Question 1

A company that uses a traditional two stage cost allocation approach is likely to do the following.
A)Overhead allocations to high volume products will tend to be overstated while overhead allocations to low volume products will tend to be understated.
B)Overhead allocations to high volume products will tend to be understated, while allocations to low volume products will tend to be overstated.
C)Overhead allocations to large products will tend to be understat

Accepted Answer

Traditional two-stage cost allocation often uses volume-based drivers, which can lead to high volume products absorbing more overhead than they actually consume, while low volume products absorb less, resulting in overstated overhead for high volume products and understated for low volume products.

Question 2

The main difference (or differences) between how traditional costing and activity based costing treat indirect manufacturing costs is (are) that
A)Traditional costing uses only production volume based drivers while activity based costing uses only non production volume based drivers.
B)Traditional costing treats only unit level costs as variable, while abc systems treat unit level, batch level and product level costs as variable.
C)Traditional cost allocations are usually based on a plant wide overhead rate, while abc systems use departmental overhead rates.
D)A and b.

Accepted Answer

The answer of The main difference (or differences) between how...

Question 3

The Cooper/Kaplan "Rule of One" refers to the following:
A)Only one overhead rate should be used to allocate fixed costs.
B)If only one item is represented by an activity cost pool, then the cost can be classified as fixed.
C)If there is more than one activity cost pool, then one of the cost pools must be variable.
D)Traditional cost allocation systems will distort the allocations for at least one cost pool.

Accepted Answer

The answer of The Cooper/Kaplan "Rule of One" refers to...

Question 4

Activity based cost systems would probably provide the greatest benefits for organizations that use
A)Job order costing.
B)Process costing.
C)Historical costing
D)Standard costing.

Accepted Answer

Activity-based costing is most beneficial for organizations using job order costing because it provides more accurate cost information for customized products or services.

Question 5

When traditional production volume based overhead allocations are made, rather than activity based allocations,
A)The unit costs of high volume and large size products tend to be overstated, while the unit cost of low volume and small products tend to be understated.
B)The unit costs of high volume and large size products tend to be understated, while the unit cost of low volume and small products tend to be overstated.
C)The unit costs of high volume and small products tend to be overstated, while the unit costs of low volume and large products is understat

Accepted Answer

When traditional production volume based overhead allocations are made, rather than activity based allocations, the unit costs of high volume and large size products tend to be overstated, while the unit cost of low volume and small products tend to be understated. This is because the overhead costs are allocated based on the volume of production, rather than the actual activities that are performed. As a result, products that are produced in high volumes will have a higher overhead cost allocated to them, even if they do not actually require more overhead resources. Conversely, products that are produced in low volumes will have a lower overhead cost allocated to them, even if they actually require more overhead resources.

Quiz 1: Marginal Costing, Contribution, and Activity-Based Costing Techniques

A company that uses a traditional two stage cost allocation approach is likely to do the following.

The main difference (or differences) between how traditional costing and activity based costing treat indirect manufacturing costs is (are) that

The Cooper/Kaplan "Rule of One" refers to the following:

Activity based cost systems would probably provide the greatest benefits for organizations that use

When traditional production volume based overhead allocations are made, rather than activity based allocations,