ACC 202 Chapter 18

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20 Questions - Developed by: - Developed on: - 11,390 taken

True and False

  • 1
    Traditional costing systems use multiple predetermined overhead rates.
  • 2
    Traditionally, overhead is allocated based on direct labor cost or direct labor hours.
  • 3
    Current trends in manufacturing include less direct labor and more overhead.

  • 4
    Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.
  • 5
    A cost driver does not generally have a direct cause-effect relationship with the resources consumed
  • 6
    The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

  • 7
    To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool
  • 8
    Low-volume cost products often require more special handling than high-volume products.
  • 9
    When overhead is properly assigned in ABS, it will usually decrease the unit cost of high-volume products
  • 10
    ABC leads to enhanced control over overhead costs

  • 11
    ABC usually results in less appropriate management decisions
  • 12
    ABC is generally more costly to implement than traditional costing
  • 13
    ABC eliminates all arbitrary cost allocations
  • 14
    ABC is particularly useful when overhead costs are an insignificant portion of total costs
  • 15
    ABC is particularly useful when overhead costs are an insignificant portion of total costs
  • 16
    Activity-based management focuses on reducing costs and improving processes

  • 17
    Any activity that increases the cost of producing a product is a value-added activity
  • 18
    Engineering design is a value-added activity
  • 19
    Non-value-added activities increase the cost of a product but not its perceived value
  • 20
    Machining is a non-value-added activity

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