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.

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.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 12MC: Which statement is correct? A. Activity-based cost systems are less costly than traditional cost...

See similar textbooks

Similar questions

Which of the following is a reason a company would implement activity-based costing? A. The cost of record keeping is high. B. The additional data obtained through traditional allocation are not worth the cost. C. They want to improve the data on which decisions are made. D. A company only has one cost driver.
What advantage does the FIFO cost method have over the average cost method relative to providing information for cost control?
Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately.
Disadvantages of activity-based costing include which of the following? a. It is not acceptable under GAAP for external reporting. b. It can be costly to implement. c. It can be used in activity-based management. d. Both a. and b.
Which of the following is false about activity-based costing? Implementing an activity-based costing system is more costly than implementing a traditional cost allocation system. In ABC, the assumption is that activities use resources or cause costs. An activity-based costing system relies only on volume measures such as direct labor hours to allocate all overhead costs to products. A traditional cost allocation system and an activity-based costing system are used to estimate the profitability of products.
Which of the following statements regarding activity-based costing (ABC) is false? A. ABC is not an appropriate tool for analysing non-manufacturing costs. B. ABC can be used to analyse the profitability of customers. C. ABC evolved as a response to problems with traditional costing systems. D. ABC can be used to measure the cost of cost objects.
Which of the following statements about time-driven activity-based costing is true? a. Time-driven ABC requires estimates of only two items, namely: the cost per time unit of supplying resource capacity, and unit times of consumption of resource capacity by products, services or customers b. Time-driven ABC is a simplification of traditional ABC. Due to this simplification, time-driven ABC is unable to adequately capture the complexity of real world operations c. With time-driven ABC, managers assign resource costs to each activity and then to products or customers rather than directly estimating the resource demands required by each product d. Survey evidence has revealed that ABC adoption rates are fairly low due to oversimplification and perceived inaccuracies. As a result, a more complex approach called time-driven ABC was implemented in order to overcome the perceived inaccuracies e. None of the available statements are true
1. Which of the following is a disadvantage of the Variable Costing method? A. The data available does not easily relate to CVP[Cost - volume - profit] applications. B. The data is not applicable to short-term decision-making situations. C. Much time and effort must be expended to allocate fixed costs to various segments. D. It cannot be used for external reporting purposes. E. All of the above are disadvantages of variable costing.
Demonstrate why expressing fixed costs on a per unit of activity basis is misleading and may result in faulty decisions.
Which of the following statements is not false of costing systems? A. Activity-based costing systems tend to use fewer cost pools than does a traditional costing system. B. Many traditional costing systems can distort product costs and profitability. C. Activity-based costing systems tend to combine various costs into a single cost pool. D. Traditional costing systems tend to be more costly than activity-based costing systems
If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate. True or False?
Which of the following is a limitation of activity-based costing? More cost pools Poorer management decisions Less control over overhead costs Some arbitrary allocations continue

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Cornerstones of Cost Management (Cornerstones Ser…

Accounting

ISBN:

9781305970663

Author:

Don R. Hansen, Maryanne M. Mowen

Publisher:

Cengage Learning

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

GET THE APP

About FAQ Academic Integrity Sitemap Document Sitemap

Contact Bartleby Contact Research (Essays)High School Textbooks Literature Guides Concept Explainers by Subject Essay Help Mobile App

GET THE APP

Privacy

Your CA Privacy Rights

Your NV Privacy Rights

About Ads

Manage My Data

bartleby, a Learneo, Inc. business

	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.