Chapter 8
ACTIVITY-BASED
COSTING
(ABC)
MULTIPLE CHOICES-THEORETICAL
• Traditional costing system are characterized by their use of
which of the following measures as bases for allocating overhead
costs to output:
• Unit-level drivers.
• Batch-level drivers.
• Product-level drivers.
• Plant-level drivers.
• ABC systems are characterized by their use of which of the following
measures as bases for allocating overhead to output:
• Unit-level drivers.
• Batch-level drivers.
• Pro
duct-
level
driver
s. d.
All of
the
above
.
• All of the following are distinctions that usually exist between
traditional and ABC costing sytems, except that:
• The number of overhead cost pools tends to be lower in ABC systems.
• The number of allocation bases tends to be higher in ABC system.
• Costs within an ABC cost pool tend to be more homogeneous than
the costs within a traditional system's cost pool.
• All ABC systems are two-stage costing systems, while traditional
systems may be one or two stage.
• Activity-based costing:
• Is the initial phase of converting to a just in time operating environment.
• Can be used only in a job order costing system.
• Is a two-phase overhead cost allocation system that identifies activity
cost pools and cost drivers.
• Uses direct labor as its primary cost driver.
• Examples of activities at the batch level of cost include:
• scheduling, setting up, and moving
• cutting,
painting, and
packaging,
designing,
changing, and
advertising
d. heating, lighting, and security
