What do you think are some advantages for using the ABC method versus a single plant-wide rate or multiple departmental overhead rates. Why would an activity-based costing (ABC) system appeal to some companies and not all companies. Provide at least 3 examples of companies you think would and wouldn't want to use the ABC method.

What do you think are some advantages for using the ABC method versus a single plant-wide rate or multiple departmental overhead rates. Why would an activity-based costing (ABC) system appeal to some companies and not all companies. Provide at least 3 examples of companies you think would and wouldn't want to use the ABC method.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3DQ: Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product...

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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.
Activity Based Costing Give your answers to the following questions; Why do product costing systems based on a single, volume based cost driver tend to overcost high volume products? What undesirable strategic effects can such distortion of product costs have? What is meant by activity analysis? Give 3 criteria for determining whether an activity adds value. What is meant by customer profitability analysis as it relates to activity based costing? Give an example of an activity that might be performed more commonly for one customer than another.
Which of the following statements is true of activity-based costing? O a. Activities are the cost objects of the second stage of ABC. O b. ABC ignores the allocation of storage costs. O c. ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. O d. An activity cost pool collects costs related to the same activity. DUS PAGE NEXT PAGE e here to search 11:38 O a dx ENG 22-05-2021 hp రు 144 ort sc delete end home 4 7\ - backspace num lock E 8. home F K enter pause M ↑ shift end alt ctrl
Which of the following statements is true regarding activity-based costing systems? ABC costing systems are less complex and, therefore, less costly than traditional systems. ABC costing systems can be used in manufacturing firms only. ABC systems accumulate overhead costs by departments. ABC costing systems have separate indirect cost allocation rates for each activity.
If the Activity-Based Costing (ABC) method's main intention is to find a possibility to cut the Overhead and indirect costs from the cost of production, is the blow statement correct? Please explain thoroughly with examples and restate the correct statement if it is false. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a lower unit cost resulting for the high volume products. When a company implements activity-based costing, manufacturing overhead cost is often shifted from high volume products to low volume products, with a higher unit cost resulting for the low volume products. Does the shift from low-volume to high-volume or vice versa affect the product cost?
Why would a business that uses traditional costing systems consider implementing activity-based costing? Discuss the following in your answer: Problems with traditional costing systems in a modern manufacturing environment. Whether the benefits of activity-based costing always outweigh the costs.
Using ABC product cost information when considering reducing cost, which of the following would not be a way to reduce activity costs? a.Improve operations so that the activity-base usage per unit is eliminated. b.Switch to a plantwide allocation rate. c.Improve operations so that the activity-base usage per unit is reduced. d.Change the classification of employees doing an activity to decrease the activity rate.
Which of the following statements is false? (You may select more than one answer.)a. Absorption costing assigns fixed and variable manufacturing overhead costs toproducts.b. Job-order costing systems are used when companies produce many different typesof products.c. A normal costing system assigns costs to products by multiplying the actualo verhead rate by the actual amount of the allocation base.d. A company such as Coca-Cola is more likely to use a process costing system thana job-order costing system.
Activity-based costing tends to pass the cost-benefit test for companies with A. Operations that are relatively simple B. Many products that use different amounts of resources C. Many products that use about the same amount of resources D. Few products that use about the same amount of resources
Which of the following statements is incorrect? O a. ABC systems lead to higher allocation of overheads to products than traditional systems O b. Corporate overheads are not allocated to products whether companies use ABC or traditional systems Oc. Activity based costing (ABC) systems use cost pools whereas traditional costing systems use cost centres Od. Company size has an impact in the adoption of ABC systems, with large companies adopting them more than smaller companies
ABC systems get more accurate as more activities are identified and analyzed. Critique the following statement: “A company should look to break its production process into as many activities as possible in order to determine the most accurate unit costs possible”. Why do you agree or disagree with that statement? Give several reasons.
. There are two (2) costing systems (techniques) that organizations use to budget for the operational/production costs; thus, Marginal Costing and Absorption Costing. The use of each system is dependent on the information needs of the business or organization.These costing systems use the same costs, but they are treated differently according to their behavior.Required:In a detailed manner, look at each of these costing systems and then make a comparison between them.