When comparing absorption costing to variable costing, all of the below are disadvantages of traditional costing except: Group of answer choices The use of the single cost driver does not allocate overhead as accurately as using multiple cost drivers. There is only one overhead cost pool and a single measure of activity, such as direct labor hours, which makes the traditional method simple and less costly to maintain. The use of the single cost driver may overallocate overhead to one product and underallocate overhead to another product, resulting in erroneous total costs.

When comparing absorption costing to variable costing, all of the below are disadvantages of traditional costing except: Group of answer choices The use of the single cost driver does not allocate overhead as accurately as using multiple cost drivers. There is only one overhead cost pool and a single measure of activity, such as direct labor hours, which makes the traditional method simple and less costly to maintain. The use of the single cost driver may overallocate overhead to one product and underallocate overhead to another product, resulting in erroneous total costs.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3DQ: Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product...

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Similar questions

Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately.
Which of the following statements is not false of costing systems? A. Activity-based costing systems tend to use fewer cost pools than does a traditional costing system. B. Many traditional costing systems can distort product costs and profitability. C. Activity-based costing systems tend to combine various costs into a single cost pool. D. Traditional costing systems tend to be more costly than activity-based costing systems
Which among the following is not true about traditional costing system? a. This method allocates greater proportion of overheads to high volume products b. This method avoids the phenomenon of product cost cross subsidization c. This method allocates smaller proportion of overheads to low volume products d. This method leads to cost smoothing
Which of the following statements about activity-based costing (ABC) is false? Group of answer choices Activity-based costing differs from traditional costing systems in that products are not cross-subsidized. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. Activity-based costing is useful for allocating marketing and distribution costs. In activity-based costing, cost drivers are what cause costs to be incurred.
Which of the following statements about activity-based costing (ABC) is false? Group of answer choices Activity-based costing is useful for allocating marketing and distribution costs. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only multiple products rather than single product. Activity-based costing differs from traditional costing systems in that it allocates costs according to the rates at which a product consumes different activities. In activity-based costing, all overhead costs are accumulated into a single cost pool and a single cost driver is identified to allocate costs to the cost objects.
When product diversity exists, basing overhead allocation on traditional overhead costing- Will undercost simple, high volume products and overcost complex, low volume products; At least two of the answers are correct; will have no effect will overcost simple,high-volume products and undercost complex; low-volume products will likely result in more precise product costs.
Which of the following statements about activity-based costing is not true? A. activity-based costing is useful for allocating distribution costs. B. activity-based costing is useful for allocating marketing costs. C. activity-based costing is more likely to result in major differences from traditional costing systems for firms that produce just one product, rath than multiple products. OD. in activity-based costing, it is cost drivers that cause costs to be incurred.
Which of the following is false about activity-based costing? Implementing an activity-based costing system is more costly than implementing a traditional cost allocation system. In ABC, the assumption is that activities use resources or cause costs. An activity-based costing system relies only on volume measures such as direct labor hours to allocate all overhead costs to products. A traditional cost allocation system and an activity-based costing system are used to estimate the profitability of products.
Which of the following statements is true? O a. Activity-based costs per unit are always greater than volume-based costs per unit. O b. All the statements are false. O c. Different cost allocation methods are constructed so that they typically result in the same or similar estimates of how much it costs to make a product. O d. Activity-based costing typically provides less information about product costs while requiring more recordkeeping. O e. Volume-based costing has typically resulted in overcost for high-volume products and undercost for low-volume products. 11:40 ere to search A D a dx ENG 22-05-2021 hp delete home end an Ed 96 & 7\ 6. + backspace mum lock RO 7 V home g up K enter 50 pause B t shift 2Y end alt ctrl ins
Which of the following is a limitation of activity-based costing? More cost pools Poorer management decisions Less control over overhead costs Some arbitrary allocations continue
1. Which of the following is a disadvantage of the Variable Costing method? A. The data available does not easily relate to CVP[Cost - volume - profit] applications. B. The data is not applicable to short-term decision-making situations. C. Much time and effort must be expended to allocate fixed costs to various segments. D. It cannot be used for external reporting purposes. E. All of the above are disadvantages of variable costing.
When a traditional, volume-based costing system is used, which of the following products is most likely to suffer from cost distortion? Select one O a. A low-volume, low-complexity product ObA low-volume, high-complexity product O CA low-volume, medium-complexity product O d. none of the given answer O e. A high-volume, medium-complexity product