Solved by verified expert :CC 350 WK 11 Final Exam
1) A top-selling product might actually result in losses for the company. Answer:
2) Companies that undercost products will most likely lose market share. Answer:
3) If companies increase market share in a given product
line because their reported costs are less than their actual costs, they
will become more profitable in the long run. Answer:
4) As product diversity and indirect costs increase, it
is usually best to switch away from an activity based cost system to a
broad averaging system. Answer:
5) If a company undercosts one of its products, then it will overcost at least one of its other products. Answer:
6) Direct costs plus indirect costs equal total costs. Answer: 7) When refining a costing system, a company should classify as many costs as possible as indirect costs. Answer:
8) In a homogeneous cost pool, all costs have a similar cause-and-effect relationship with the cost-allocation base. Answer:
9) Indirect labor and distribution costs would most likely be in the same activity-cost pool. Answer:
10) Activity-based costing helps identify various activities that explain why costs are incurred. Answer:
11) Direct tracing of costs improves cost accuracy. Answer:
12) A cost-allocation base is a necessary element when using a strategy that will refine a costing system. Answer:
13) An activity-based costing system is necessary for costing services that are similar. Answer: 14) Traditional systems are likely to undercost complex products with lower production volume. Answer:
15) For activity-based cost systems, activity costs are
assigned to products in the proportion of the demand they place on
activity resources. Answer:
16) Unit-level measures can distort product costing because
the demand for overhead resources may be driven by batch-level or
product-sustaining activities. Answer: 17) Output unit-level costs cannot be determined unless you know how many units are in a given batch. Answer:
18) Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system. Answer:
19) Misleading cost numbers are larger when
unit-level assignments and the alternative activity-cost-driver
assignments are proportionately similar to each other. Answer: 20) Availability of reliable data and measures should be considered when choosing a cost-allocation base. Answer:
21) When designing a costing system, it is easiest to calculate total costs first, and then per-unit costs. Answer:
22) ABC systems attempt to trace more costs as direct costs. Answer:
23) ABC systems create homogeneous cost pools linked to different activities. Answer:
24) ABC systems seek a cost allocation base that has a cause-and-effect relationship with costs in the cost pool. Answer:
25) For service organizations, activity-based cost systems may be used to clarify appropriate cost assignments. Answer:
26) ABC reveals opportunities for improving the way work is done. Answer:
27) Activity-based management refers to the use of information derived from ABC analysis to analyze and improve operations. Answer: 28) Information derived from an ABC analysis might be used to eliminate nonvalue-added activities. Answer: 29) ABC costing systems are primarily for use in manufacturing and marketing and not for design engineering. Answer:
30) Department-costing systems are a further refinement of ABC systems. Answer:
31) ABC systems are useful in manufacturing, but not in the merchandising or service industries. Answer:
32) Costing systems with multiple cost pools are considered ABC systems. Answer:
33) Regarding department wide systems, the benefits of an ABC system must be balanced against its costs and limitations. Answer: 34) ABC systems always provide decision-making benefits that exceed implementation costs. Answer:
35) The primary costs of an ABC system are the measurements necessary to implement the system. Answer:
36) Simply because activity-based costing systems employ
more activity-cost drivers, they provide more accurate product costs
than traditional systems. Answer:
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