BADM 2710 CH5
Assignment of overhead costs to activity cost pools occurs in stage ________ of ABC costing. (Enter only one word per blank.)
1
Identification of cost drivers for each activity cost pool occurs in stage _________ of ABC costing. (Enter only one word per blank.)
2
With a traditional volume-based costing system, there is a tendency to undercost ______.
low-volume, complex
An activity that must be done for each item produced is a(n) __-level activity.
unit
The steps in stage one of ABC costing are ______.
assignment of costs to appropriate cost pool identification of cost pools
A pool rate of $3.00 per machine hour means that ______.
each machine hour used by a product should cost $3.00
An important factor in the move toward ABC system is ______.
increasing automation makes information more available
Volume-based costing is also called ______-based costing. (Enter only one word per blank.)
Blank 1: throughput
Costs such as heating and cooling, property taxes, and insurance on the factory are examples of ______.
facility-level activities
Factors influencing the movement from traditional to ABC costing include all of the following except ______.
high reliance on labor to produce products
Costs of setting up machinery for a new production run ______.
is a batch-level activity
Identification of a proper cost driver can result in all of the following except ______.
lower system implementation costs
Engineering design cost is an example of a(n) ______ level activity.
product-sustaining
Traditional product-costing systems may not work well when a company ______.
relies only on unit-based costs drivers manufactures a diverse set of products
Product costs can be distorted by using ______.
single cost pool only unit-level cost drivers the same cost driver for all activities
To calculate total unit cost in an activity-based system requires ______.
direct labor per unit overhead activity cost per unit direct materials per unit
A characteristic of an event or activity that results in the incurrence of costs is a cost ______.
driver
With a traditional volume-based costing system, there is a tendency to overcost ______ products.
high-volume, standard
Widely varying consumption ratios result from ______.
product line diversity
Increasing automation, coupled with sophisticated real-time information systems, ______.
provides the data needed to implement highly accurate product costing systems
The degree of correlation is the ______.
relationship between the consumption of an activity and the consumption of the cost driver
Volume-based product-costing systems have difficulty assigning overhead costs accurately if ______.
there is a large proportion of non-unit-level activities products differ significantly in the way they use activities
Labor-hour-based product-costing systems where labor hour are related closely to the factory volume are also called ______-costing systems.
volume-based throughput-based
True or false: The total unit product cost is calculated by adding total direct materials and total direct labor costs and dividing by the number of units produced.
False Add direct materials per unit + direct labor per unit + overhead activity costs per unit.
True or false: The classification of activities into unit-level, batch-level, product-sustaining-level, and facility-level activities is called activity-based costing.
False This is a component of activity-based costing called a cost hierarchy.
The first stage in an ABC system is to ______.
identify significant activities and assign overhead costs to each activity
One factor driving the movement toward ABC is ______.
more product diversity
One way to identify differences between products is to compare the _______ ratio of each activity cost pool used by the products. (Enter only one word per blank.)
Blank 1: consumption
The classification of activities into levels is called a(n) ____ ___. (Enter only one word per blank.)
Blank 1: cost Blank 2: hierarchy
Activities required in order for the entire production process to occur are referred to as ______-level activities. (Enter only one word per blank.)
Blank 1: facility
The cost per unit of the cost driver for a particular activity cost pool is called the _______ _______. (Enter only one word per blank.)
Blank 1: pool Blank 2: rate
Activities that are necessary to support entire product lines, but are not performed every time a new unit or batch is produced are _____-_____ level activities. (Enter only one word per blank.)
Blank 1: product Blank 2: sustaining
An activity that must be done for each item produced is a(n) _____-____ activity. (Enter only one word per blank.)
Blank 1: unit Blank 2: level
Product costs are most likely to be distorted when using a(n) ________-based product-costing system. (Enter only one word per blank.)
Blank 1: volume
A system that uses multiple cost pools and assigns costs to products in accordance with the amount of the activity used by the product line is a(n) ______-costing system.
activity-based
Direct labor is not the best cost driver for a cost related to the purchasing raw materials because the purchasing activity is a(n) ______.
batch activity and direct labor is a unit-level activity
The steps in stage two of ABC costing are ______.
computation of total unit activity cost for each product line identification of cost drivers for each activity cost pool
A characteristic of an event or activity that results in the incurrence of costs is a(n) __.
cost driver