exam 2
Which statement is correct?
Activity-based cost systems are more accurate than traditional cost systems.
Which of the following cost drivers would best be associated with the activity of a physician time in a medical clinic?
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Which of the following is most likely to be a cost driver for a packaging and shipping activity?
Number of orders
Consider the following statements regarding traditional costing systems. Which of the statements is the most accurate?
Overhead costs are applied to products on the basis of volume-related measures and traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements
ABC Production manufactures products X and Y and has been applying overhead on the basis of direct labor hours. Product X is a high-volume product and relatively simplistic in nature. Product Y is a low-volume product that requires a variety of complex manufacturing procedures. What would an activity-based costing system likely disclose about products X and Y?
Product X was overcosted and product Y was undercosted
Which of the following would activity-based costing most likely lead to?
Raising the sale price of low-colume products
A cost not relevant to deciding whether to purchase a new machine is:
The cost of the old machine
Which of the following product situations is better suited to job order costing than to process costing?
The costs are easily traced to a specific product.
Which of the following product situations is better suited to job order costing than to process costing?
The value of work in process is based on assigning standard costs.
Which of the following is a reason a company would implement activity-based costing?
They want to improve the data on which decisions are made.
A job order costing system is most likely used by which of the following?
an accounting firm specializing in tax returns
predetermined overhead rate
computes the overhead applied to each job
Which of the following product situations is better suited to job order costing than to process costing?
costs are easily traced to a specific product.
Activity-based costing systems:
frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product
Manufacturing overhead:
is a pool of indirect production costs that must somehow be attached to each unit manufactured
Activity-based costing systems:
often reveal products that were under- or over-costed by traditional costing systems
Factors in a decision problem that cannot be expressed in numerical terms are:
qualitative in nature
Which of the following is not a qualitative decision that should be considered in an outsourcing decision?
relevant costs
The cost of inventory owned by a company is considered a: opportunity cost
sunk cost
job order costing
the cost accounting system used by law firms
process costing
the cost accounting system used by pet food manufacturers
Which if the following costs are relevant to a decision making situation?
the cost of special electrical wiring in an equipment acquisition decision
Which if the following costs are relevant to a decision making situation?
the cost of special electrical wiring in an equipment acquisition decision and the salary of a supervisor who will be transferred elsewhere in the organization in a department closure decision
overapplied overhead
the result when the actual overhead is less than the amount assigned to each specific job
underapplied overhead
the result when the actual overheat is more than the amount sing to each specific job
In activity-based costing system, direct materials used would typically be classified as a:
unit-level cost
In activity-based costing system, direct materials used would typically be classified as a:
unit-level cost/