ACC 350 Week 6 Quiz – Strayer
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Quiz 4 Chapter 5
Activity-Based Costing and
Activity-Based Management
1)
A
top-selling product might actually result in losses for the company.
2)
Companies
that undercost products will most likely lose market share.
3)
If
companies increase market share in a given product line because their reported
costs are less than their actual costs, they will become more profitable in the
long run.
4)
As
product diversity and indirect costs increase, it is usually best to switch
away from an activity based cost system to a broad averaging system.
5)
If a
company undercosts one of its products, then it will overcost at least one of
its other products.
6)
Direct
costs plus indirect costs equal total costs.
7)
When
refining a costing system, a company should classify as many costs as possible
as indirect costs.
8)
In a
homogeneous cost pool, all costs have a similar cause-and-effect relationship
with the cost-allocation base.
9)
Indirect
labor and distribution costs would most likely be in the same activity-cost
pool.
10)
Activity-based
costing helps identify various activities that explain why costs are
incurred.
11)
Direct
tracing of costs improves cost accuracy.
12)
A
cost-allocation base is a necessary element when using a strategy that will
refine a costing system.
13)
An
activity-based costing system is necessary for costing services that are
similar.
14)
Traditional
systems are likely to undercost complex products with lower production
volume.
15)
For
activity-based cost systems, activity costs are assigned to products in the
proportion of the demand they place on activity resources.
16)
Unit-level
measures can distort product costing because the demand for overhead resources
may be driven by batch-level or product-sustaining activities.
17)
Output
unit-level costs cannot be determined unless you know how many units are in a
given batch.
18)
Using
multiple unit-level cost drivers generally constitutes an effective
activity-based cost system.
19)
Misleading
cost numbers are larger when unit-level assignments and the alternative
activity-cost-driver assignments are proportionately similar to each
other.
20)
Availability
of reliable data and measures should be considered when choosing a
cost-allocation base.
21)
When
designing a costing system, it is easiest to calculate total costs first, and
then per-unit costs.
22)
ABC
systems attempt to trace more costs as direct costs.
23)
ABC
systems create homogeneous cost pools linked to different activities.
24)
ABC
systems seek a cost allocation base that has a cause-and-effect relationship
with costs in the cost pool.
25)
For
service organizations, activity-based cost systems may be used to clarify
appropriate cost assignments.
26)
ABC
reveals opportunities for improving the way work is done.
27)
Activity-based
management refers to the use of information derived from ABC analysis to
analyze and improve operations.
28)
Information
derived from an ABC analysis might be used to eliminate nonvalue-added
activities.
29)
ABC
costing systems are primarily for use in manufacturing and marketing and not
for design engineering.
30)
Department-costing
systems are a further refinement of ABC systems.
31)
ABC
systems are useful in manufacturing, but not in the merchandising or service
industries.
32)
Costing
systems with multiple cost pools are considered ABC systems.
33)
Regarding
department wide systems, the benefits of an ABC system must be balanced against
its costs and limitations.
34)
ABC
systems always provide decision-making benefits that exceed implementation
costs.
35)
The
primary costs of an ABC system are the measurements necessary to implement the
system.
36)
Simply
because activity-based costing systems employ more activity-cost drivers, they
provide more accurate product costs than traditional systems.
37)
If
products are alike, then for costing purposes:
A)
a simple
costing system will yield accurate cost numbers
B)
an
activity-based costing system should be used
C)
multiple
indirect-cost rates should be used
D)
varying
demands will be placed on resources
38)
Undercosting
a particular product may result in:
A)
loss of
market share
B)
lower
profits
C)
operating
inefficiencies
D)
understating
total product costs
39)
Overcosting
of a product is MOST likely to result from:
A)
misallocating
direct labor costs
B)
overpricing
the product
C)
undercosting
another product
D)
understating
total product costs
40)
A
company produces three products; if one product is overcosted then:
A)
one
product is undercosted
B)
one or
two products are undercosted
C)
two
products are undercosted
D)
no
products are undercosted
41)
Misleading
cost numbers are MOST likely the result of misallocating:
A)
direct
material costs
B)
direct
manufacturing labor costs
C)
indirect
costs
D)
All of
these answers are correct.
42)
An
accelerated need for refined cost systems is due to:
A)
global
monopolies
B)
rising
prices
C)
intense
competition
D)
a shift
toward increased direct costs
43)
The use
of a single indirect-cost rate is more likely to:
A)
undercost
high-volume simple products
B)
undercost
low-volume complex products
C)
undercost
lower-priced products
D)
Both B
and C are correct.
44)
Uniformly
assigning the costs of resources to cost objects when those resources are
actually used in a nonuniform way is called:
A)
overcosting
B)
undercosting
C)
peanut-butter
costing
D)
department
costing
45)
Refining
a cost system includes:
A)
classifying
as many costs as indirect costs as is feasible
B)
creating
as many cost pools as possible
C)
identifying
the activities involved in a process
D)
seeking
a lesser level of detail
46)
Greater
indirect costs are associated with:
A)
specialized
engineering drawings
B)
quality
specifications and testing
C)
inventoried
materials and material control systems
D)
All of
these answers are correct.
47)
Design
of an ABC system requires:
A)
that the
job bid process be redesigned
B)
that a
cause-and-effect relationship exists between resource costs and individual
activities
C)
an
adjustment to product mix
D)
Both B
and C are correct.
48)
ABC
systems create:
A)
one
large cost pool
B)
homogenous
activity-related cost pools
C)
activity-cost
pools with a broad focus
D)
activity-cost
pools containing many direct costs
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