BASIC COST CONCEPT REVIEW PART 5

an activity-based costing system is one that

• traces costs to activities and then to products

• traces products to activities and then to resources

• traces cost to resources and then to activities

• traces activities to cost and then to resources

ABC system would probably provide the greatest benefits for organizations that use

• process costing

• job order costing

• standard costing

• absorption costing

abc system

• can be used only in process cost system

• uses only a single basis of allocation

• focuses on units of production

• focuses on activities performed to produce a product

_______ is a product or department for which cost are accumulated or measured

• cost driver

• cost object

• cost accounting

• activity based costing

the following are benefits of ABC except

• better management decisions

• more control over manufacturing overhead costs

• elimination of all arbitrary cost allocations

• more accurate cost data

which of the following types of characteristics tends to cause too little overhead costs to be charged to the product using traditional cost allocations?

• a relatively low small products

• a relatively low volume products

• a relatively high volume products

• a and b

ABC system cannot be used by

• manufacturers

• book publisher

• hotels

• none of the choices

The following are tasks associated with the ABC system :

1. 1. identification of cost pools

2. 2. assignment of cost to products

3. 3. identification of cost drivers

4. 4. calculation of overhead rates

5. Which of the following choices is the proper order of the ABC system

• 1,2,3,4

• 1,3,4,2

• 3,1,4,2

• 3,1,2,4

Which of the following is not an argument for using a separate, stand-alone system for activity-based costing rather than integrating ABC with the general ledger system using GAAP?

• it is less costly to develop

• GAAP product costs may be incorrect relative to ABC product costs

• it is easily developed

• none of the choices

Machine hours would be accurate cost driver for

• machining setup costs

• machining cost

• Inspecting cost

• Assembly cost