answer quickly Which TWO of the following statements about activity-based costing (ABC) are true?a. Implementation of ABC is unlikely to be cost effective when variable production costs are a low proportion oftotal production costs.b. In a system of ABC, for costs that vary with production levels, the most suitable cost driver is likely to be directlabour hours or machine hours.c. Activity based costs are the same as relevant costs for the purpose of short-run decision-making.d. Activity based costing is a form of absorption costing

Activity-based costing suitable when: A variety of products are created Overhead accounts for a…

Answered: Which TWO of the following statements…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 12MC: Which statement is correct? A. Activity-based cost systems are less costly than traditional cost...

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Which statement is correct? A. Activity-based cost systems are less costly than traditional cost systems. B. Activity-based cost systems are easier to implement than traditional cost systems. C. Activity-based cost systems are more accurate than traditional cost systems. D. Activity-based cost systems provide the same data as traditional cost systems.
What is the scattergraph method, and why is it used? Why is a scattergraph a good first step in separating mixed costs into their fixed and variable components?
What advantage does the FIFO cost method have over the average cost method relative to providing information for cost control?
Discuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies.
When operating in a constrained environment, which products should be produced? A. products with the highest contribution margin per unit B. products with the highest contribution margin per unit of the constrained process C. products with the highest selling price D. products with the lowest allocated joint cost
Which of the following statements regarding marginal costing is incorrect? Select one: O A. It is useful long-term planning technique OB. It assumes that fixed costs remain fixed over relevant activity ranges O C. It assumes that variable costs vary in proportion to activity O D. It assumes that costs can be classified as variable or fixed
Disadvantages of activity-based costing include which of the following? a. It is not acceptable under GAAP for external reporting. b. It can be costly to implement. c. It can be used in activity-based management. d. Both a. and b.
Which of the following is not a true statement about variable costs? a. Total cost is known to change in proportion to any changes in related level of volume or activity. O b. When considering total cost behaviour, focus on fixed and variable costs. O c. A total cost that can change in proportion to changes in the number of products produced. O d. Total cost never changes in proportion to any changes in related levels of volume or activity. O e. An important cost to identify so managers can make important management decisions.
Which of the following statements about time-driven activity-based costing is true? a. Time-driven ABC requires estimates of only two items, namely: the cost per time unit of supplying resource capacity, and unit times of consumption of resource capacity by products, services or customers b. Time-driven ABC is a simplification of traditional ABC. Due to this simplification, time-driven ABC is unable to adequately capture the complexity of real world operations c. With time-driven ABC, managers assign resource costs to each activity and then to products or customers rather than directly estimating the resource demands required by each product d. Survey evidence has revealed that ABC adoption rates are fairly low due to oversimplification and perceived inaccuracies. As a result, a more complex approach called time-driven ABC was implemented in order to overcome the perceived inaccuracies e. None of the available statements are true
Which of the following statements is FALSE? a. There is a cause-and-effect relationship between the cost driver and the amount of cost. b. Over the long run all costs have cost drivers. c. Volume of production is a cost driver of direct manufacturing costs. d. Fixed costs have cost drivers over the short run.
The reason for some costs to be mixed in nature is? A. Presence of sunk cost in the cost structure. B. When minimal variable cost is incurred even if a facility is idle. C. Presence of opportunity cost in the cost structure. D. When we place fixed and variable costs into a single cost pool.
Which of the following points about the Activity-based costing (ABC) system is NOT a correct observation: a. Under ABC the unit cost of a product will necessary be less than the unit cost under traditional full (absorption) costing. b. Activities are considered resource drivers because they eat up resources necessary for the activities to happen. c. ABC may generate results that are not suitable for external reporting under IFRS/GAAP. d. Batch-level activities produce costs that may be in proportion to the number of units produced.

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