Accounting Quiz #5: Chapter 4

Activity-based costing systems rely on multiple bases for overhead cost allocation.

A cost driver is a factor or activity that has a direct cause-effect relationship with the resources consumed.

In order to achieve the most accurate costing, the cost driver chosen for a given activity must show a ___________ between the cost driver and the actual consumption of overhead costs.

Two benefits of ABC are that it leads to better management decisions and increases the accuracy of overhead cost allocations.

An advantage of ABC is that it is inexpensive to implement.

Which of the following is a limitation of activity-based costing?

Which of the following would not be an overhead activity cost pool?

Which of the following is the third step in applying an activity-based costing system?

When is it appropriate to use direct labor as a basis for assigning overhead costs to products?

In traditional costing systems, overhead is generally applied based on

Ordering materials, setting up machines, assembling products, and inspecting products are examples of

The first step in activity-based costing is to

Use of activity-based costing will result in the development of

Companies that switch to ABC often find they have

What is the proper preparation sequencing of the following budgets? 1. Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget 4. Budgeted Income Statement

Which of the following does not appear as a separate section on the cash budget?

The starting point in preparing a master budget is the preparation of the

The culmination of preparing operating budgets is the

The most common budget period is

If budgets are to be effective, all of the following must be present except

Which of the following is not a facility-level activity?

Which of the following is a batch-level activity?

The primary benefit of ABC is it provides

Machining parts.

Product design.

Plant maintenance.

Machine setup.

Assembling parts.

Purchasing raw materials.

Property taxes.

Painting