Cost Accounting_14E_Chapter 05.doc

Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 5 Activity-Based Costing and Activity-Based Management Objective 5.1 1) If products are different, then for costing purposes: A) an ABC costing system will yield more accurate cost numbers B) a simple costing system should be used C) a single indirect-cost rate should be used D) none of the above Answer: A Diff: 1 Terms: activity-based costing (ABC) Objective: 1 AACSB: Reflective thinking 2) Overcosting a particular product may result in: A) loss of market share B) pricing the product too low C) operating efficiencies D) understating total product costs Answer: A Diff: 2 Terms: product undercosting Objective: 1 AACSB: Analytical skills 3) Undercosting of a product is most likely to result from: A) misallocating direct labor costs B) underpricing the product C) overcosting another product D) overstating total product costs Answer: C Diff: 2 Terms: product overcosting Objective: 1 AACSB: Reflective thinking 4) A company produces three products; if one product is overcosted then: A) one product is undercosted B) one or two products are undercosted C) two products are undercosted D) no products are undercosted Answer: B Diff: 1 Terms: product-cost cross-subsidization Objective: 1 AACSB: Ethical reasoning 5) Misleading cost numbers are most likely the result of misallocating: A) direct material costs B) direct manufacturing labor costs C) indirect costs D) All of these answers are correct. Answer: C Diff: 2 Terms: activity-based costing (ABC) Objective: 1 AACSB: Reflective thinking 6) An accelerated need for refined cost systems is due to: A) global monopolies B) rising prices C) intense competition D) a shift toward increased direct costs Answer: C Diff: 2 Terms: activity-based costing (ABC) Objective: 1 AACSB: Ethical reasoning 7) The use of a single indirect-cost rate is more likely to: A) undercost high-volume simple products B) undercost low-volume c