XYZ is considering to adopt an activity based costing systems. They found that an activity-base a. use a single, volume-based cost driver. b. assign overhead to products based on the products' relative usage of direct labor. c. often reveal products that were under- or over-costed by traditional costing systems. Od. typically use fewer cost drivers than more traditional costing systems. e. have a tendency to distort product costs.

XYZ is considering to adopt an activity based costing systems. They found that an activity-base a. use a single, volume-based cost driver. b. assign overhead to products based on the products' relative usage of direct labor. c. often reveal products that were under- or over-costed by traditional costing systems. Od. typically use fewer cost drivers than more traditional costing systems. e. have a tendency to distort product costs.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 12MC: Which statement is correct? A. Activity-based cost systems are less costly than traditional cost...

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Which of the following is a reason a company would implement activity-based costing? A. The cost of record keeping is high. B. The additional data obtained through traditional allocation are not worth the cost. C. They want to improve the data on which decisions are made. D. A company only has one cost driver.
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
Which statement is correct? A. Activity-based cost systems are less costly than traditional cost systems. B. Activity-based cost systems are easier to implement than traditional cost systems. C. Activity-based cost systems are more accurate than traditional cost systems. D. Activity-based cost systems provide the same data as traditional cost systems.
Why is the direct labor cost category eliminated in many lean manufacturing environments?
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When might activity-based costing be preferred over using a relative amount of product sales in allocating selling and administrative expenses to products?
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.
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