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