Test_ 5 - Activity Based Costing _ Quizlet

10/26/2015 Test: 5 Activity Based Costing | Quizlet

https://quizlet.com/14992415/test?written=on&matching=on&mult_choice=on&tf=on&promptwith=1&limit=35 1/7

9 Written questions

1. the costs of activities related to a group of units of a product or service rather than eachindividual unit of a product or service

INCORRECT: You gave no answer

ANSWER: Batch Level Costs

2. a method of management decision making that uses ABC info to improve cost satisfaction &profitability


ANSWER: Activity Based Management

3. intense competition


ANSWER: An accelerated need for refined cost systems is due to:

4. loss of market share


ANSWER: Overcosting a particular product may result in

5. product-sustaining costs


ANSWER: Design costs are an example of:

6. that a cause-and-effect relationship exists between resource costs and individual activities, ANDan adjustment to product mix


ANSWER: Design of an ABC system requires:

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1. Unit-level cost drivers are mostappropriate as an overheadassignment base when:

INCORRECT: No answer given

ANSWER: only one product ismanufactured

2. A single indirect-cost rate may distortproduct costs because:


ANSWER: there is anassumption that all support

activities affect all products

3. Activity


ANSWER: an event, task, or unit of

work w/ a specific purpose -

7. costing outcome where one undercosted (overcosted) product results in at least one otherproduct being overcosted (undercosted)


ANSWER: Product Cost Cross Subsidization

8. expand the # of ID cost pools until homogenous - all costs have same or similar cause andeffect relationship w/ a single cost driver and used as cost allocation base


ANSWER: Indirect Cost Pools

9. greater overhead costs for each product line


ANSWER: Product lines that produce different variations (models, styles, or colors) oftenrequire specialized manufacturing activities that translate into:

9 Matching questions

a

refines a costing system by identifying individualactivities as the fundamental cost objects

b

costs of activities that cannot be traced toindividual products/services but that support theorganization as a whole

c

Identify as many DC as economically feasible -reduce costs that can be classified as ID, minimizeamount allocated

d

an ABC costing system will yield more accuratecost numbers

e

there is an assumption that all support activitiesaffect all products



g

b

a

c

h

d

work w/ a specific purpose -things a firm does

4. Facility Sustaining Costs


ANSWER: costs of activities thatcannot be traced to individual

products/services but that supportthe organization as a whole

5. Activity Based Costing


ANSWER: refines a costingsystem by identifying

individual activities as thefundamental cost objects

6. Direct Cost Tracing


ANSWER: Identify as many DCas economically feasible -

reduce costs that can be classified asID, minimize amount allocated

7. A company produces three products; ifone product is overcosted then:


ANSWER: one or two productsare undercosted

8. If products are different, then forcosting purposes:


ANSWER: an ABC costingsystem will yield more

accurate cost numbers

f

reduces the use of broad averages for assigningthe cost of resources to cost objects

g

an event, task, or unit of work w/ a specificpurpose - things a firm does

h one or two products are undercosted

i only one product is manufactured



f

accurate cost numbers

9. Refined Costing System


ANSWER: reduces the use ofbroad averages for assigning

the cost of resources to cost objects

9 Multiple choice questions

1. overcosting another product

(No Answer)a. Design of an ABC system requires:

b. Overcosting a particular product may result in

c. Refining a cost system includes:

d. CORRECT: Undercosting of a product is most likely to result from:

2. Costs o activities undertaken to support individual products/services regardless of the # ofunits or batches in which the units are produced

(No Answer)a. Facility Sustaining Costs

b. Product Undercosting

c. CORRECT: Product (Service) Sustaining Costs

d. Product Overcosting

3. Product (Service) sustaining Costs

(No Answer)a. CORRECT: Ex: Design/R&D costs

b. Activity Based Costing

c. Output Unit Level Costs

d. Ex: Administrative Costs



4. variable

(No Answer)a. If products are different, then for costing purposes:

b. CORRECT: ABC assumes all costs are ________ because over the long run management canadjust the amount of resources employed.

c. Activity Based Management

d. Traditional cost systems distort product costs because:

5. undercost both low-volume complex products and undercost lower-priced products

(No Answer)a. Greater indirect costs are associated with:

b. A single indirect-cost rate may distort product costs because:

c. Design of an ABC system requires:

d. CORRECT: The use of a single indirect-cost rate is more likely to:

6. a product consumes a high level of resources but is reported to have a low cost/unit

(No Answer)a. Activity Based Costing

b. CORRECT: Product Undercosting

c. Peanut Butter Costing

d. Product Overcosting

7. whenever possible, use the cost driver (cause of IDc's) as the cost allocation base for eachhomo ID cost pool (effect)

(No Answer)a. CORRECT: Cost Allocation Base

b. Batch Level Costs

c. Cost Hierarchy

d. Activity



8. A particular costing approach that uses broad averages for assigning the cost of resourcesuniformly to cost objects when the individual products or services , may in fact, use thoseresources in nonuniform ways

(No Answer)a. Activity Based Costing

b. Product Undercosting

c. Product Overcosting

d. CORRECT: Peanut Butter Costing

9. identifying the activities involved in a process

(No Answer)a. Indirect Cost Pools

b. Design of an ABC system requires:

c. Refined Costing System

d. CORRECT: Refining a cost system includes:

8 True/False questions

1. Ex: Administrative Costs → Product (Service) sustaining Costs

This is false. You gave no answer.

It should be Ex: Administrative Costs → Facility Sustaining Costs.

2. Misleading cost numbers are most likely the result of misallocating: → indirect costs

This is true. You gave no answer.

3. Activity-based costing (ABC) can eliminate cost distortions because ABC: → they apply averagesupport costs to each unit of product


It should be Activity-based costing (ABC) can eliminate cost distortions because ABC: →develops cost drivers that have a cause-and-effect relationship with the activities performed.



4. Product Overcosting → a product consumes a high level of resources but is reported to have alow cost/unit


It should be Product Overcosting → A product consumes a low level of resources but isreported to have a high cost/unit.

5. Greater indirect costs are associated with: → specialized engineering drawings; qualityspecifications and testing; inventoried materials and material control systems


6. Traditional cost systems distort product costs because: → they apply average support costs toeach unit of product


7. Output Unit Level Costs → the costs of activities related to a group of units of a product orservice rather than each individual unit of a product or service


It should be Output Unit Level Costs → the costs of activities performed on each individual unitof a product or service.

8. Cost Hierarchy → categorization of indirect costs into different costs pools on the basis of thedifferent types of cost drivers, or cost-allocation bases, or different degrees of difficulty indetermining cause and effect relationships


Test_ 5 - Activity Based Costing _ Quizlet

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