Fundamental Accounting Principles -Hardcover
22nd Edition
ISBN: 9780077862275
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter C, Problem 10DQ
Samsung must assign overhead costs to its products. Activity-based costing is generally considered more accurate than other methods of assigning overhead. If this is so, why do all manufacturers not use it?
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Which of the following is false about activity-based costing?
Implementing an activity-based costing system is more costly than implementing a traditional cost allocation system.
In ABC, the assumption is that activities use resources or cause costs.
An activity-based costing system relies only on volume measures such as direct labor hours to allocate all overhead costs to products.
A traditional cost allocation system and an activity-based costing system are used to estimate the profitability of products.
Which of the following statements about activity-based costing is not true?
A. activity-based costing is useful for allocating distribution costs.
B. activity-based costing is useful for allocating marketing costs.
C. activity-based costing is more likely to result in major differences from traditional costing systems for firms that produce just one product, rath
than multiple products.
OD. in activity-based costing, it is cost drivers that cause costs to be incurred.
Which of the following statements about activity-based costing (ABC) is false?
Group of answer choices
Activity-based costing differs from traditional costing systems in that products are not cross-subsidized.
Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
Activity-based costing is useful for allocating marketing and distribution costs.
In activity-based costing, cost drivers are what cause costs to be incurred.
Chapter C Solutions
Fundamental Accounting Principles -Hardcover
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following statements about activity-based costing is not true?A. activity-based costing is useful for allocating distribution costs.B. activity-based costing is useful for allocating marketing costs. C. activity-based costing is more likely to result in major differences from traditional costing systems for firms that produce just one product, rather than multiple products.D. in activity-based costing, it is cost drivers that cause costs to be incurred.arrow_forwardSamsung must assign overhead costs to its products. Activity-based costing is generally considered more accurate than other methods of assigning overhead. If this is so, why do all manufacturers not use it?arrow_forwardWhich of the following statements are true? I. Activity-based costing differs from traditional costing systems in that products are NOT cross-subsidized.II. Activity-based costing is more likely to result in major difference from traditional costing systems if the firm make only one product rather than multiple products.III. Activity-based costing uses batch-level, product sustaining-level, and facility-sustaining costs to help assign overhead to products.IV. Activity-based costing is useful for allocating marketing and distribution costs also. Question 8 options: a) II and III are true. b) I, III, and IV are true. c) I and IV are true. d) All of the statements are true.arrow_forward
- Which of the following statements about activity-based costing (ABC) is false? Group of answer choices Activity-based costing is useful for allocating marketing and distribution costs. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only multiple products rather than single product. Activity-based costing differs from traditional costing systems in that it allocates costs according to the rates at which a product consumes different activities. In activity-based costing, all overhead costs are accumulated into a single cost pool and a single cost driver is identified to allocate costs to the cost objects.arrow_forwardWhich of the following statements is true of activity-based costing? O a. ABC ignores the allocation of storage costs. O b. Activities are the cost objects of the second stage of ABC. Ос. An activity cost pool collects costs related to the same activity. O d. ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products.arrow_forwardWhich of the following statements is true regarding activity-based costing systems? ABC costing systems are less complex and, therefore, less costly than traditional systems. ABC costing systems can be used in manufacturing firms only. ABC systems accumulate overhead costs by departments. ABC costing systems have separate indirect cost allocation rates for each activity.arrow_forward
- 1. What is a predetermined overhead rate and explain why many companies use it? 2. Many accountants believe that overhead costs are the main source of product cost distortions. Do you agree or disagree? 3. Explain activity-based product costing.arrow_forwardWhich of the following statements is incorrect? O a. ABC systems lead to higher allocation of overheads to products than traditional systems O b. Corporate overheads are not allocated to products whether companies use ABC or traditional systems Oc. Activity based costing (ABC) systems use cost pools whereas traditional costing systems use cost centres Od. Company size has an impact in the adoption of ABC systems, with large companies adopting them more than smaller companiesarrow_forwardIf 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?arrow_forward
- The following statements refer to organisations that use service costing:(i) The service provided will be a homogenous product.(ii) The cost of materials is relatively small compared to labour, expenses and overheads.(iii) A problem with service costing is the difficulty in defining a realistic cost unit.(iv) Inventory levels are generally high in-service costing industries.Which of the above statements are correct?a) (i) and (ii)b) (ii) and (iii)c) (ii) and (iv)d) (i) and (iv)arrow_forwardThe following statements refer to organisations that use service costing: (i) The service provided will be a homogenous product. (ii) The cost of materials is relatively small compared to labour, expenses and overheads. (iii) A problem with service costing is the difficulty in defining a realistic cost unit. (iv) Inventory levels are generally high in-service costing industries. Which of the above statements are correct? a) (i) and (ii) b) (ii) and (iii) c) (ii) and (iv) d) (i) and (iv)arrow_forwardGoogle generates much of its revenue by providing online advertising. It is said that: “Activity-based costing is only useful for manufacturing companies.” Is this a true statement? Explain.arrow_forward
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