CHAPTER4ACTIVITY-BASEDCOSTMANAGEMENTSYSTEMSTRUE/FALSE1.Simplybecauseactivity-basedcostingsystemsemploymoreactivitycostdrivers,theyprovidemoreaccurateproductcoststhantraditionalsystems.a.Trueb.False2.Atop-sellingproductmightactuallyresultinlossesforthecompany.a.Trueb.False3.Traditionalsystemsarelikelytoundercostcomplexproductswithlowerproductionvolume.a.Trueb.False4.Usingmultipleunit-levelcostdriversgenerallyconstitutesaneffectiveactivity-basedcostsystem.a.Trueb.False5.TheCooperPenCompanycaseinthetextprovidesanillustrationofwhyfactoriesproducingamorevariedmixofproductshavehighercoststhanfactoriesproducingonlyanarrowrangeofproducts.a.Trueb.False6.Productlinesthatproducedifferentvariations(models,styles,orcolors)oftenrequirespecializedactivitiesthattranslateintolowersupportcostsforeachproductline.a.Trueb.False7.Specializedengineeringdrawings,qualityspecificationsandtesting,inventoriedmaterials,andmaterialcontrolsystemsareexamplesofactivitiesthatequatetogreatersupportcosts.a.Trueb.False8.Foractivity-basedcostsystems,activitycostsareassignedtoproductsintheproportionofthedemandtheyplaceonactivityresources.a.Trueb.False9.Anactivity-basedcostingsystemisnecessaryforcostingservicesthataresimilar.a.Trueb.False10.ABCsystemsseekacostallocationbasethathasacause-and-effectrelationshipwithcostsinthecostpool.a.Trueb.False11.Ingeneral,theselectionofactivitycostdriversrequiresmakingtrade-offsbetweenaccuracyandthecostofmeasurement.a.Trueb.False12.Theselectionofactivitycostdriversrequiresmakingchoicesrelatedtotheusageoftransactiondrivers,durationdrivers,andintensitydrivers.a.Trueb.False13.Reducingthenumberofproductionrunsprovidesaneconomicbenefiteventhoughresourcesremainatthesamelevel.a.Trueb.False14.Aneasywaytoimplementaneffectiveactivity-basedcostingsystemistobuyaprepackagedABCsoftwarepackage.a.Trueb.False15.Activity-basedcostinghelpstoidentifyvariousactivitiesthatexplainwhycostsareincurred.a.Trueb.False16.ABCrevealsopportunitiesforimprovingthewayworkisdone.a.Trueb.False17.Usingactualdriverquantitiesratherthanpracticalcapacitytoassignproductcostscanleadtoimprovementsinproductcosts.a.Trueb.False18.Practicalcapacityisusedasthedenominatorforactivitydrivercalculationstoavoiddistortionscausedbytheassignmentofexcesscapacitycoststotheproducts.a.Trueb.False19.Unusedcapacityshouldbetreatedasageneralcosttobesharedacrossallproductlines.a.Trueb.False20.Costdriverratescalculatedusingactualworkperformedincludeanallocationforthecostofresourcesusedandforunusedcapacity.a.Trueb.False21.Assigningsellinganddistributioncoststoproductlinesisbecomingmoreimportantbecauseofcustomerrequestsforcustomizedservices.a.Trueb.False22.Thecostsofmarketing,selling,anddistributionexpenseshavebeendecreasingrapidlyinrecentyears.a.Trueb.False23.Customerswhodemandlowpricesandcustomizedservicesarethemostprofitablecustomers.a.Trueb.False24.Ingeneral,servicecompaniesareidealcandidatesforactivity-basedcosting.a.Trueb.False25.Forserviceorganizations,activity-basedcostsystemsclarifyappropriatecostassignmentsandhelptoidentifytheprofitabilityofvariousserviceactivities.a.Trueb.False26.ThemostsuccessfulABCprojectsoccurwhenaclearbusinesspurposeexistsforbuildingtheABCmodel.a.Trueb.False27.WhentheABCsystemhasapoormodeldesign,ABCcanstillovercomethebarrierstoimplementationandprovideaneffectivesystem.a.Trueb.False28.Anactivity-basedcostingsyste...
