Question

nts) 16. Eaton Company uses activity-based costing to allocate overhead costs to products. When figuring the cost of ordering raw materials, which of the following is likely the best cost driver for this activity? a. Number of orders placed. b. Weight of the parts ordered. c. Square footage of the purchasing department area. d. Direct labor cost e. None of the answer choices is correct. e comfc future for safet materia local h e factor ta rela 17. Which of the following shows the steps required to implement activity-based costing in the correct order? a Allocate overhead costs to products, identify costly activities to complete products, assign overhead costs to activities, identify cost drivers for each activity, and calculate a predetermined overhead rate for each activity. b. Allocate overhead costs to products, identify cost drivers for each activity; assign overhead costs to activities, identify costly activities to complete products, and calculate a predetermined overhead rate for each activity, c. Identify costly activities to complete products; assign overhead costs to activities, identify cost drivers for each activity: calculate a predetermined overhead rate for each activity, and allocate overhead costs to products. d. Identify cost drivers for each activity: assign overhead costs to activities, identify costly activities to complete products: calculate a predetermined overhead rate for each activity, and allocate overhead costs to products. e. None of the answer choices is correct. 18. Which of the following is an advantage of using activity-based costing (ABC)? a. It provides management with simpler. less accurate information than traditional costing methods. b. Fixed costs are presented on a per unit basis. c. It tends to provide more accurate product cost information. d. It is typically inexpensive to implement. e. None of the answer choices is correct. 19. All of the following are disadvantages of activity-based costing (ABC) excepti a. ABC systems are expensive. b. ABC systems provide inaccurate product cost data. c. Companies with one or two products may see little benefit from an ABC system. d. Unit fixed costs can be misleading e. None of the answer choices is correct.

Answer 1

16. a. Number of orders placed.

17. c. Identify costly activities to complete products; assign overhead costs to activities; identify cost drivers for each activity; calculate a predetermined overhead rate for each activity; and allocate overhead cost to products.

18. c. It tends to provide more accurate product cost information.

19. b. ABC system provides inaccurate production cost data.