What are some of the advantages of variable costing? It eliminates the distortio

Question

What are some of the advantages of variable costing?

It eliminates the distortions to income and product costs when volume changes

Neither of the answers are correct

Both answers are correct

It reduces the dysfunctional incentives to overproduce

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QUESTION 2

What is a purpose(s) for implementing activity-based costing?

Both answers are correct

Neither answer is correct

To change incentives of operating managers

To develop more "accurate" product or product-line costs

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QUESTION 3

Which of the following statements is true regarding activity-based management (ABM)?

ABC cost data helps managers identify which products to produce

All of the answers are correct

Business activities are identified and evaluated for potential streamlining or elimination

ABC cost data helpd managers identify which customers to retain

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QUESTION 4

When traditional absorption costing is employed, which of the following is FALSE?

In a single-product organization, product costs are accurately reported for decision-making purposes

In a multi-product organization, product costs are accurately reported for decision-making purposes

In a single-product organization, product costs are properly reported for financial reporting purposes

In a multi-product organization, product costs are properly reported for financial reporting purposes

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QUESTION 5

Which of the following is a mutually exclusive cost pool used in activity-based cost accounting?

Batch level

Product level

All of the answers are correct

unit level

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QUESTION 6

What are some of the potential problems with using variable costing?

Both of the answers are correct

It is difficult to determine which costs are fixed and which are variable

It produces unit cost figures that contain no estimate of the opportunity cost of capacity

Neither of the answers are correct

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QUESTION 7

Which of the following is a correct matching of terms?

Depreciation of equipment is a batch-level cost

Package design is a production-sustaining cost

Insurance is a product-level cost

Cutting a table leg is a unit-level cost

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QUESTION 8

Which of the following statements is true regarding Activity-Based Costing (ABC)?

Activity-Based Costing includes analysis of cost drivers

Activity-Based Costing can be applied to service-oriented firms

Activity-Based Costing can be applied to manufacturing firms

All of the answers are correct

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QUESTION 9

Absorption costing of inventories, as required by US GAAP, has been criticized for encouraging managers to increase year-end inventories in order to boost reported profits. Which of the following techniques is the most effective at resolving this problem?

Senior management control of inventory levels

Adoption of just-in-time (JIT) production system

Use variable costing to determine income for bonus purposes

Reward managers based upon the residual income approach

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QUESTION 10

One should always be wary of using unit costs for decision-making, because unit costs:

can be multiplied by a different number of units, suggesting that the cost data is scalable

ignore step-fixed costs

disguise the true nature of how costs vary with prodution

generate misleading results when the company faces an increasing cost curve

All of the answers are correct

a.

It eliminates the distortions to income and product costs when volume changes

b.

Neither of the answers are correct

c.

Both answers are correct

d.

It reduces the dysfunctional incentives to overproduce

Explanation / Answer

1. answer is c

2. answer is B

3. answer is B

4. answer is B

5.answer is B

6. answe is D

7.answer is d

8.answer is D

9. anser is B

10. answer is E

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