Question 1

In general, if we compare the traditional full absorption method with ABC, the traditional full absorption method will tend to assign less costs to simple, high-volume products, and less costs to complicated, low-volume products.

Accepted Answer

The traditional full absorption method tends to assign more costs to simple, high-volume products and less costs to complicated, low-volume products because it allocates overhead based on a single driver like direct labor hours, which may not accurately reflect the use of resources by complex, low-volume products. Activity-Based Costing (ABC), on the other hand, assigns costs more accurately based on multiple activities, capturing the true cost of complicated, low-volume products better.

Question 2

A major benefit of resource consumption accounting is that, by separating out fixed and proportional costs, it provides managers with more relevant information for making decisions.

Accepted Answer

Resource consumption accounting provides managers with a more accurate picture of how much it actually costs to produce goods or services, by breaking down costs into fixed and variable components. This allows managers to make more informed decisions about pricing, production levels, and resource allocation.

Question 3

A major benefit of activity-based costing is that it focuses attention on underutilization of production capacity.

Accepted Answer

The answer of A major benefit of activity-based costing is...

Question 4

The Collet Company makes many colors of paint in its factory. The paint is sold in one-gallon containers. It typically makes 10,000 gallons of a color at a time, then switches to making paint of another color. The cost of heating the factory would be considered a

Accepted Answer

The cost of heating the factory is a facility level cost because it is a general overhead expense that benefits the entire operation and does not vary with the number of units produced, the size of the batches, or the specific type of product being made.

Quiz 10: Understanding Insurance

In general, if we compare the traditional full absorption method with ABC, the traditional full absorption method will tend to assign less costs to simple, high-volume products, and less costs to complicated, low-volume products.

A major benefit of resource consumption accounting is that, by separating out fixed and proportional costs, it provides managers with more relevant information for making decisions.

A major benefit of activity-based costing is that it focuses attention on underutilization of production capacity.

The Collet Company makes many colors of paint in its factory. The paint is sold in one-gallon containers. It typically makes 10,000 gallons of a color at a time, then switches to making paint of another color. The cost of heating the factory would be considered a