Traditional Volume-based costing allocates indirect product costs based on the volume of output, using such allocation bases as direct labor hours, machine production process. Activity-based costing (ABC) has consistently shown that volume-based costing. the cost of low-volume products and the Select one: O a. Overstates, Understates O b. Understates, Understates O c Understates, Overstates O d. Overstates, Overstates O e. none of the given answer.

Traditional Volume-based costing allocates indirect product costs based on the volume of output, using such allocation bases as direct labor hours, machine production process. Activity-based costing (ABC) has consistently shown that volume-based costing. the cost of low-volume products and the Select one: O a. Overstates, Understates O b. Understates, Understates O c Understates, Overstates O d. Overstates, Overstates O e. none of the given answer.

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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TRUE OR FALSE The last step in activity-based costing system is the selection of cost driver.
In your own words, explain the difference between absorption costing and variable costing methods. How does each treat fixed manufacturing overhead? Provide an example and calculate the unit product cost using each method.
traditional product-costing systems are structured on multiple volume-based cost drivers. True or False?
Activity Based Costing (ABC) is most likely to be used whenA. only one product is being madeB. indirect costs are smallC. raw material cost are highD. several products are being made
What are three advantages of activity -based costing over traditional volume -based allocation methods ? а . Ease of use, more accurate product costing, and more effective cost control. b. More accurate product costing, fewer cost objects, and a direct correlation to production volume . c. More accurate product costing, more effective cost control, and better focus on the relevant factors for decision making . d. Fewer allocation bases , ease of use, and a direct correlation to production volume
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In order to determine product costs, JIT firms are usually structured so they can use: a.joint costing b.process costing c.variable costing d.job-order costing
Asset turnover A company reports the following: Sales $1,189,650 Average total assets (excluding long-term investments) 566,500 Determine the asset turnover ratio. If required, round your answer to one decimal place.fill in the blank 1
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
Consider the following statements regarding traditional costing system: I – Overhead costs are applied to products on the basis of volume-related measures II – All manufacturing costs are easily traceable to the goods produced III – Traditional costing system tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements Which of the above statements is/are true?
Employee training is an example of discretionary fixed costs. Select one: True False Below are the measures of cost functions except: a. Regression analysis b. Engineering analysis c. Visual fit analysis d. Maintenance analysis Cost behavior is linear in nature on cost driver levels. Select one: True False Discretionary cost are the fixed cost that are able to achieve at desired level of service or production. Select one: True False Period costs are the cost identified with goods produced. Select one: True False Lease payment is the example of discretionary fixed cost. Select one: True False Below are the examples of committed costs, except: a. Mortgage payment b. Depreciation c. Tax payment d. Management salary Direct labor cost includes wages of all the labors that can be traced specifically. Select one: True False Cost are assumed to be fixed or changes within the relevant range of activity. Select one: True False
18. Which is not a step in activity-based costing? Group of answer choices identify the activities performed by the organization identify the cost driver(s) associated with each activity assign costs to products by multiplying the cost driver rate by the volume of the cost driver units consumed by the product compute a cost rate per production