Questions from Cost Accounting

Q: “One of the lessons learned from activity-based costing is

“One of the lessons learned from activity-based costing is that all costs are really a function of volume of output.” Is this true, false, or uncertain? Explain.

Q: “Activity-based costing breaks down the indirect costs into several

“Activity-based costing breaks down the indirect costs into several activities that cause costs (cost drivers). These should be the same for each department in an organization.” Is this true, false, o...

Q: It has been said that a prior department’s costs behave similarly to

It has been said that a prior department’s costs behave similarly to direct materials costs. Under what conditions are the costs similar? Why account for them separately?

Q: You have been asked to determine whether a company uses an activity

You have been asked to determine whether a company uses an activity-based cost system. What information would you look for to answer the question?

Q: “Activity-based costing is just another inventory valuation method.

“Activity-based costing is just another inventory valuation method. It isn’t relevant for making operating decisions.” Do you agree with this statement? Explain.

Q: Howard Rockness was worried. His company, Rockness Bottling, showed

Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past several years despite an increase in revenues. With profits declining and revenues increasing, Rockn...

Q: The product costs reported using either plantwide or department allocation are the

The product costs reported using either plantwide or department allocation are the same. The only difference is in the number of cost drivers used. True or false? Explain.

Q: Why do companies commonly use direct labor-hours or direct labor

Why do companies commonly use direct labor-hours or direct labor cost but not the number of units to allocate overhead?

Q: What are the costs of moving to an activity-based cost

What are the costs of moving to an activity-based cost system? What are the benefits?

Q: What are the basic steps in computing costs using activity-based

What are the basic steps in computing costs using activity-based costing?