Answer the following questions using the information below:
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:
The accounting records show the Mossman Job consumed the following resources:

-Which of the following is a sign that an ABC system may be useful?
A)There are small amounts of indirect costs.
B)Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity.
C)Products a company is less suited to produce and sell show small profits.
D)Operations staff agrees with accountants about the costs of manufacturing and marketing products and services.

Question

Answer the following questions using the information below:
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:
  The accounting records show the Mossman Job consumed the following resources:
 
-Which of the following is a sign that an ABC system may be useful?
A)There are small amounts of indirect costs. 
B)Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity. 
C)Products a company is less suited to produce and sell show small profits. 
D)Operations staff agrees with accountants about the costs of manufacturing and marketing products and services.

Quizplus · Accepted Answer

The statement "Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity" indicates that an ABC system may be useful because it helps to allocate overhead costs to products based on the specific resources they consume, rather than using a general rate. Option A is incorrect because small amounts of indirect costs do not necessarily require an ABC system. Option C is incorrect because profitability of products is not directly related to the usefulness of an ABC system. Option D is incorrect because agreement between operations staff and accountants does not indicate the need for an ABC system.

Answer the Following Questions Using the Information Below