College Acct 2- Chapter 04

Front

Which of the following is a potential issue with using departmental overhead rates? They may rely too heavily on volume-based allocation, which can be problematic when products vary in production complexity or lot size.

Back

They may rely too heavily on volume-based allocation, which can be problematic when products vary in production complexity or lot size.

Front

What is the primary benefit of activity-based costing?

Back

More accurate product costing.

Front

As the complexity of a product's manufacturing operation increases, the number of activities and cost drivers used in an activity-based cost system will likely:

Back

increase.

Front

Activity-based costing is most appropriate to use when labor costs are a(n) __________ proportion of total product costs and the manufacturing process is ____________.

Back

decreasing, complex

Front

The total overhead applied to Product M6 under activity-based costing is closest to:

Back

$350,708

Front

Which of the following is a limitation of activity-based costing?
Activity-based costing can be used only if approved by the Institute of Management Accountants.
Activity-based costing can be expensive to use.
Activity-based costing can only be used by firms involved in manufacturing.
Activity-based costing systems can only be used by firms with state-of-the-art technology.

Back

Activity-based costing can be expensive to use.

Front

Back

$38.44

Front

Using direct labor-hours as the sole basis for overhead allocation:

Back

will systematically overcost products with high production volumes and undercost products with low production volumes.

Front

The overhead applied to each unit of Product B6 under activity-based costing is closest to:

Back

$585.35 per unit

Front

Inspecting a product for defects is an example of a:

Back

Unit-level activity.