Students Name: Section 1 Multiple Choice- 20 Points 1. An example of a unit leve
ID: 2587453 • Letter: S
Question
Students Name: Section 1 Multiple Choice- 20 Points 1. An example of a unit level process in an activity based cost system would be? a. Product design b. Executive office cleaning c. Equipment set-up d. Providing power to run equipment 2. An advantage of activity cost pools is that it? a. Accumulates costs relating to a single activity b. Accumulates costs relating to only multiple activities c. Accumulates costs relating to break even activities d. Accumulates costs relating to margin of safety activities 3. Traditional cost systems tend to over-cost standard stanchions which result in? a. Reporting higher profit margins for a product b. Reporting lower profit margins for a product c. Reporting only the break-even margins for a product d. Reporting only the negative profit margins for a productExplanation / Answer
1. c.Equipment Setup; is an good example of Unit level process which allows the management by using ABC system to allocate the cost of setups to different products based on Number of Equipment setups.
2. a.Accumulates cost relating to single activity. in ABC System, the overhead costs are divided based on activity and accumulates costs to each single activity.
3.b. Reporting lower profit margins for a product; Traditinal costing system will allocate overhead on one basis like on sale dollars etc which makes the profits of the product to decrease.