abc costing

abc costing

University

8 Qs

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University

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abc costing

abc costing

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Quiz

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University

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laili ismail

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8 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main purpose of Activity Based Costing (ABC)?

To identify labour hours

To allocate overhead based on activities

To determine quality control costs

To calculate direct material costs

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a cost driver in ABC?

Activities that drive the costs

Direct labour costs

Machine maintenance costs

Transportation costs

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are cost pools in ABC?

Direct material costs

Distinct activities that drive costs assigned in monetary value

Indirect labour costs

Marketing costs

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the formula for calculating the cost driver rate in ABC?

Machine maintenance cost / Production units

Direct labour cost / Direct material cost

Total overhead / Number of employees

Cost pool / Basis of activity driver

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What are the steps for designing ABC?

Identify production units, Calculate labour hours, Calculate machine hours, Calculate total overhead costs

Identify marketing activities, Trace costs to the departments, Calculate total costs, Prepare financial statements

Calculate direct material costs, Calculate direct labour costs, Calculate overhead costs, Calculate total production costs

Identify activities and cost classification, Trace costs to the pools, Relate activities to the cost drivers and then to the rate, Total up the costs and show new costs under the new classification

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main difference between Traditional Costing and ABC?

Traditional Costing has more levels of cost hierarchy than ABC

ABC uses cost drivers to determine cost objects, while Traditional Costing uses blanket rates

Traditional Costing is more expensive than ABC

ABC only considers direct costs, while Traditional Costing considers indirect costs

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a limitation of ABC?

ABC is inexpensive to implement

Cost driver basis is accurate

Pricing and decision making are not improved

Classification of overheads is subjective

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