acg exam 2

Activity Based Costing

A method of allocating overhead based on each product's use of activities in making the product.

Which statement is correct?

Activity-based cost systems are more accurate than traditional cost systems.

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

Which of the following cost drivers would best be associated with the activity of a physician time in a medical clinic?

Physician minutes with a patient

Which of the following product situations is better suited to job order costing than to process costing? Group of answer choices

The costs are easily traced to a specific product.

calculate the predetermined overhead rate using direct labor dollars

estimated overhead/direct labor hours

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: Group of answer choices

qualitative

Which of the following is not a qualitative decision that should be considered in an outsourcing decision?

relevant cost

The cost of inventory owned by a company is considered a:

sunk cost

In activity-based costing system, direct materials used would typically be classified as a:

unit level cost