ACC 350 Week 6 Quiz 4 – TestBank

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ACC 350 Week 6 Quiz 4 Chapter 5 Activity-Based Costing and Activity-Based Management (160 Questions and Answers)

Cost Accounting, 15e (Horngren/Datar/Rajan)

  1. Which of the following statements is true of a peanut-butter costing system?
  2. Overcosting a particular product may result in ________.
  3. For a company with diverse products, undercosting overhead of a product will lead to ________.
  4. Aqua Company produces two products -Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is based on customer orders and is custom designed. 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. Which of the following statements is true of Aqua?
  5. Product-cost cross-subsidization ________.
  6. An accelerated need for refined cost systems is due to ________.
  7. Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called ________.
  8. Product-cost cross-subsidization is very common when costs are uniformly spread across various products.
  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 compared to activity-based costing system.
  13. Explain how a top-selling product may actually result in losses for the company……………………….Continued (65 Pages)