BUS 252 Accounting Test Bank 09 Test Questions and Answers(2022/2023)

19. The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to activity cost pools. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-02 Assign costs to cost pools using a first-stage allocation. 20. Activity-based costing involves a two-stage allocation in which overhead costs are first assigned to departments and then to jobs. TRUE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-02 Assign costs to cost pools using a first-stage allocation. Learning Objective: 07-04 Assign costs to a cost object using a second-stage allocation. 21. Activity rates in activity-based costing are computed by dividing costs from the second-stage allocations by the activity measure for each activity cost pool. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 07-03 Compute activity rates for cost pools. 22. Activity rates are computed in the second-stage allocation in activity-based costing. FALSE AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 07-03 Compute activity rates for cost pools. Learning Objective: 07-04 Assign costs to a cost object using a second-stage allocation. Multiple Choice Questions 23. An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: A. under activity-based costing the sum of all product costs does not equal the total costs of the company. B. under activity-based costing manufacturing costs are assigned to products. C. activity-based costing has not been approved by the United Nation's International Accounting Board. D. activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Difficulty: 1 Easy Learning Objective: 07-01 Understand activity-based costing and how it differs from a traditional costing system. 24. Assembling a product is an example of a: A. Unit-level activity. B. Batch-level activity. C. Product-level activity. D. Organizationsustaining. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 1 Easy Learning Objective: 07-01 Understand activity-based costing and how it differs from a traditional costing system. 25. If substantial batch-level or product-level costs exist, then overhead allocation based on a measure of volume such as direct labor-hours alone: A. is a key aspect of the activity-based costing model. B. will systematically overcost high-volume products and undercost lowvolume products. C. will systematically overcost low-volume products and undercost highvolume products. D. must be used for external financial reporting since activity-based costing cannot be used for external reporting purposes. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 07-01 Understand activity-based costing and how it differs from a traditional costing system. 26. Which terms would make the following sentence true? Manufacturing companies that benefit the most from activity-based costing are those where overhead costs are a _________ percentage of total product cost and where there is ___________ diversity among the various products that they produce. A. low; little B. low; considerable C. high; little D. high; considerable AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 07-01 Understand activity-based costing and how it differs from a traditional costing system. 27. Which of the following costs should not be included in product costs for internal management reports that are used for decision-making? A. Costs of unit-level activities. B. Costs of batch-level activities. C. Costs of product-level activities. D. Costs of organization-sustaining activities. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objective: 07-01 Understand activity-based costing and how it differs from a traditional costing system. 28. The plant manager's salary is an example of a: A. Unit-level activity. B. Batch-level activity. C. Product-level activity. D. Organization-sustaining activity. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Difficulty: 2 Medium Learning Objecti