Costing Systems

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Chapter 5: Activity-Based Costing MULTIPLE CHOICE QUESTIONS 1. Consider the following statements regarding traditional costing systems: I.Overhead costs are applied to products on the basis of volume-related measures. II.All manufacturing costs are easily traceable to the goods produced. III.Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements. Which of the above statements is (are) true? A. I only. B. II only. C. III only. D. I and III. E. II and III. Answer: D LO: 1 Type: N 2. Many traditional costing systems: A. trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates. B. write off…show more content…
II.They must be done for each unit of product that is made. III.They are needed to support an entire product line. Which of the above statements is (are) true? A. I only. B. II only. C. III only. D. I and II. E. II and III. Answer: C LO: 3 Type: RC 12. Which of the following is least likely to be classified as a facility-level activity in an activitybased costing system? A. Plant maintenance. B. Property taxes. C. Machine processing cost. D. Plant depreciation. E. Plant management salaries. Answer: C LO: 3 Type: RC Chapter 5 111 13. The salaries of a manufacturing plant's management are said to arise from: A. unit-level activities. B. batch-level activities. C. product-sustaining activities. D. facility-level activities. E. direct-cost activities. Answer: D LO: 3 Type: RC 14. Which of the following choices correctly depicts a cost that arises from a batch-level activity and one that arises from a facility-level activity? Batch-Level Facility-Level Activity Activity A. Direct materials Plant depreciation B. Inspection Property taxes C. Quality assurance Shipping D. Plant maintenance Insurance E. Management salaries Material handling Answer: B LO: 3 Type: RC 15. The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost: object. application method. hierarchy. estimation method. classification scheme that is useful in traditional, volume-based
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