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Questions and Answers
What is a cost object in Activity-Based Costing (ABC)?
What is a cost object in Activity-Based Costing (ABC)?
- A group of individual cost items with the same cause-effect relationship
- An event that incurs cost
- A factor that causes a change in the cost of an activity
- An item for which cost measurement is required, like a product or customer (correct)
In ABC, what does an activity cost driver measure?
In ABC, what does an activity cost driver measure?
- Frequency and intensity of demand placed on activities by cost objects (correct)
- Change in the cost of an activity
- Total overhead of each cost pool
- Quantity of resources consumed by an activity
What is the purpose of dividing activities into cost pools in ABC?
What is the purpose of dividing activities into cost pools in ABC?
- To calculate the total overhead of each cost pool
- To identify all the activities required to create the product
- To measure the quantity of resources consumed by an activity
- To include all individual costs related to an activity (correct)
Which of the following is NOT an example of a cost driver category in ABC?
Which of the following is NOT an example of a cost driver category in ABC?
What represents a group of various individual cost items with the same cause-effect relationship in ABC?
What represents a group of various individual cost items with the same cause-effect relationship in ABC?
Why is Activity-Based Costing (ABC) mostly used in the manufacturing industry?
Why is Activity-Based Costing (ABC) mostly used in the manufacturing industry?
What is the purpose of issuing a corporate brochure?
What is the purpose of issuing a corporate brochure?
What is the purpose of preparing a profit and loss statement and balance sheet?
What is the purpose of preparing a profit and loss statement and balance sheet?
What is the purpose of raising funds through methods like PPD, preference shares, and fixed deposits?
What is the purpose of raising funds through methods like PPD, preference shares, and fixed deposits?
What is the purpose of advertising and analyzing feedback from sales?
What is the purpose of advertising and analyzing feedback from sales?
What is the purpose of dealing with auditors and banks for working capital and term loans?
What is the purpose of dealing with auditors and banks for working capital and term loans?
What is the purpose of issuing share certificates and dealing with grievances?
What is the purpose of issuing share certificates and dealing with grievances?
What can be more effectively controlled using the ABC approach?
What can be more effectively controlled using the ABC approach?
In an ABC environment, what initial work is required by team members?
In an ABC environment, what initial work is required by team members?
What is the first step in creating a cost code in activity-based costing?
What is the first step in creating a cost code in activity-based costing?
What is a common extreme cost reduction measure for firms facing financial challenges?
What is a common extreme cost reduction measure for firms facing financial challenges?
What should be included in the list of resources for each activity?
What should be included in the list of resources for each activity?
How is the cost driver rate calculated?
How is the cost driver rate calculated?
Which philosophy focuses on continuous improvement and serves as a good starting point in an ABC environment?
Which philosophy focuses on continuous improvement and serves as a good starting point in an ABC environment?
What is the purpose of calculating the cost driver rate?
What is the purpose of calculating the cost driver rate?
In what scenario would firms need to consider measures like divestitures?
In what scenario would firms need to consider measures like divestitures?
In the example given, what is the cost driver used for the electricity bill?
In the example given, what is the cost driver used for the electricity bill?
What type of costs are highlighted as gaining importance in comparison to manufacturing costs?
What type of costs are highlighted as gaining importance in comparison to manufacturing costs?
What is the next step after calculating the per-unit cost of each resource?
What is the next step after calculating the per-unit cost of each resource?
What is the primary focus of Activity-Based Costing (ABC)?
What is the primary focus of Activity-Based Costing (ABC)?
Which of the following is NOT listed as a function under the allocation of power, water, steam to various activities?
Which of the following is NOT listed as a function under the allocation of power, water, steam to various activities?
Which activity involves spending time meeting with overseas suppliers and buyers?
Which activity involves spending time meeting with overseas suppliers and buyers?
In Activity-Based Costing, what is the term used for factors that determine the costs of activities?
In Activity-Based Costing, what is the term used for factors that determine the costs of activities?
Which function involves analyzing Monthly Profit & Loss statements?
Which function involves analyzing Monthly Profit & Loss statements?
What does ABC focus on, according to the provided text?
What does ABC focus on, according to the provided text?
