abc costing
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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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