question

Activity-based costing often shifts overhead costs from large volume, standardized products to low-volume, specialty products that consume disproportionate resources.

answer

true

question

ABC can be used to assign costs to any cost object that is of management interest.

answer

true

question

The final step of activity-based costing assigns overhead costs to pools rather than to products.

answer

true

question

An advantage of using the plantwide overhead rate method?

answer

The necessary information is readily available.

question

what company would be best served by a plantwide overhead rate?

answer

A company that manufactures few products and whose operations are labor intensive.

question

A system of accounting in which the costs of each process are accumulated separately and then assigned to the units of product that passed through the process is a:

answer

process cost accounting

question

A company that applies process costing is most frequently characterized by:

answer

Homogeneous

question

An organizational unit of a factory that has the responsibility for partially manufacturing or producing a product is called a:

answer

Production Department

question

Direct material costs are recorded:

answer

Directly to Goods in Process Account

question

Direct labor and indirect labor are recorded, respectively, to:

answer

Goods in Process and Factory Overhead

question

In a process costing operation, the direct labor of a production department includes

answer

All labor used exclusively by that department, even if the labor is not applied to the product itself.

question

All labor used exclusively by that department, even if the labor is not applied to the product itself.

answer

There may be over or underapplied overhead.

question

To compute an equivalent unit of production, one must be able to reasonably estimate:

answer

The percentage of completion

question

A method of assigning overhead costs to a product using a single overhead rate is:

answer

plantwide overhead rate method

question

Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?

answer

Departmental overhead rate method and activity-based costing

question

Which of the following would not be considered a product cost?

answer

cost accountants salary

question

Overhead costs:

answer

Cannot be traced to units of product in the same way that direct labor can.

question

The cost object of the plantwide overhead rate method is:

answer

The unit of product

question

Which of the following statements is true with regard to the plantwide overhead rate method?

answer

The rate is determined using volume-related measures.

question

The cost object(s) of the departmental overhead rate method is

answer

The production departments in the first stage and the unit of product in the second stage.

question

Which of the following statements is true with regard to the departmental overhead rate method?

answer

It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

question

The cost object(s) of the activity-based costing method is(are):

answer

The production activities in the first stage and the unit of product in the second stage.

question

From an ABC perspective, what causes costs to be incurred?

answer

Activities

question

Which of the following statements is true with regard to activity-based costing rates?

answer

The premise of ABC is that activities are what cause costs to be incurred.

question

What is the reason for pooling costs?

answer

Determining a pool rate for all costs incurred by the same activity reduces the number of cost assignments required.

question

Which of the following are advantages of using the plantwide overhead rate method?

answer

The necessary information is readily available.

question

Which of the following is a disadvantage of the departmental overhead rate method?

answer

The departmental overhead rate method assigns overhead on the basis of volume-related measures.

question

What are three advantages of activity-based costing over traditional volume-based allocation methods?

answer

More accurate product costing, more effective cost control, and better focus on the relevant factors for decision making.

question

What are the main advantages of traditional volume-based allocation methods compared to activity-based costing?

answer

Traditional volume-based methods are easier to use and less costly to implement and maintain

question

A cost that remains the same in total even when volume of activity varies is a

answer

Fixed cost

question

A cost that changes in total proportionately to changes in volume of activity is a(n):

answer

variable cost

question

A cost that can be separated into fixed and variable components is called a:

answer

Mixed cost

question

A target income refers to:

answer

income planned for a future period

question

The margin of safety is the excess of:

answer

Expected sales over break-even sales.

question

The excess of expected sales over the sales level at the break-even point is known as the:

answer

Margin of Safety

question

Using a traditional costing approach, which of the following manufacturing costs are assigned to products?

answer

Variable manufacturing overhead, direct materials, direct labor, and fixed manufacturing overhead.

question

Which of the following statements is true regarding absorption costing?

answer

It assigns all manufacturing costs to products.

question

Which of the following statements is true regarding variable costing?

answer

Only manufacturing costs that change in total with changes in production level are included in product costs.

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