Question : 21. Which of the following statements regarding activity-based costing (ABC) true? A. Resources : 1291685

21. Which of the following statements regarding activity-based costing (ABC) is true? 
A. Resources consume activities and products consume costs.
B. Activities consume resources and products consume activities.
C. Costs consume activities and products cause costs.
D. Resources consume activities and activities cause costs.

22. Which of the following is a key feature of activity-based costing? 
A. Overhead costs are assigned on the basis of volume.
B. Overhead costs are assigned on the basis of sales.
C. Overhead costs are assigned on the basis of direct labor hours.
D. Overhead costs are assigned on the basis of activities.

23. Which of the following statements accurately describes the basis of activity-based costing? 
A. Activities simply sustain a facility’s general manufacturing process.
B. Activities refer to batch-level costs incurred to support the production of each different type of product.
C. Activities consume facility-level costs.
D. Activities consume resources and products consume activities.

24. What should be done in Stage 1 in an activity-based costing (ABC) system? 
A. Total manufacturing costs are calculated.
B. Raw materials are purchased.
C. Cost drivers for activities are chosen.
D. Activities are identified.

25. Which of the following statements is false regarding the identification of activities in activity-based costing (ABC)? 
A. The identification of activities that drive overhead costs is done before cost drivers are selected.
B. An activity can be thought of as a procedure or process that causes work to be accomplished.
C. Overhead costs should not be traced to more than one activity.
D. Because of different types of production processes and products, every business will have a different set of activities and cost drivers.

26. Which of the following statements is true regarding activities? 
A. An activity that drives overhead costs should only take place within the physical manufacturing facility.
B. Activities can be consumed by resources.
C. Overhead costs can be traced to more than one activity.
D. Activities seldom cause work to be accomplished.

27. Which of the following statements is true regarding the identification of activities in an ABC system? 
A. All manufacturing companies have identical types of activities.
B. All merchandising companies have identical types of activities.
C. As a business becomes more complex, fewer activities need to be identified.
D. Two different businesses which have the same type of activities can still choose different cost drivers.

28. Which of the following statements is false regarding activities in an ABC system? 
A. As a business becomes more complex, more activities will probably need to be identified.
B. Two different manufacturing companies that make the same products may come up with different sets of activities and cost drivers.
C. The maximum number of activities that should be identified as batch-level is two.
D. Overhead costs may be allocated to more than one activity.

29. In Stage 2 of ABC allocation: 
A. cost drivers are determined and costs are traced to each activity.
B. activities are identified.
C. predetermined overhead rates are calculated.
D. equivalent units are computed.

30. Which of the following statements regarding cost drivers is false? 
A. Different businesses can have different sets of cost drivers.
B. Cost drivers should generally be chosen based on a cause-and-effect relationship between the driver and the specific cost being considered.
C. Cost drivers are groups of overhead costs that are similar.
D. An activity could have more than one potential cost driver.