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)
- Which of the following statements is true of a peanut-butter costing system?
- Overcosting a particular product may result in ________.
- For a company with diverse products, undercosting overhead of a product will lead to ________.
- 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?
- Product-cost cross-subsidization ________.
- An accelerated need for refined cost systems is due to ________.
- Uniformly assigning the costs of resources to cost objects when those resources are actually used in a nonuniform way is called ________.
- Product-cost cross-subsidization is very common when costs are uniformly spread across various products.
- Companies that overcost products will most likely lose market share.
- 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.
- 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.
- Peanut-butter costing system is a more refined costing system compared to activity-based costing system.
- Explain how a top-selling product may actually result in losses for the company……………………….Continued (65 Pages)