I-A limitation of using the physical output method in allocating joint costs to joint products is that it treats low-value products that are large in size as if they were valuable. II-Joint costs include direct materials, direct labor, and manufacturing overhead. A. Only statement II is true B. Both statements are false C. Both statements are true D. Only statement I is true

I-A limitation of using the physical output method in allocating joint costs to joint products is that it treats low-value products that are large in size as if they were valuable. II-Joint costs include direct materials, direct labor, and manufacturing overhead. A. Only statement II is true B. Both statements are false C. Both statements are true D. Only statement I is true

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 3DQ: Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product...

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For joint cost allocation: only the net realizable method can be used to allocate joint costs to by-products. only the relative sales value method can be used to allocate joint costs to scrap. separable costs do not include disposal costs. no joint costs are allocated to by-products or scrap. the most accurate method is the one using physical measures of output.
Which of the following statements is true? An avoidable fixed production cost incurred before the split-off point in a joint process is relevant in a sell or process further decision. It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs. Which of the following statements is true? Consistency demands that a cost that is relevant in one decision be regarded as relevant in other decisions as well. Variable costs are always relevant costs in decisions.
Which of the following is a false statement about scrap and by-products? Select one: a. Both scrap and by-products are incidental outputs to the joint process. b. Management’s goal is to produce both scrap and by-products. c. Both by-products and scrap are salable. d. A by-product has a higher sales value than does scrap.
Multiple costing is a technique of using two or more costing methods for ascertainment of cost by: a.the same industry for same product b.the same firm for same product c.the several firm for same product d.the several industries for same product Achievement of real and permanent reduction in the unit cost of product is called as: a.Cost control b.Cost reduction c.Cost analysis d.Cost estimation
When making outsourcing decisions, which of the following is true? a. Expected use of the freed capacity is irrelevant. b. The variable cost of producing the product in-house is relevant. c. The total manufacturing unit cost of making the product in-house is relevant. d. Avoidable fixed costs are irrelevant.
Which of the following statements best describes a by-product? Multiple Choice A product created along with the main product whose sales value does not cover its cost of production. A product that is produced from material that would otherwise be scrap. A product that usually produces a small amount of revenue when compared to the main product's revenue. A product that has a lower unit selling price than the main unit. A product that has a selling price similar to that of the main product.
1. By-products are Select one: a. not sufficient alone, in terms of sales value, for management to justify undertaking the joint process. b. the primary reason management undertook the production process. c. also known as scrap. d. items resulting from a joint process that have no further value. 2. Which of the following is a false statement about scrap and by-products? Select one: a. Both scrap and by-products are incidental outputs to the joint process. b. Management’s goal is to produce both scrap and by-products. c. Both by-products and scrap are salable. d. A by-product has a higher sales value than does scrap. 3. The definition of a sunk cost is Select one: a. a cost that relates to money poured into theground. b. considered the original cost of an item. c. also known as an opportunity cost. d. a cost that cannot be recovered regardless of what happens.
Please explain thoroughly with examples. Which statement(s) is True/False and why? If none are true, please restate them to be true. 1. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the high volume products. 2. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the low volume products. 3. When a company implements activity-based costing, manufacturing overhead cost is often shifted from high volume products to low volume products, with a higher unit cost resulting for the high volume products. 4. When a company implements activity-based costing, manufacturing overhead cost is often shifted from high volume products to low volume products, with a higher unit cost resulting for the low volume products.
Which of the following statement is false? Multiple Choice Fixed manufacturing overhead is treated as a product cost under absorption costing method. Variable costing method is more useful than absorption costing approach in internal and managerial decision-making. The absorption costing approach is used in external financial reporting. The contribution margin income statement format separates costs according to cost behaviour. Fixed manufacturing overhead is treated as a period cost under absorption costing method.
If the Activity-Based Costing (ABC) method's main intention is to find a possibility to cut the Overhead and indirect costs from the cost of production, is the blow statement correct? Please explain thoroughly with examples and restate the correct statement if it is false. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a lower unit cost resulting for the high volume products. When a company implements activity-based costing, manufacturing overhead cost is often shifted from high volume products to low volume products, with a higher unit cost resulting for the low volume products. Does the shift from low-volume to high-volume or vice versa affect the product cost?
ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on
Indirect costs occur when? A. Resources are shared by more than one product or service. B. Costs cannot be directly traced to products or services. C. Multiple departments share a piece of equipment or facility. D. All of the above are correct.