ACC 100 Lecture Notes - Lecture 8: Activity-Based Costing, Cost Driver, Cost Accounting

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ochrecrocodile426

21 Apr 2016

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Functional based system are based on volume measures such as: direct labor hours, and machine hours, and there are two types: plant wide rates, and departmental rates. Two major factors impair their ability to assign overhead costs accurately: the proportion of non unit related overhead costs to total overhead charge is large, the degree of product diversity is great. Cost driver: a factor that drives or causes costs. Unit level drivers: single use costs direct material, direct labor, and overhead. Batch level drivers: products or services delivered in batches, such as purchase orders, equipment, maintenance, equipment deprecation, and quality control. Depends on the number of units produced, high the number the less the overhead, lower the number the more the overhead costs. Unit level activates: activities that are performed each time a unit is produced. Non unit level activities: activities that are not performed each time a unit is produced, these costs vary in some other factor or factors.

Related Questions

1.If there is a change in the level of the number of unitsproduced:
a.fixed costs per unit will be the same and variable costs per unitwill change.
b.fixed and variable costs per unit will change.
c.fixed and variable costs per unit will remain the same.
d.fixed costs per unit will change and variable costs per unit willbe the same.

2.Which of the following will decrease a companyâs breakevenpoint?
A) Decreasing the contribution margin per unit.
B) Increasing the variable cost per unit.
C) Increasing the total fixed costs.
D) Increasing the selling price per unit.

	3.In generating cost information fordetermining whether or not to delete a product line, the mostimportant distinction to identify is:
	A)	direct versus indirect costs
	B)	fixed versus variable costs
	C)	manufacturing versus non-manufacturing costs
	D)	avoidable versus unavoidable costs

4.Which of the following is the proper sequence in anactivity-based costing system?
A) Identification of cost drivers, identification ofcost pools, calculation of cost application rates, assignment ofcost to products.
B) Identification of cost pools, identification of costdrivers, calculation of cost application rates, assignment of costto products.
C) Assignment of cost to products, identification ofcost pools, identification of cost drivers, calculation of costapplication rates,.
D) Calculation of cost application rates,identification of cost drivers, identification of cost pools,assignment of cost to products.

5.Which of the following statements is true?
A) A traditional volume-based system based on directlabor generally undercosts high volume product lines.
B) In a traditional volume-based costing system basedon direct labor, low volume products generally subsidize highvolume products.
C) An activity-based costing system generallyundercosts low-volume, complex product lines.
D) A traditional volume-based costing system based ondirect labor generally undercosts low-volume, complex productlines.

6.Hamilton Company applies overhead based on direct labor hours.At the beginning of 2005, the company estimated that manufacturingoverhead would be $700,000, and direct labor hours would be 10,000.Actual overhead by the conclusion of 2005 amounted to $800,000 andactual direct labor hours were 14,000. On the basis of thisinformation, Horton's 2005 predetermined overhead rate is:
A) $50.00
B) $70.00
C) $80.00
D) $57.14

pearpig306

1- Which of the following costs is the most likely to be allocated to a product in a traditional job costing environment?

A. Direct materials

B. Direct labor

C. Manufacturing overhead

D. Selling and administrative

2. An allocation base that causes overhead costs to be incurred is called a:

A. revenue drives.

B. predetermined driver.

C. cost driver.

D. applied driver.

3. Which of the following statements is true regarding cross-subsidies

A. they occur when factory workers are trained to work on many different machines,

B. they occur when high-volume products are assigned more than their fair share of overhead costs,

C. they occur when high-volume products have more direct material and direct labor costs than overhead costs.

D. They occur when more than one cost driver cat he determined for a particular overhead cost item.

4. Which of the following is true regarding activity-based costing (ABC)?

A. The benefits of using ABC always outweigh its limitations.

B. the lower the proportion of Overhead costs as compared to direct materials and direct labor costs, the more likely a company, will benefit by using ABC.

C. Companies with a high-proportion of non-unit -level costs should rarely use ABC.

D. High measurement costs associated with ABC may deter some companies from its use.
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ACC 100 Lecture Notes - Lecture 8: Activity-Based Costing, Cost Driver, Cost Accounting

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