1. If management wants the most accurate product cost, which of the following costing methods should be used? O Normal costing using a plantwide overhead rate. O Activity-based costing. O Volume-based costing using a plantwide overhead rate. O Volume-based costing using departmental overhead rates. 2. Which costing method tends to overstate the cost of high-volume products? O Differential costing. O Job order costing.

1. If management wants the most accurate product cost, which of the following costing methods should be used? O Normal costing using a plantwide overhead rate. O Activity-based costing. O Volume-based costing using a plantwide overhead rate. O Volume-based costing using departmental overhead rates. 2. Which costing method tends to overstate the cost of high-volume products? O Differential costing. O Job order costing.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 13MC: Activity-based costing systems: A. use a single predetermined overhead rate based on machine hours...

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Similar questions

Which is not a step In activity-based costing? A. identify the activities performed by the organization B. identify the cost driver(s) associated with each activity C. compute a cost rate per production D. assign costs to products by multiplying the cost driver rate by the volume of the cost driver units consumed by the product
Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately.
Happy Trails has this information for its manufacturing: Â Its income statement under absorption costing is: Prepare an income statement with variable costing and a reconciliation statement between both methods.
Lean manufacturing uses value streams to produce a family of products that require the same manufacturing sequence. Value-stream costing is an approach often used to determine the unit product costs in a lean manufacturing environment. Which of the following best describes how unit costs are calculated using value-stream costing? a. Value stream costs divided by units shipped b. Value stream costs divided by units produced c. (Total prime costs + overhead costs assigned to the value stream using a plantwide rate) divided by units produced d. Activity-based costing assignments within the value stream
Activity-based costing systems: A. use a single predetermined overhead rate based on machine hours instead of on direct labor B. frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product C. limit the number of cost pools D. always result in an increase of at least one products selling price
Which of the following statements is true? a. Job-order costing is used only in manufacturing firms. b. Process costing is used only for services. c. Job-order costing is simpler to use than process costing because the recordkeeping requirements are less. d. The job cost sheet is subsidiary to the work-in-process account. e. All of these.
Activity-based costing is preferable in a system: when multiple products have similar product volumes and costs with a large direct labor cost as a percentage of the total product cost with multiple, diverse products where management needs to support an increase in sales price
The second stage of customer-based activity-based costing entails the assignment of: a. resource costs to sales departments. b. resources costs to distribution channels. c. customer-related activity costs to products. d. customer-related activity costs to customers.
When might activity-based costing be preferred over using a relative amount of product sales in allocating selling and administrative expenses to products?
Which of the following production characteristics is better suited for process costing and not job order costing? Each product batch is distinguishable from the prior batch. The costs are easily traced to a specific product. Costs are accumulated by department. The value of work in process is the direct material used, the direct labor incurred, and the overhead applied to the job in process.
Trail Outfitters has this information for its manufacturing: Its income statement under absorption costing is as follows: Prepare an income statement with variable costing and a reconciliation statement between both methods.
Why does a company use a standard costing system? A. to identify variances from actual cost that assist them in maintaining profits B. to identify nonperformers in the workplace C. to identify what vendors are unreliable D. to identify defective materials