Chap 5 obj: 3
Which of the following statements is true of activity-based costing??
Activity-based costing classifies some of the indirect costs as direct costs
ABC system _____.
Highlights the different levels of activites
ABC systems create ______.
Homogeneous activity-related cost pools
Activity based costing systems differs from traditional costing system in the treatment of _____.
Indirect materials
A single indirect-cost rate distort product costs because ____.
There is an assumption that all support activities affect all products
Activity-based costing (ABC) can eliminate cost distortions because ABC systems _____.
establish a cause-and-effect relationship with the activities performed
Product lines that produce different variations (models, styles, or colors) often requires specialized manufacturing activities that translate into ______.
greater overhead costs for each product line.
Which of the following statements is true of activity-based costing?
Activity based costing is more suited to companies with high product diversity than companies with single product line.
Activity-based costing is not likely to yield benefit for companies _____.
with a complex product design processes