Activity-based Costing Access the text companion website by going to www.cengagebrain.com and entering the text author’s name or ISBN in the search box, and clicking on the ‘Access Now’ link under Study Tools. At the companion website, click on the link titled “Internet Exercise.” Read the article Activity-based costing from Economist.com
Required:
Answer the following questions based on the article:
1. If two activities use the same amount of direct costs, will they also consume approximately the same amount of overhead costs? Explain with an example.
2. As new technologies make it easier for firms to customize products, will activity-based costing become more or less important?
3. Name four activities that “purchasing” could be subdivided into for the purpose of allocating costs in an activity-based costing system.
4. Has activity-based costing been consistently popular since its introduction in the 1980s?
5. What did Kaplan say were the only two questions that needed to be answered in applying time-driven activity-based costing?
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