Which of the following statements is true? O a. A company can either choose Activity-based costing (ABC) or the traditional costing system to allocate its costs for external reporting. O b. Traditional costing can be used for internal reporting. O. Activity based costing (ABC) can be used for external reporting. O d. Activity based costing can only be used in manufacturing companies O e. None of the given answers is correct.

Which of the following statements is true? O a. A company can either choose Activity-based costing (ABC) or the traditional costing system to allocate its costs for external reporting. O b. Traditional costing can be used for internal reporting. O. Activity based costing (ABC) can be used for external reporting. O d. Activity based costing can only be used in manufacturing companies O e. None of the given answers is correct.

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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Standard costs are used in companies for a variety of reasons. Which of the following is a benefit of using standard costs? a. They are used to estimate the cost of inventory. b. They are used to control costs. c. They are used to plan direct materials, direct labor, and variable factory overhead. d. all of these choices
Which of the following statements is false? (You may select more than one answer.)a. In recent years, most companies have experienced increasing manufacturing overhead costs in relation to direct labor costs.b. Activity-based costing systems may use direct labor-hours and/or machine-hoursto assign unit-level costs to products.c. Facility-level costs are not caused by particular products.d. Product-level costs are larger for high-volume products than for low-volumeproducts.
Organizations are motivated to use multiple indirect cost pools instead of a single indirect cost pool when Select one: O a. Multiple Indirect cost pools are needed to conform to external reporting requirements b. manufacturing overhead costs are difficult to control c. the cost drivers for the multiple indirect cost pools are different from the cost driver of the single indirect cost pool d. none of the options
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Which of the following statements about activity-based costing (ABC) is false? Group of answer choices In activity-based costing, cost drivers are what cause costs to be incurred. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. Activity-based costing is useful for allocating marketing and distribution costs. Activity-based costing differs from traditional costing systems in that it allocates costs according to the rates at which a product consumes different activities.
Which of the following statements is false? Cost allocations such as activity-based costing allow manager to evaluate profitability of their products. A budget is a quantitative plan for acquiring and using financial and other resources over a specific forthcoming time period. A detailed activity-based costing system is costly to implement. Using different allocation base does not affect manufacturing overhead costs allocated to each product.
Which of the following conditions would favour the use of activity-based costing (ABC) rather than traditional absorption costing? (1) Overheads represent a large proportion of total cost (2) A diverse product range with complex manufacturing operations (3) Overheads are primarily driven by volume of output O 1, 2 and 3 O 2 only O 1 and 3 only O 1 and 2 only
What is a good response to? Activity-based costing (ABC) has transformed how organizations measure and manage costs by breaking overhead costs into cost pools based on activity (Kenton, 2024). ABC allocates overhead costs based on a particular activity instead of spreading it out evenly. This gives management clear information to determine which activities benefit the company and which may need to be altered or discontinued. An example of a company using ABC could be electrical costs. If the electrical costs fluctuate based on labor hours, management could use the labor hours as a cost driver. They could determine the cost driver rate by dividing the electric costs for the year by the annual labor hours. Once they determine the cost rate, they can multiply that by the electrical hours used for an activity to calculate the cost. In the example given, it would be pretty easy to implement; however, there are several overhead costs to calculate, which would require a lot of record-keeping,…
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.
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Please answer with reason for all why the option is correct and why the other options are incorrectPlease answer correct otherwise skip it 4. Which of the following statements is true? An activity measure in activity-based costing expresses how much of an activity is carried out and it is used as the allocation base for assigning overhead costs to products and services. Activity-based management involves focusing on activities to eliminate waste, decrease processing time, and reduce defects. An activity-based costing system is generally more difficult to set up and run than a traditional cost system. Multiple Choice Statements I and II are true. Statements II and III are true. All of the statements are true. None of the statements are true.