accounting 2

Advantages of the activity-based costing includes

more effective overhead cost control better production and pricing decisions accurate assignment of costs to products

An activity which focuses on product lines and are not affected by number of units is a

product level activity.

One of the disadvantages of the departmental and the plantwide overhead rate methods is that

technological advances may decrease the effect of direct labor hours as a percentage of total manufacturing costs.

Johnson Company has the following overhead costs: machine setup $25,000; factory maintenance $10,000; heating and lighting $15,000; and selling expenses of $5,000. What is the total overhead costs using activity-based costing?

$50,000.

The advantages of using the departmental overhead rate method and the plantwide overhead method include all of the following:

Both methods are consistent with GAAP. Both methods are based on readily available information. Both methods are easy to implement.

What is the second step in activity-based costing?

Tracing overhead costs to activity cost pools.

The basis of the activity-based costing method is a(n)

activity

In order for a service provider to use activity-based costing, they must have demand for reliable cost information and existence of

cost