Accounting Test 3 Chapter 8
Which one of the following is not a unit-level cost driver? A. Direct material dollars. B. Direct labor hours. C. Machine hours. D. Production orders.
D. Production orders.
Volume-based overhead rates may cause undesirable strategic effects such as: A. All of these answer choices are correct. B. Incorrect decisions. C.Ineffective management of operations for process improvement. D. Unprofitable cross-subsidization of products.
A. All of these answer choices are correct.
When gathering activity data, which of the following would not be a question that ABC project team members typically ask employees or managers? A. Where the activity takes place B. Value the activity has for the customer C. Time spent performing the activity D. Resources required for the activity
A. Where the activity takes place
A firm has many products, some produced in an automated production process and some produced in a manual production process. Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to: A. Underapply overhead to the period. B. Understate overhead of the product. C. Overstate overhead of the product. D. Overapply overhead to the period.
B. Understate overhead of the product.
Which of the following is a benefit of activity-based costing? A. More streamlined manufacturing processes. B. Reduced overhead costs. C. Facilitate better product pricing decisions. D. More accurate measures of production volume.
C. Facilitate better product pricing decisions.
Which of the following is a benefit of activity-based costing? A. More streamlined manufacturing processes. B. Reduced overhead costs. C. Facilitate better product pricing decisions. D. More accurate measures of production volume.
C. Facilitate better product pricing decisions.
Activity-based costing systems: A. Are less complex and therefore less costly than volume-based systems. B. Can be used in manufacturing firms only. C. Have separate overhead rates for each activity. D. Accumulate overhead costs by departments.
C. Have separate overhead rates for each activity.
A volume-based rate is an appropriate overhead application base when: A. Direct labor costs are large. B. Direct material costs are large relative to direct labor costs incurred. C. Only one product is manufactured. D. Several well-differentiated products are manufactured.
C. Only one product is manufactured.
Which of the following activities is a facility-level activity? A.Depreciation on a highly specialized piece of production equipment. B. Product design. C. Plant management salaries. D. Direct labor.
C. Plant management salaries.
A company using a volume-based overhead assignment (allocation) method will tend to: A. Overstate the cost of low volume products. B. Understate the cost of all products. C. Understate the cost of low volume products. D. Understate the cost of high volume products.
C. Understate the cost of low volume products.
In the context of ABC, cross-subsidization refers to: A. Efforts to increased coordination among department heads. B. Production departments subsidizing each other. C. Cross-selling products lines, which affect customer profitability. D. Costing inaccuracies which affect the relative profitability of products.
D. Costing inaccuracies which affect the relative profitability of products
ABC is used only for overhead costs T/F
True
