Which statement is FALSE? Activity-Based Costing includes non-manufacturing costs in product costs, so the inventory in the balance sheet will be higher under ABC than under traditional costing. Job costing does not consider non-manufacturing costs when recording product costs Activity-Based Costing can improve the accuracy of product cost in a Job Costing setting more than in process costing. None of above Increasing the number of indirect cost pools under ABC does not necessarily increase the accuracy of product costs.

Which statement is FALSE? Activity-Based Costing includes non-manufacturing costs in product costs, so the inventory in the balance sheet will be higher under ABC than under traditional costing. Job costing does not consider non-manufacturing costs when recording product costs Activity-Based Costing can improve the accuracy of product cost in a Job Costing setting more than in process costing. None of above Increasing the number of indirect cost pools under ABC does not necessarily increase the accuracy of product costs.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 5MC: Which of the following is a reason a company would implement activity-based costing? A. The cost of...

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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.
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Why is the direct labor cost category eliminated in many lean manufacturing environments?
Which of the following statements are false regarding Activity-Based Costing? Select one: A. Non-manufacturing costs are not necessary to include when calculating the profitability of each product. B. Costs are allocated based on a pre-determined overhead rate. C. Transitioning from traditional costing methods to Activity-Based Costing can be complicated and costly. D. Activity-Based Costing follows the same basic calculation methods as traditional costing approaches. E. None of the above OO O
Which of the following statements regarding activity-based costing (ABC) is false? A. ABC is not an appropriate tool for analysing non-manufacturing costs. B. ABC can be used to analyse the profitability of customers. C. ABC evolved as a response to problems with traditional costing systems. D. ABC can be used to measure the cost of cost objects.
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.
Answer 1. Which of the following costs/expenses is included in product costs under both absorption costing and variable costing? A) Equipment depreciation. B) Variable manufacturing costs. Variable selling expenses. D) Supervisory salaries. 2. What is the costing method that can be used most easily with break-even analysis and other cost-volume-profit techniques? A) Process costing. B) Job-order costing. C) Absorption costing. D) Variable costing. 3. The Predetermined Overhead Rate is $18.50 per machine hour. During the year, actual manufacturing overhead expenses incurred were $456,000 and the machine operated for 24,550 hours. This means: A) Manufacturing overhead is overapplied B) Before any adjustments, net income is understated C) No journal entry is needed D) The balance in the MOH account is zero E) None of the above 4. Why would an activity-based costing system that is designed for internal decision making NOT conform to generally accepted accounting principles? A) First-stage…
Which THREE of the following statements about activity-based costing (ABC) and traditional costing systems (absorption costing and marginal costing) are correct? OABC is better than absorption costing in understanding what causes costs to be incurred Both ABC and marginal costing treat all fixed costs as product costs No over-absorption or under-absorption of overheads can occur under ABC Marginal costing understates the true cost of a product when compared to ABC ABC is not suitable for use in businesses that provide services OABC is useful for businesses which have high overheads in their cost structure
CLEAR MY CHOICE Which of the following statements is false? O a Volume-based costing has typically resulted in undercost for high-volume products and overcost for low-volume products. O b. 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. OC Activity-based costing typically provides less information about product costs while requiring more recordkeeping. O d. All the statements are false. O e. Activity-based costs per unit are always greater than volume-based costs per unit. Windows buii PAGE dows huil Sslacyl Jail NEXT P. ENG DELL
1. What is a predetermined overhead rate and explain why many companies use it? 2. Many accountants believe that overhead costs are the main source of product cost distortions. Do you agree or disagree? 3. Explain activity-based product costing.
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Which of the following is not a distinction between process costing and job order costing? a. Job costing: Sound production planning; Process costing: Bad production planning b. Job costing: Variety of products; Process costing: Homogeneous c. Job costing: Output not transferred; Process costing: Output is transferred d. Job costing: Cost control is difficult; Process costing: Effective cost control