Practice Test

Q1) ABC is a traditional system of cost allocation Show Answer

Q2) ABC involves identification of activities and cost associated with it. Show Answer

Q3) Cost driver is an activity that generates cost Show Answer

Q4) Cost driver may be structural Show Answer

Q5) ABC provides more accurate information Show Answer

Q6) Inspection plan is a cost driver for customer order processing Show Answer

Q7) No of orders is a cost driver for inspection activity Show Answer

Q8) Recruitment activity is a cost driver for personal activity. Show Answer

Q9) Volume of activity is a cost driver for financial accounting activity. Show Answer

Q10) Reduction of set up time reduces cost Show Answer

Q11) Reduction of direct labour reduces cost. Show Answer

Q12) ABC is a Show Answer

Q13) An Activity which generates cost is a Show Answer

Q14) The customer order processing activity has cost driver Show Answer

Q15) ABC stands for Show Answer

Q16) Documentation activity has cost driver Show Answer

Q17) ABC based costing Show Answer

Q18) ABC tries to Show Answer

Q19) The steps in ABC include: Show Answer

Q20) A cost driver is an Show Answer

Q21) Cost drivers may be Show Answer

Q22) No. of purchase orders is an Show Answer

Q23) No of inspections is an Show Answer

Q24) ABC provides information which is Show Answer

Q25) Cost driver for customer order processing is Show Answer

Q26) Cost driver for inspection activity is Show Answer

Q27) Cost driver for inspection activity is Show Answer

Q28) Cost driver for production activities is Show Answer

Q29) Cost driver for personal activities is Show Answer

Q30) Cost driver for financial accounting activity is Show Answer

Q31) Under ABC cost reduction is achieved by Show Answer

Q32) Under traditional costing cost reduction is achieved by Show Answer

Q33) ABC cannot be applied where Show Answer

Q34) Implementation of ABC system is possible when Show Answer

Q35) Following is not a facility level activity. Show Answer

Q36) Machine set up is a Show Answer

Q37) Inspection is the Show Answer

Q38) Testing of product is a Show Answer

Q39) Following is not a product line activity Show Answer

Q40) Plant security is a Show Answer

Q41) Loading machine is a Show Answer

Q42) Product designing is a Show Answer

Q43) Building depreciation is a Show Answer

Q44) ABM has a Show Answer

Q45) ABM is the application of Show Answer

Q46) ABM helps in the management in Show Answer

Q47) ABM implementation requires support of Show Answer

Q48) ABM is the application of Show Answer

Q49) ABM helps in the management in Show Answer

Q50) ABM implementation requires support of Show Answer

Q51) ABC Show Answer

Q52) ABC emphasizes Show Answer

Q53) ABC identifies Show Answer

Q54) ABC focuses on Show Answer

Q55) Implementation of ABM requires Show Answer

Q56) In ABC indirect costs are allocated to the products based on Show Answer

Q57) Four basic steps are used in an ABC system. List the proper order of these steps given below:
(a) Identify the primary activities and estimate a total cost pool for each
(b) Allocate the costs to the cost object using the activity cost allocation rates
(c) Select an allocation base for each activity
(d) Calculate an activity cost allocation rate for each activity.
Show Answer

Q58) Four basic steps are used in an ABC system. List the proper order of these steps given below:
(a) Identify the primary activities and estimate a total cost pool for each
(b) Allocate the costs to the cost object using the activity cost allocation rates
(c) Select an allocation base for each activity
(d) Calculate an activity cost allocation rate for each activity.
Show Answer

Q59) All of the following are considered to be part of the activity levels often used to implement ABC, with the exception of Show Answer

Q60) Which of the following systems focuses on activities as the fundamental cost objects and uses the costs of those activities for compiling the indirect costs of products? Show Answer

Q61) Regarding activity-based costing systems, which of the following statements is true? Show Answer

Q62) Examples of activities at the batch level of costs include: Show Answer

Q63) Examples of activities at the product level of costs include: Show Answer

Q64) Which of the following is typically regarded as a cost driver in traditional accounting practices? Show Answer

Q65) The term cost driver refers to Show Answer

Q66) Cost allocation bases in activity-based costing should be Show Answer

Q67) Costs that are common to many different activities within an organisation are known as _____ costs. Show Answer

Q68) Relative to traditional product costing, activity-based costing differs in the way costs are Show Answer

Q69) Activity rates are determined by Show Answer

Q70) Providing the power required to run production equipment is an example of a Show Answer

Q71) The following tasks are associated with an activity-based costing system:
(1) Calculation of cost application rates
(2) Identification of cost drivers
(3) Assignment of cost to products
(4) Identification of cost pools
Which of the following choices correctly expresses the proper order of the preceding tasks?
Show Answer

Q72) Which of the following is not a broad, cost classification category typically used in activity-based costing? Show Answer

Q73) In an activity-based costing system, direct materials used would typically be classified as a Show Answer

Q74) In an activity-based costing system, materials receiving would typically be classified as a Show Answer

Q75) The salaries of a manufacturing plant’s management are said to arise from Show Answer

Q76) An activity that has a direct cause-effect relationship with the resources consumed is a (n) Show Answer

Q77) A well-designed activity-based costing system starts with Show Answer

Q78) Assigning overhead using ABC will usually Show Answer

Q79) The primary benefit of ABC is it provides Show Answer

Q80) Which of the following is not a benefit of activity-based costing? Show Answer

Q81) Which of the following is a limitation of activity-based costing? Show Answer

