The main difference between activity-based costing andtraditional costing systems is that activity-based costing uses aseparate allocation rate for each activity. (Points : 1)
True
False
2. Peterson Company has both fixed and variable costs. If thevolume doubles, the total fixed costs will double. (Points : 1)
True
False
3. Two main benefits of activity-based costing are more accurateproduct cost information and more detailed information on costs ofactivities and the drivers of these costs. (Points : 1)
True
False
4. Which of the following statements is CORRECT with respect tovariable cost per unit, within the relevant range? (Points : 1)
It will increase as production decreases.
It will decrease as production decreases.
It will remain the same as production levels change.
It will decrease as production increases.
5. Jenny was reviewing the water bill for her doggy day spa anddetermined that her highest bill, $1,700, occurred in July when shewashed 800 dogs and her lowest bill, $900, occurred in Novemberwhen she washed 400 dogs. What was the fixed cost associated withJenny’s water bill? (Points : 1)
$150
$300
$100
$200
None of these is correct
6. Activity-based management refers to using activity-based costinformation to make decisions that increase profits whilesatisfying customers’ needs. (Points : 1)
True
False
7. Dalian Company provides the following information:
Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000
What is the breakeven point in terms of sales revenues? (Points :1)
$18,500
$25,000
$37,500
$22,750
8. Activity-based costing systems and traditional costing systemswill produce the same results for product cost and profitability,although they use different methods of calculation. (Points :1)
True
False
9. Brannon Company manufactures ceiling fans and uses anactivity-based costing system. Each ceiling fan consists of 20separate parts totaling $95 in direct materials, and requires 2.5hours of machine time to produce. There are no direct labor costs.Additional information follows:
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $ .08
Machining Machine hours $7.20
Assembling Number of parts $.35
Packaging Number of finished units $2.70
What is the total manufacturing cost per ceiling fan? (Points :1)
$125.75
$121.13
$115.32
$124.30
None of these is correct
10. Fixed costs per unit decrease as production levels decrease.(Points : 1)
True
False
ScholarMatic: Explanation & Answer
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