Cost Accounting, 15e (Horngren/Datar/Rajan)
Chapter 5 Activity-Bad Costing and Activity-Bad Management
Objective 5.1
1) Which of the following statements is true of a peanut-butter costing system?
A) A peanut无证酒驾
-butter costing system typically has more-homogeneous indirect cost pools.
B) A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects.
C) A peanut-butter costing system assumes that all costs are variable.
D) In a peanut-butter costing system, costs of activities are ud to assign costs to other cost objects such as products or rvices bad on the activities the products or rvices consume.
Answer: B
Diff: 2
O玉米汁的功效与作用
bjective: 1
AACSB: Analytical thinking
2) Overcosting a particular product may result in ________.
A) loss of market share
B) pricing the product too low
C) operating efficiencies
D) understating total product costs
Answer: A
Diff: 2
Objective: 1
AACSB: Analytical thinking
3) For a company with diver products, undercosting overhead of a product will lead to ________.
A) misallocating direct labor costs of the product.
B) misallocating direct material costs of the product
C) misallocating indirect costs of another product
D) misallocating direct c苏轼的生平经历
osts of another product
Answer: C
Diff: 2
Objective: 1
AACSB: Analytical thinking
4) Aqua Company一个字网名
produces two products–Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is bad on customer orders and is custom designed. Also, 55% of Beta's cost is shared between design and tup costs, while Alpha's major portions of costs
are direct costs. Alpha is using a single cost pool to allocate indirect costs. Which of the following statements is true of Aqua?
A) Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs.
B) Aqua will undercost Alpha's indirect costs becau alpha has high direct costs.
C) Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs.
D) Aqua will overcost Beta's indirect costs becau beta has high indirect costs.
Answer: C
Diff: 2
Objective: 1
AACSB: Application of knowledge
5) Product-cost cross-subsidization ________.
A) exists when one overcosted product results in more than one other product being overcosted
B) means that if a company undercosts more than one of its products, it will overcost more than one of its other products
C) means that if a company undercosts one of its products, it will overcost at least one of its other products
D) exists only when one overcosted product results in all other products being overcosted
Answer: C
Diff: 2
Objective: 1
AACSB: Analytical thinking
6) An accelerated need for refined cost systems is due to ________.
A) global monopolies
B) rising prices
C) inten competition
D) a shift toward incread direct costs
Answer: C
Diff: 2
Objective: 1
AACSB: Analytical thinking
7) Uniformly assigning the costs of resources to cost objects when tho resources are actually ud in a nonuniform way is called ________.
A) activity-bad costing
B) uniform costing
C) peanut-butter costing
D) department costing
Answer: C
Diff: 1
Objective: 1
AACSB: Analytical thinking
8) Product-cost cross-subsidization is very common when costs are uniformly spread across various products.
Answer: TRUE
Diff: 2
Objective: 1
AACSB: Analytical thinking
9) Companies that overcost products will most likely lo market share.
Answer: TRUE
Diff: 1
Objective: 1
AACSB: Analytical thinking
10) If companies increa market share in a given product line becau their reported costs are less than their actual costs, they will become more profitable in the long run.
Answer: FALSE
Explanation: The actual costs will increa becau of the additional sales and the other product lines (which are subsidizing the undercosting of the growing product line) will suffer. The net result will be the company having a lower operating income than it could have had.
Diff: 2
Objective: 1
AACSB: Analytical thinking
11) As product diversity and indirect costs increa, it is usually best to switch away from a broad averaging system to an activity-bad cost system.
Answer: TRUE
Diff: 1
Objective: 1
AACSB: Analytical thinking
12) Peanut-butter costing system is a more refined costing system compared to activity-bad costing system.
Answer: FALSE
Explanation: Activity-bad costing system is a more refined costing system compared to peanut-butter costing system.
Diff: 2
Objective: 1
AACSB: Analytical thinking
13) Explain how a top-lling product may actually result in loss for the company.
