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If you have difficulty answering the following questions, learn more about this topic by reading our Activity Based Costing (Explanation).
Activity based costing is considered to be a traditional costing method.
Under ABC, indirect manufacturing costs are predominantly assigned on the basis of direct machine hours.
Which of the following would not be included in a product's cost for inventory valuation for the financial statements?
Which would be the least favorable basis for allocating manufacturing overhead for a factory with automated equipment and a significant variation of services by its indirect labor?
Which would be the most favorable basis for allocating manufacturing overhead for a factory with automated equipment and a significant variation of services by its indirect labor?
Activity-based costing will provide greater accuracy when allocating costs than a manufacturer's machine hours when its products and customers are __________ diverse.
When using machine hours for allocating manufacturing overhead (instead of activity-based costing), a low-volume item requiring a significant amount of special handling will be assigned too __________ manufacturing overhead.
The cost to set up production equipment is best allocated directly to products via machine hours.
Setup cost is an example of a batch-level cost.
Manufacturing costs are often organized in the general ledger by function and department. When applying activity-based costing, these manufacturing costs will be sorted by activities.
In activity-based costing, the manufacturing overhead cost per unit will depend partially on the number of units in a batch.
In ABC the assumption is that __________ use resources or cause costs.
If products are uniform and customers are similar in their demands, activity-based costing may not offer a significant advantage over machine hours when assigning overhead.
A product with a high gross profit could be an unprofitable product.
Activity-based costing can be used to allocate SG&A expenses in order to assist management with pricing and other marketing decisions.