 units. The actual results for the year are as follows: Units produced: 53,000 Direct materials purchased: 408,000 pounds at $1.32 per pound Direct materials used: 406,800 pounds Direct labor: 10,500 hours at $17.95 per hour Fixed overhead: $36,570 Variable overhead: $18,000 MPV=28,560 UNFAV MUV=21,500 FAV LRV=525 FAV LEV=45,900 UNFAV FIXED SPENDING VARIANCE= 7,170 UNFAV FIXED VOLUME VARIANCE= 2,400 FAV VARIABLE SPENDING= 150 UNFAV VARIABLE EFFICIENCY= 4,335 UNFAV Prepare journal entries for the following: The purchase of direct materials The issuance…
Which of the following statements is true? O a. Activity-based costs per unit are always greater than volume-based costs per unit. O b. All the statements are false. O c. Different cost allocation methods are constructed so that they typically result in the same or similar estimates of how much it costs to make a product. O d. Activity-based costing typically provides less information about product costs while requiring more recordkeeping. O e. Volume-based costing has typically resulted in overcost for high-volume products and undercost for low-volume products. 11:40 ere to search A D a dx ENG 22-05-2021 hp delete home end an Ed 96 & 7\ 6. + backspace mum lock RO 7 V home g up K enter 50 pause B t shift 2Y end alt ctrl ins
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