Activity-Based Costing Quiz

Is the following statement TRUE or FALSE regarding activity-based costing? "A cost pool is an activity which consumes resources and for which overhead costs are identified and allocated"

• TRUE

• FALSE

Is the following statement TRUE or FALSE regarding activity-based costing (ABC) and cost drivers? "A cost driver is any factor that cause a change in the cost of an activity"

• TRUE

• FALSE

Is the following statement TRUE or FALSE regarding activity-based costing? "Life-cycle costing takes into account all costs incurred in a product like life-cycle with exception of sunk costs incurred on research and development"

• TRUE

• FALSE

Is the following statement TRUE or FALSE regarding activity-based costing? "Life-cycle costing ensures a profit is generated over the life of the product"

• TRUE

• FALSE

Is the following statement about target costing TRUE or FALSE ? "Products should be discontinued if there is a target cost gap"

• TRUE

• FALSE

Is the following statement about target costing TRUE or FALSE ? "A target cost gap is the difference between the target cost for a product and its projected cost"

• TRUE

• FALSE

Is the following statement about target costing TRUE or FALSE ? "A risk with target costing is that cost reductions may affect the perceived value of the product"

• TRUE

• FALSE

Is the following statement about target costing TRUE or FALSE ? "Cost may be reduced in target costing by removing product features that do not add value"

• TRUE

• FALSE

Is the following statement about target costing TRUE or FALSE ? "The high cost of (for ex) research, design and marketing in the early stages in a product's life-cycle necessitate a high initial selling price"

• TRUE

• FALSE

Is the following statement about material flow cost accounting (MFCA) TRUE or FALSE ? "In MFCA, output costs are allocated between positive and negative product costs"

• TRUE

• FALSE