For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions, press or click on the blank space provided.
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.
Want more practice questions?
Receive instant access to our graded Quick Tests (more than 1,800 unique test questions) when you join AccountingCoach PRO.
We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping. The certificates include Debits and Credits, Adjusting Entries, Financial Statements, Balance Sheet, Income Statement, Cash Flow Statement, Working Capital and Liquidity, Financial Ratios, Bank Reconciliation, and Payroll Accounting. Click here to learn more.