The main difference between activity-based costing and traditional costing systems is that activity-based costing uses a separate allocation rate for each activity. (Points : 1) 
True 
False 


2. Peterson Company has both fixed and variable costs. If the volume doubles, the total fixed costs will double. (Points : 1) 
True 
False 


3. Two main benefits of activity-based costing are more accurate product cost information and more detailed information on costs of activities and the drivers of these costs. (Points : 1) 
True 
False 


4. Which of the following statements is CORRECT with respect to variable cost per unit, within the relevant range? (Points : 1) 
It will increase as production decreases.
It will decrease as production decreases.
It will remain the same as production levels change.
It will decrease as production increases.


5. Jenny was reviewing the water bill for her doggy day spa and determined that her highest bill, $1,700, occurred in July when she washed 800 dogs and her lowest bill, $900, occurred in November when she washed 400 dogs. What was the fixed cost associated with Jenny's water bill? (Points : 1) 
$150
$300
$100
$200
None of these is correct


6. Activity-based management refers to using activity-based cost information to make decisions that increase profits while satisfying customers' needs. (Points : 1) 
True 
False 


7. Dalian Company provides the following information:


Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000


What is the breakeven point in terms of sales revenues? (Points : 1) 
$18,500
$25,000
$37,500
$22,750


8. Activity-based costing systems and traditional costing systems will produce the same results for product cost and profitability, although they use different methods of calculation. (Points : 1) 
True 
False 


9. Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. There are no direct labor costs. Additional information follows:

Activity Allocation Base Cost Allocation Rate 
Materials handling Number of parts $ .08 
Machining Machine hours $7.20 
Assembling Number of parts $.35 
Packaging Number of finished units $2.70 



What is the total manufacturing cost per ceiling fan? (Points : 1) 
$125.75
$121.13
$115.32
$124.30
None of these is correct


10. Fixed costs per unit decrease as production levels decrease. (Points : 1) 
True 
False


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