Answer: If indirect costs are not properly allocated to the products, a p左的英文单词
roduct may appear to cost less than it actually does cost to produce. If the lling price is bad on the lower costs, the lling price may actually be lower than the costs needed to produce the product resulting in loss for the company. Diff: 2
Objective: 1
AACSB: Analytical thinking
Objective 5.2
1) Refining a cost system includes ________.
A) classifying as many costs as indirect costs as is feasible
B) creating as many cost pools as possible
C) identifying the activities involved in a process
D) eking a lesr level of detail
Answer: C
Diff: 1
Objective: 2
AACSB: Analytical thinking
2) Which of the following is true of refinement of a costing system?
A) While refining a costing system, companies should identify as many indirect costs as is economically feasible.
B) A homogeneous cost pool will u multiple cost drivers to allocate costs.
C) It reduces the u of broad averages for assigning the cost of resources to cost objects.
D) It is likely to yield the most decision-making benefits when direct costs are a high percentage of total costs.
Answer: C
Diff: 2
Objective: 2
AACSB: Analytical thinking
3) Which of the following is a reason that has accelerated the demand for refinements to the costing system?
A) The declining demand for customized products has led managers to decrea the variety of products and rvices their companies offer.
B) The u of product and process technology has led to an increa in indirect costs and a decrea in direct costs.
C) The incread of automated process has led to the increa in direct manufacturing cost leading to a四字成语唯美
decrea in breakeven point.
D) The increasing competition in product markets has led to an increa in contr钢笔工具抠图
ibution margin resulting in a decrea of breakeven point.
Answer: B
Diff: 3
Objective: 2
AACSB: Analytical thinking
4) Demand for refinements to the costing system has accelerated due to ________.
A) increa in direct costs
B) decrea in product diversity
C) decrea in indirect costs
D) competition in product markets
Answer: D
Diff: 1
Objective: 2
AACSB: Analytical thinking
5) Collin Inc. produces hospital equipment and the tup requirements vary from product to product. Collin produces its products bad on customer orders and us ABC costing. In one of its indirect cost pools, tup costs and distribution costs are pooled together. Costs in this pool are allocated using number of customer orders for the easiness of costing operations. Bad on the information provided, which of the following arguments is valid?
A) Collin has clearly failed to identify as many direct costs as is economically feasible.
B) All costs in a homogeneous cost pool have the same or a similar cau-and-effect relationship with the single cost driver that is ud as the cost-allocation ba for Collin.
C) Collin has unnecessarily wasted resources by classifying tup and distribution costs as they could have been considered as direct costs.
D) Collin has failed to u the correct cost driver as the cost-allocation ba for tup costs.
Answer: D
Diff: 1
Objective: 2
AACSB: Application of knowledge
6) When refining a costing system, a company should classify as many costs as possible as indirect costs, thereby minimizing the extent to which costs have to be traced rather than allocated.
Answer: FALSE
Explanation: When refining a costing system, a company should classify as many costs as possible as direct costs, thereby minimizing the extent to which costs have to be traced rather than allocated.
Diff: 2
Objective: 2
AACSB: Analytical thinking
7) A refined costing system provides better measurement of the costs of indirect resources ud by different cost objects, no matter how differently various cost objects u indirect resources.
Answer: TRUE
Diff: 1
Objective: 2
AACSB: Analytical thinking
8) Indirect labor and distribution costs would most likely be in the same activity-cost pool.
Answer: FALSE
Explanation: Indirect labor and distribution costs would not be in the same activity-cost pool becau their cost drivers are very dissimilar. A cost driver of indirect labor would include direct labor hours, while a cost driver of distribution costs would include, for example, cubic feet of cargo moved.
Diff: 2
Objective: 2
AACSB: Analytical thinking
9) Direct tracing of costs reduces the amount of costs classified as indirect costs.
Answer: TRUE
Diff: 1
Objective: 2
AACSB: Analytical thinking
