cost_accounting_test_bankCh05 2

cost_accounting_test_bankCh05 2
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CHAPTER 5 ACTIVITY-BASED COSTING AND ACTIVITYBASED MANAGEMENT

MULTIPLE CHOICE 36. An accelerated need for refined cost systems is due to: a. global monopolies b. rising prices c. intense competition d. a shift toward increased direct costs Answer: c Difficulty: 2 Terms to Learn: activity-based costing (ABC) 39. Refining a cost system includes: a. classifying as many costs as indirect costs as is feasible b. creating as many cost pools as possible c. identifying the activities involved in a process d. seeking a lesser level of detail Answer: c Terms to Learn: activity Difficulty: 2 Objective: 2 Objective: 1

40. Greater indirect costs are associated with: a. specialized engineering drawings b. quality specifications and testing c. inventoried materials and material control systems d. All of these answers are correct. Answer: d Difficulty: 1 Terms to Learn: product-cost cross-subsidization Objective: 2

45. A single indirect-cost rate may distort product costs because: a. there is an assumption that all support activities affect all products b. it recognizes specific activities that are required to produce a product c. costs are not consistently recorded d. it fails to measure the correct amount of total costs Answer: a Difficulty: 2 Terms to Learn: product-cost cross-subsidization Objective: 3

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49. Product lines that produce different variations (models, styles, or colors) often require specialized manufacturing activities that translate into: a. fewer indirect costs for each product line b. decisions to drop product variations c. a greater number of direct manufacturing labor cost allocation rates d. greater overhead costs for each product line Answer: d Difficulty: 2 Terms to Learn: product-cost cross-subsidization Objective: 3

57. Activity-based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT: a. numerous products that consume different amounts of resources b. operations that remain fairly consistent c. a highly competitive environment, where cost control is critical d. accessible accounting and information systems expertise to maintain the system Answer: b Difficulty: 2 Terms to Learn: activity-based costing (ABC) 59. The MOST likely example of an output unit-level cost is: a. general administrative costs b. paying suppliers for orders received c. engineering costs d. machine depreciation Answer: d Difficulty: Terms to Learn: output unit-level costs 1 Objective: 4 Objective: 3

66. Unit-level cost drivers are most appropriate as an overhead assignment base when: a. several complex products are manufactured b. only one product is manufactured c. direct labor costs are low d. factories produce a varied mix of products Answer: b Difficulty: Terms to Learn: output unit-level costs 2 Objective: 4

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75. A manufacturing firm produces multiple families of products requiring various combinations of different types of parts. Of the following, the MOST appropriate cost driver for assigni

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