Question

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3)

Which of the following is NOT a characterization of activity-based costing?

Select one:

A. identifying all resources used by activities regardless of how individual costs behave in the short run

B. identification of only variable costs

C. using the cost hierarchy to allocate costs to products

D. identification of all costs used by activities

4)

Indications that a product cost system needs revision include

Select one:

A. the company uses a single allocation base system developed long ago.

B. managers lose bids they expected to win and win bids they expected to lose.

C. prime cost represent the vast majority of product cost.

D. the product line consists of a products which are produced at different locations.

5)

Traditional cost systems can be used to

Select one:

A. help identify new designs to reduce costs.

B. can be used to enhance budgeting.

C. reveal activities that can be eliminated.

D. help control nonfinancial items such as number of setup hours.

E. accurately assign direct costs.

6)

The term used to describe a situation when at least one miscosted product causes other products to be miscosted in the organization is known as

Select one:

A. product undercosting.

B. cross-subsidization.

C. product sub-optimization.

D. product marketing.

E. product overcosting.

7)

Determining what activities add customer value is an example of what facet of activity-based management?

Select one:

A. achieve planned growth

B. improve selection of process activities to enhance profit

C. increase effective coordination among business function activities

D. reduce costs of non-value-added activities

E. match the company's use of resources to customer demand

8)

Which of the following statements about activity-based costing is TRUE?

Select one:

A. Indirect cost allocation bases are unlikely to be cost drivers.

B. It provides similar results to traditional costing when one activity creates a substantial amount of total cost.

C. It provides similar results to traditional costing when different products use resources from different activities in different proportions.

D. It provides less information than traditional cost systems.

E. It does not affect cost control.

9)

Outsourcing the accounting function is an example of what facet of activity-based management?

Select one:

A. improve selection of process activities to enhance profit

B. achieve planned growth

C. increase effective coordination among business function activities

D. match the company's use of resources to customer demand

E. reduce costs of non-value-added activities

Answer 1

3	D. identification of all costs used by activities
4	B. managers lose bids they expected to win and win bids they expected to lose.
5	E. accurately assign direct costs.
6	B. cross-subsidization.
7	B. improve selection of process activities to enhance profit
8	C. It provides similar results to traditional costing when different products use resources from different activities in different proportions.
9	E. reduce costs of non-value-added activities