A) In activity-based costing, straight labor-hours is constantly the finest allocation base to allocate all non-manufacturing indirect costs.

B) task based costing is more suited to service providers with high product diversity than carriers with single product line.

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C) task based costing broadly averages or spreads the expense of sources uniformly to cost objects such as assets or services.

D) The main benefit of activity-based costing over peanut-butter costing is the accurate distribution of all direct expenses to the products.


5) A single indirect-cost rate distort product costs since ________.

A) over there is an assumption that every support activities affect all assets

B) that recognizes particular activities the are required to develop a product

C) compete pricing is ignored

D) that assumes all expenses are product costs

6) Extracts from cost information the Hebar Corp.:



Simple L3 Pack

Complex L7 Pack


Setup expense allocated using straight labor-hours




Setup expense allocated using setup-hours





Which that the following statement is true of Hebar's setup costs under classic costing?

A) L3 fill is undercosted by $5,550

B) L7 pack is undercosted by $5,450

C) L3 pack is overcosted by $5,550

D) L7 load is overcosted by $5,550


7) i beg your pardon of the following statements is true the activity-based costing?

A) Activity-based costing ignores the allocation the marketing and also distribution costs.

B) Activity-based costing is an ext likely to an outcome in significant differences from classic costing solution if the certain manufactures just one product quite than lot of products.

C) Activity-based costing classifies some of the indirect prices as direct costs.

D) chances of product-cost cross-subsidization are higher in activity-based costing contrasted to classic costing systems.

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8) Activity-based costing (ABC) deserve to eliminate expense distortions because ABC solution ________.

A) create a cause-and-effect partnership with the tasks performed

B) use single cost swimming pool for all overhead costs, thereby allowing simplicity

C) usage a vast average to allocate all overhead costs

D) never think about interactions in between different department in assigning assistance costs


9) Product present that produce different sports (models, styles, or colors) often require dedicated manufacturing tasks that interpret into ________.

A) under indirect expenses for each product heat

B) decision to drop product sport

C) a greater variety of direct manufacturing labor cost allocation rates

D) better overhead prices for each product line

Premium agency provides the adhering to ABC costing information:


ActivitiesTotal CostsActivity-cost drivers

Account inquiry              $200,000              10,000              hours

Account billing              $140,000              4,000,000              lines

Account verification accounts              $75,000              40,000              accounts

Correspondence letters              $ 25,000              4,000              letters

Total costs              $440,000


The above activities are used by department A and B together follows:


Department ADepartment B

Account inspection hours              2,500              hours              4,000hours

Account billing lines              400,000              lines                  250,000lines

Account verification accounts              10,000              accounts              8,000accounts

Correspondence letters              1,200              letters              1,600letters