Q82) Which of the following is not a facility-level activity? Show Answer

Q83) Which of the following is not a product-level activity? Show Answer

Q84) Which of the following is not a batch-level activity? Show Answer

Q85) Which of the following is not a unit-level activity? Show Answer

Q86) Which of the following is not a facility-level activity? Show Answer

Q87) Which of the following is not a product-level activity? Show Answer

Q88) Which of the following is not a batch-level activity? Show Answer

Q89) Which of the following is not a unit-level activity? Show Answer

Q90) Which of the following is a unit-level activity? Show Answer

Q91) Which of the following is a batch-level activity? Show Answer

Q92) Which of the following is a product-level activity? Show Answer

Q93) Which of the following is a facility-level activity? Show Answer

Q94) Activities required to support or sustain an entire production process are called Show Answer

Q95) Cost allocation bases in activity-based costing should be Show Answer

Q96) What is the purpose of ABC? Show Answer

Q97) What type of activity is the cost of processing purchase orders? Show Answer

Q98) What type of activity is the cost of designing products? Show Answer

Q99) Which one of the following is the most appropriate cost driver for the ordering and receiving materials cost pool? Show Answer

Q100) In an activity-based cost system, to what does ‘pooling costs’ refer? Show Answer

Q101) What is one aspect of ABC that differs from traditional costing? Show Answer

Q102) ABC is Show Answer

Q103) Which of the following is a typical cost pool? Show Answer

Q104) In establishing an Activity Based Costing System, an organization’s goal is to Show Answer

Q105) Cost drivers are Show Answer

Q106) How is an activity cost rate calculated when using ABC to assign manufacturing overhead costs? Show Answer

Q107) Which one of the following is a collection of overhead costs related to a cost object? Show Answer

Q108) An accounting system that collects financial and operating data on the basis of the underlying nature and extent of the cost drivers is Show Answer

Q109) Traditional Costing allocates overheads on the basis of _____. Show Answer

Q110) ABC allocates overheads on the basis of _____. Show Answer

Q111) _____ costing is defined as “Cost attribution to cost units on the basis of benefits received from indirect activities i.e. ordering, setting-up, assuring quality etc”. Show Answer

Q112) ABC is suitable when there is a _____ range of products. Show Answer

Q113) ABC is suitable when the operations are _____. Show Answer

Q114) ABC is suitable when the overheads form a _____ proportion of the total costs. Show Answer

Q115) In ABC, overheads are allocated in proportion of _____. Show Answer

Q116) Traditional costing systems are generally more accurate than ABC costing. Show Answer

Q117) Companies that use ABC trace direct materials and direct labour to cost objects just as would be done using traditional costing systems. Show Answer

Q118) The use of direct labour hours or direct machine hours to trace costs to products occurs with the use of absorption costing but not with the use of ABC. Show Answer

Q119) Activity-based costing involves a two-stage allocation in which overhead costs are first assigned to departments and then to jobs on the basis of direct labour hours. Show Answer

Q120) Machine setup is normally considered a batch-level cost. Show Answer

Q121) Machine setup is normally considered a unit-level cost. Show Answer

Q122) Building depreciation is generally considered an organizational or facility cost. Show Answer

Q123) Activity-based costing is appropriate for a company that manufactures a wide variety of products. Show Answer

Q124) Activity-based costing is appropriate for a company that manufactures a single product. Show Answer

Q125) Activity-based costing is appropriate for a company that has low overhead costs that are proportional to the unit volumes of products. Show Answer

Q126) Activity-based costing is appropriate for a company that has low overhead costs that are proportional to unit volumes of individual products. Show Answer

Q127) Activity cost pools are cost accumulations associated with a given activity. Show Answer

Q128) Activity cost pools are assigned to products, using factory overhead rates for each activity. Show Answer

Q129) Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool. Show Answer

Q130) Direct labour hours is not a cost pool that is regularly used in the activity-based costing method. Show Answer

Q131) Activity based costing is much easier to apply than single plant-wide factory overhead allocation. Show Answer

Q132) Activity based costing can be used to allocate period costs to various products that the company sells. Show Answer

Q133) Activity based costing can only be used to allocate manufacturing factory overhead. Show Answer

Q134) Traditionally, overhead is allocated based on direct labour cost or direct labour hours. Show Answer

Q135) Current trends in manufacturing include less direct labour cost or direct labour hours. Show Answer

Q136) The first step in activity-based costing is to assign overhead costs to products, using cost drivers. Show Answer

Q137) When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products. Show Answer

Q138) ABC leads to enhanced control over overhead costs. Show Answer

Q139) ABC usually results in less appropriate management decisions. Show Answer

Q140) ABC is generally more costly to implement than traditional costing. Show Answer

Q141) ABC eliminates all arbitrary cost allocations. Show Answer

Q142) ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity. Show Answer

Q143) ABC is particularly useful when overhead costs are an insignificant portion of total costs. Show Answer

Q144) Activity-based costing focuses on reducing costs and improving processes. Show Answer

Q145) Plant management is a batch-level activity. Show Answer

Q146) Painting is a product-level activity. Show Answer

Q147) A company that uses only volume-based measures will overcost its low-volume products. Show Answer

Q148) ABC will be most useful in estimating fixed costs. Show Answer

Q149) Volume-based measures will tend to overcost high volume products. Show Answer

Q150) Direct materials are normally considered as batch-level costs. Show Answer

Q151) Unit level costs occur once for each unit produced. Show Answer

Q152) Batch level costs occur once for each unit produced. Show Answer

Q153) Machine setup is normally considered a batch-level cost. Show Answer

Q154) Machine setup is normally considered a unit-level cost. Show Answer

Q155) Building depreciation is generally considered an organizational or facility cost. Show Answer

Q156) Building depreciation is generally considered an product or process level cost. Show Answer