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Managerial Accounting 11th canadian edition By Garrison – Test Bank

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  • ISBN-10 ‏ : ‎ 1259275817
  • ISBN-13 ‏ : ‎ 978-1259275814

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SKU:tb1002434

Managerial Accounting 11th canadian edition By Garrison – Test Bank

Chapter 07
Activity-Based Costing: A Tool to Aid Decision Making

Multiple Choice Questions

1. Costs incurred at which of the following activity levels should NOT be allocated to products for decision-making purposes?
A. Unit-level activities.
B. Batch-level activities.
C. Product-level activities.
D. Organization-sustaining activities.

Blooms: Understand
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Medium
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

2. Testing a prototype of a new product is an example of an activity at which of the following levels?
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Organization-sustaining activity.

Blooms: Remember
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Easy
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

3. Setting up equipment is an example of an activity at which of the following levels?
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Organization-sustaining activity.

Blooms: Remember
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Medium
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

4. Which of the following activity levels is an example of the clerical activity associated with processing purchase orders to produce an order for a standard product?
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Organization-sustaining activity.

Blooms: Understand
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Hard
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

5. Worker recreational facilities are examples of costs that would ordinarily be considered to be incurred at which of the following activity levels?
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Organization-sustaining activity.

Blooms: Understand
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Medium
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

6. Arranging for a shipment of a number of different products to a customer is an example of an activity at which of the following levels?
A. Unit-level activity.
B. Batch-level activity.
C. Customer-level activity.
D. Organization-sustaining activity.

Blooms: Understand
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Medium
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

7. Human resource management is an example of an activity at which of the following levels?
A. Unit-level activity.
B. Product-level activity.
C. Batch-level activity.
D. Organization-sustaining activity.

Blooms: Understand
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Medium
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

8. Which of the following would be classified as a product-level activity?
A. Machine setup for a batch of a standard product.
B. Cafeteria facilities available to and used by all employees.
C. Human resource management.
D. Advertising a product.

Blooms: Understand
CPA Competency: 3.3.2 Evaluates and applies cost management techniques appropriate for specific costing decisions.
Difficulty: Medium
Learning Objective: 07-01 Explain the activity-based costing model and how it differs a traditional costing system.
Topic: 07-05 Overhead Cost Pools, Allocation Bases, and Activity-Based Costing
Topic: 07-06 Activity Rates Based on Capacity, Not Budget

9. Why may departmental overhead rates NOT correctly assign overhead costs?
A. Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials.
B. Because of the high correlation between direct labour hours and the incurrence of overhead costs.
C. Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.
D. Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.

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