26) Which of the following is NOT considered to be part of the cost hierarchy often used to implement ABC?
A) Unit-level activity
B) Batch-level activity
C) Product-level activity
D) Production-level activity
27) Which of the following describes how, in ABC, the activity allocation rate is computed?
A) The total estimated activity cost pool is divided by the total estimated activity allocation base.
B) The total estimated activity allocation base is divided by the total estimated activity cost pool.
C) The total estimated activity allocation base is multiplied by the total estimated activity cost pool.
D) You take the total estimated activity allocation base and subtract the total estimated total activity cost pool.
28) What is the last step in developing an ABC system?
A) Identify the primary activities and estimate a total cost pool for each.
B) Allocate the costs to the cost object using the activity cost allocation rates.
C) Select an allocation base for each activity.
D) Calculate an activity cost allocation rate for each activity.
29) Which of the following statements does NOT describe an ABC system?
A) ABC systems can create more accurate product costs.
B) ABC systems may only be used by service companies.
C) ABC systems are more complex and costly than traditional costing systems.
D) ABC systems are used in both manufacturing and nonmanufacturing companies.
30) Which of the following can be used in conjunction with activity-based costing?
A) Job costing
B) Process costing
C) Neither A nor B
D) Both A and B
31) The ________ system focuses on activities as the fundamental cost objects. It uses the costs of those activities as building blocks for compiling the indirect costs of products and other cost objects.
A) activities-based costing
B) job costing
C) process costing
D) product costing
32) ABC costing might lead to:
A) cutting back on high-volume products that appear unprofitable.
B) expanding low-volume products that appear profitable.
C) raising the sale price of high-volume products.
D) raising the sale price of low-volume products.
33) Which of the following is NOT likely to be a cost driver of activities associated with determining product cost?
A) Number of cost accountant's labor hours
B) Number of material requisitions
C) Number of product inspections
D) Number of production orders
34) Which of the following is MOST likely to be the cost driver for the packaging and shipping activity?
A) Number of orders shipped
B) Number of setups
C) Number of units produced
D) Hours of testing
35) All of the following are activities in an activity-based costing system that determine the cost of a manufactured product except for:
A) accounting.
B) inspecting.
C) machining.
D) materials handling.