Question

1) Top management compensation cost is an example of ________ in the cost hierarchy.
A) unit-level costs B) batch-level costs C) product-sustaining costs D) facility-sustaining costs

2) Which of the following statements is true of ABC systems?
A) ABC system will always result in higher product costs.
B) ABC system employs multiple activity-cost drivers.
C) ABC system is least suited for service companies.
D) ABC system is simpler compared to traditional systems.

3) Costs such as supervision, depreciation, maintenance, supplies, and power are included

in the _________.

A) capital expenditures budget

B) distribution costs budget

C) revenues budget

D) manufacturing overhead budget

4) Total finished units to be produced is based on the ________.

A) direct material purchase budget

B) budgeted sales units

C) direct material usage budget

D) budgeted manufacturing overhead

5) Activity-based costing:
assumes that the cost of a product is equal to the sum of the costs of all activities performed to manufacture it.
has become more widespread as overhead costs have been decreasing relative to
is similar to a conventional cot accounting system in accounting for direct labor and manufacturing overhead but differs in regard to direct materials
D) uses a single unit-level basis to allocate overhead costs to products.

6) In activity-based costing, unit product costs computed for external financial reports

     do NOT include:

A) direct materials.

B) direct labor.

C) manufacturing overhead.

D) selling costs.

Answer 1

1. Top management is an Example of Top management involves activities carried out for an entire facility. Hence incurs facility sustaining cost.

2.statement D is correct as ABC systems recognizes the activities, costs and products which is in a simpler way than traditional methods.

3. Statement A is correct.

Cost such as super vision, depreciation, maintenance,supplies and power are included in the capital Expenditures budget.

4. Statement B is correct  

Total finished units to be produced is based on the budgeted sales unit.

5. Statement D is correct.

Activity based costing uses a single unit level basis to allocate over head cost to products.

6.statement D is correct.In activity based costing unit product costs computed for External financial reports do not include selling costs.