The major limitation of volume-based costing systems is the use of volume-based:
Volume-based rates produce inaccurate product cost when:
A. A large share of factory overhead cost is not volume-based.
B. Firms produce a diverse mix of products.
C. Large volumes of a product are manufactured.
D. Both answer A and answer B are correct.
E. None of the answers above is correct.
If the usage of project activities is not proportional to the number of units produced, then some managers will be overcharged and others undercharged under the:
A. Activity-based costing
B. Volume-based costing
C. Overhead costing
D. Process …show more content…
B. Understate the cost of low volume products.
C. Understate the cost of high volume products.
D. Understate the cost of all products.
E.Either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved.
23. Which of the following is a batch-level cost driver?
A. Output units.
B. Number of engineering change orders.
C. Number of materials handling transactions.
D. Square feet of plant area occupied.
E. Number of employees.
24. Which of the following activities is a facility-level activity?
A. Materials handling.
B. Plant maintenance.
C. Product inspection.
D. Design engineering.
E. Purchase orders.
25. In an organization that makes furniture, which of the following is a high value-added activity?
A. Using direct materials in production.
B. Inspecting production.
C. Storing finished goods inventory.
D. Moving work-in-process inventory between work stations.
E. Reworking the product to repair defects.
26. Overhead costs are allocated to cost objects in an activity-based costing system in the following manner: A. Overhead costs are traced to departments, then costs are traced to products.
B. Overhead costs are traced to activities, then costs are traced to products.
C. Overhead costs are traced to activities, then costs are traced to departments and then allocated