Cost Accounting

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Multiple Choice Questions

16. Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce. A) low, little B) low, considerable C) high, little D) high, considerable

17. Would factory security and assembly activities be best classified at an appliance manufacturing plant as unit-level, batch-level, product-level, or organization-sustaining?

| |Security |Assembly |
|A) |Product |Unit |
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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

42. ABC systems create: A) one large cost pool B) homogenous activity-related cost pools C) activity-cost pools with a broad focus D) activity-cost pools containing many direct costs

44. ABC systems: A) highlight the different levels of activities B) limit cost drivers to units of output C) allocate costs based on the overall level of activity D) generally undercost complex products

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

46. Traditional cost systems distort product costs because: A) they do not know how to identify the appropriate units B) competitive pricing is ignored C) they emphasize financial accounting requirements D) they apply average support costs to each unit of

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