Week 9 - In Class Quiz - ABC - Anabi

What is the purpose of refining a costing system?

• To obtain more accurate costs

• To decrease indirect costs

• To improve customer satisfaction

• To increase product diversity

What is the main difference between simple and activity-based costing systems?

• Simple costing uses multiple cost drivers, while ABC uses only one.

• ABC is less costly to implement than simple costing.

• Simple costing is more accurate than ABC.

• ABC identifies individual activities as cost objects, while simple costing does not.

What is the purpose of a cost hierarchy in activity-based costing?

• To categorize various activity cost pools based on different types of cost drivers.

• To identify the best base for allocating overhead costs.

• To determine the total estimated overhead costs.

• To allocate overhead costs uniformly across all products.

What is the concept of overcosting in product costing?

• When a product absorbs too much cost, making it seem less profitable than it really is.

• When a product consumes a low level of resources but is allocated high costs per unit.

• When a product is left with too little cost, making it seem more profitable than it really is.

• When a product consumes a high level of resources but is allocated low costs per unit.

What are the signals that suggest ABC implementation could help a firm?

• All indirect costs are identified as output unit-level costs.

• Products that a company is well-suited to make show small profits.

• Operations staff has substantial agreement with the reported costs of manufacturing.

• Products make diverse demands on resources due to volume, process steps, batch size, or complexity.

What is the purpose of activity-based management?

• To categorize various activity cost pools based on different types of cost drivers.

• To allocate overhead costs uniformly across all products.

• To improve customer satisfaction and profitability using ABC information.

• To refine a costing system by identifying individual activities as cost objects.

What is the main guideline for refining a costing system?

• Cost-allocation bases

• Indirect-cost pools

• Direct-cost tracing

• Increase in product diversity

What is the purpose of plantwide overhead rate calculation?

• To categorize various activity cost pools based on different types of cost drivers.

• To identify individual activities as cost objects.

• To allocate overhead costs to all products based on total estimated overhead.

• To determine the best base for allocating overhead costs.

What is the effect of overcosting on product profitability?

• It absorbs too much cost, making it seem less profitable than it really is.

• It is left with too little cost, making it seem more profitable than it really is.

• It makes the product seem more profitable than it really is.

• It results in small profits for products that a company is well-suited to make.

What is the purpose of broad averaging in cost allocation?

• To allocate costs uniformly regardless of how they are actually incurred.

• To determine the total estimated overhead costs.

• To identify individual activities as cost objects.

• To categorize various activity cost pools based on different types of cost drivers.