chapter 3 acct. 202

In activity-based costing, the focus is on the activities performed to produce specific products.

TRUE

Activity-based costing involves a two-stage allocation process in which overhead costs are first assigned to departments and then allocated to products using activity measures.

false

When a company changes from a traditional costing system to an activity-based costing system, costs will ordinarily shift from low-volume products to high-volume products when the activity-based costing system includes batch-level or product-level costs.

false

Under the ABC philosophy

the cost of a product is equal to the sum of the costs of all activities performed to manufacture it.

In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:

the total activity for the activity cost pool.

Activities consume resources. In activity-based costing an attempt is made to trace the costs of those activities directly to the products that cause them.

true

An activity in activity-based costing is an event that causes the consumption of overhead resources.

true

An activity rated is computed for each activity cost pool—not for each product.

true

In the second-stage allocation in activity-based costing, overhead costs are allocated from activity cost pools to products.

true