Chapter 3 Questions (2)

total cost of each activity divided by the total activity is the formula for

activity rate

an activity measure in activity based costing is used as an _____ base for applying overhead costs to products and services

allocation

activity based management is focused on

eliminating waste and reducing defects

an activity cost pool accumulates costs for _____ activity measure(s)

exactly one

direct labor hours is an accurate allocation base when

factors other than direct labor have an insignificant effect on overhead costs

activity based costing can identify activities that would benefit from process _____

improvements

what companies can ABC be used by?

manufacturing and service companies

what is the first stage of allocating overhead costs to products?

overhead costs are assigned to activity cost pools

activity based costing is most likely to be beneficial when

overhead costs are high and increasing and no one knows why, products differ substantially in batch size and the activities they require

power to run production equipment would be a(n) _____ level activity

unit

implementing activity based costing includes or requires

taking employees away from other tasks, should be done by a cross functional team, and requires substantial resources