ACC 350 Final Exam – TestBank

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ACC 350 Final Exam Chapter 5, Activity-Based Costing and Activity-Based Management

Cost Accounting, 15e (Horngren/Datar/Rajan) – More than 1000 Questions and Answers

  1. Which of the following statements is true of a peanut-butter costing system?
    A) A peanut-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 ….to assign costs to other cost objects such as products or services based on the activities the products or services consume.
  2. Overcosting a particular product may result in acc 350 final exam ________.
    A) loss of market share
    B) pricing the product too low
    C) operating efficiencies
    D) understating total product costs
  3. For a company with diverse products, undercosting overhead of a product will lead to ________.
    A) misallocating direct labor costs of the product acc 350 final exam
    B) misallocating direct material costs of the product
    C) misallocating indirect costs of another product
    D) misallocating direct costs of another product
  4. Aqua Company produces two products -Alpha and Beta. Alpha has a high market share and is …..in bulk. Production of Beta is based on customer orders and is custom ……. Also, 55% of Beta’s cost is shared between design and setup costs, while Alpha’s major portions of costs are direct costs. Alpha is using a single cost pool to allocate indirect costs. acc 350 final exam 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 ….indirect costs.
    B) Aqua will undercost Alpha’s indirect costs because alpha has high direct costs
    C) Aqua will …..Alpha’s indirect costs as it is using a single cost pool to allocate indirect costs.
    D) Aqua will overcost Beta’s indirect costs because beta has high indirect costs.
  5. Product-cost cross-subsidization ________.
    A) exists when one over costed product results in more than one other product being overcosted
    B) means that if a company under costs more than one of its products, it will overcost more than one of its other products
    C) means that if a company under costs one of its products, it will overcost at least one of its other products acc 350 final exam
    D) exists only when one over costed product results in all other products being overcosted
  6. An accelerated need for refined cost systems is due to ________.
    A) global monopolies
    B) rising prices
    C) intense competition
    D) a shift toward increased direct costs
  7. Uniformly assigning the costs of resources to cost objects when those resources are actually …..in a nonuniform way is ________.
    A) activity-based costing
    B) uniform costing
    C) peanut-butter costing
    D) department costing
  8. Product-cost cross-subsidization is very common when costs are uniformly ….across various products acc 350 final exam
  9. Companies that overcost products will most likely lose market share
  10. If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.
  11. As product diversity and indirect costs increase, it is usually best to switch away from a broad averaging system to an activity-based cost system.
  12. Peanut-butter costing system is a more refined costing system …..to activity-based costing system
  13. Explain how a top-selling product may actually result in losses for the company………………………………………………………………….Continued (375 Pages)acc 350 final exam