Instant Download
Sample Chapters
Management Accounting, 6e (Atkinson et al.)
Chapter 1 How Management Accounting Information Supports Decision Making
Objective 1
1) Management accounting is subject to the rules formulated by standard setters such as the
Financial Accounting Standards Board (FASB).
Answer: FALSE
Explanation: Financial accounting is subject to the rules of the FASB.
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
2) Management accounting information is primarily oriented to external stakeholders, such as
investors, creditors, regulators, and tax authorities.
Answer: FALSE
Explanation: Management accounting information is primarily oriented to management.
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
3) The International Accounting Standards Board sets the guidelines used for management
accounting.
Answer: FALSE
Explanation: Financial accounting must be consistent with the rules of the IASB.
Diff: 1
Terms: International Accounting Standards Board
Objective: 1
AACSB: Reflective thinking
4) A good management accounting system can become a source of competitive advantage for a
company.
Answer: TRUE
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
5) Management accounting information is sometimes predictive and forward looking.
Answer: TRUE
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
2
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
6) Management accounting has no prescribed rules about its content, how the content is to be
developed, and how the content is to be presented.
Answer: TRUE
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
7) The Federal Accounting Standards Advisory Board sets cost accounting standards for all
federal government activities.
Answer: TRUE
Diff: 2
Terms: Government Accounting Standards Board
Objective: 1
AACSB: Reflective thinking
8) Management accounting measures can provide advance warnings of problems.
Answer: TRUE
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
9) Information about customer satisfaction is an example of financial information.
Answer: FALSE
Explanation: Information about customer satisfaction is an example of nonfinancial information.
Diff: 1
Terms: nonfinancial information
Objective: 1
AACSB: Reflective thinking
10) Management accounting information can be used for all of the following EXCEPT:
A) calculate the cost of a product or service.
B) evaluate the performance of a company.
C) project materials needs.
D) evaluate the market price of the stock.
Answer: D
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
3
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
11) Which of the following types of information are used in management accounting?
A) financial information
B) nonfinancial information
C) information focused on the long term
D) All of the above are correct.
Answer: D
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
12) Management accounting:
A) is both retrospective, providing feedback about past operations, and also prospective,
incorporating forecasts and estimates about future events.
B) is primarily oriented to external stakeholders.
C) must be consistent with rules formulated by the Financial Accounting Standards Board
(FASB).
D) provides information that is generally available only on a quarterly or annual basis.
Answer: A
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
13) Which of the following descriptors refer to management accounting information?
A) It is only retrospective, reporting and summarizing in financial terms the results of past
decisions and transactions.
B) It is driven by rules.
C) It is prepared for shareholders.
D) It is oriented to meeting the decision making needs of employees and managers inside the
organization.
Answer: D
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
14) Which of the following would be considered management accounting information?
A) Budgeted production for the year 2011.
B) Budgeted Balance Sheet.
C) Analysis of trend in stock prices.
D) Both budgeted production for the year of 2011, and the budgeted balance sheet.
Answer: D
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
4
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
15) Management accounting information includes all of the following EXCEPT:
A) tabulated results of customer satisfaction surveys.
B) the cost of producing a product.
C) the percentage of units produced that is defective.
D) market price of the stock.
Answer: D
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
16) Management accounting reports might include information about:
A) customer complaints.
B) net income for the year on budgeted income statement.
C) total assets on budgeted balance sheet.
D) All of the above are correct.
Answer: D
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
17) The person MOST likely to use management accounting information is a(n):
A) banker evaluating a credit application.
B) shareholder evaluating a stock investment.
C) governmental taxing authority.
D) assembly department supervisor.
Answer: D
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
18) Which of the following is NOT a function of a management accounting system?
A) strategic development
B) financial reporting
C) control
D) product costing
Answer: B
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
5
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
19) Financial accounting:
A) focuses on the future and includes activities such as preparing next year’s operating budget.
B) does not need to comply with GAAP (generally accepted accounting principles).
C) is primarily oriented to external stakeholders, such as investors, creditors, regulators and tax
authorities.
D) is prepared for the use of department heads and other employees.
Answer: C
Diff: 1
Terms: financial accounting
Objective: 1
AACSB: Reflective thinking
20) The person MOST likely to use ONLY financial accounting information is a:
A) factory shift supervisor.
B) vice president of operations.
C) current shareholder.
D) department manager.
Answer: C
Diff: 2
Terms: financial accounting
Objective: 1
AACSB: Reflective thinking
21) Historically, management accounting innovations have been developed by:
A) the International Accounting Standards Board.
B) the Cost Accounting Standards Board.
C) Academic accountants.
D) Managers.
Answer: D
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
22) In general, it was not until the 1970s that management accounting systems:
A) were improved because of demands by the FASB and the SEC.
B) stagnated and proved inadequate.
C) started to develop innovations in costing and performance-measurement systems due to
intense pressure from overseas competitors.
D) started to address the decision-making needs of managers.
Answer: C
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
6
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
23) Financial accounting information:
A) provides a signal that something is wrong.
B) identifies what is wrong.
C) explains what is wrong.
D) simply summarizes information but gives no indication that anything is wrong.
Answer: A
Diff: 2
Terms: financial accounting
Objective: 1
AACSB: Reflective thinking
24) The regulatory authority responsible for formulating rules of United States GAAP is:
A) the Financial Accounting Standards Board.
B) the Cost Accounting Standards Board.
C) the Federal Accounting Standards Advisory Board.
D) the International Accounting Standards Board.
Answer: A
Diff: 1
Terms: financial accounting, FASB
Objective: 1
AACSB: Reflective thinking
25) Management accounting information is BEST described as:
A) providing a signal that something is wrong.
B) identifying and helping to explain what is wrong.
C) simply summarizing information, but giving no indication that anything is wrong.
D) measuring overall organizational performance.
Answer: B
Diff: 1
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
7
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
26) Compare and contrast the users and uses of management accounting and financial
accounting.
Answer: Management accounting provides information to internal decision makers of the
business such as line supervisors, division managers and top executives. Its purpose is to help
managers plan, organize, control and make operating decisions by predicting future results and
evaluating performance.
Financial accounting provides information to external decision makers such as investors and
creditors. Its purpose is to present a fair picture of the financial condition of the company for use
by these parties in making investing and credit decisions.
Diff: 2
Terms: management accounting, financial accounting
Objective: 1
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
27) What is the purpose of management accounting?
Answer: Management accounting gathers short-term and long-term financial and nonfinancial
information to plan, coordinate, motivate, improve, control, and evaluate success factors of an
organization. Management accounting converts data into usable information that supports
planning, organizing, and control decision making.
Diff: 2
Terms: management accounting
Objective: 1
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
Objective 2
1) During the history of management accounting, innovations were developed to address the
decision-making needs of managers.
Answer: TRUE
Diff: 2
Terms: management accounting
Objective: 2
AACSB: Reflective thinking
2) A key element in any organization’s strategy is to identify its target customers and to deliver
what those target customers want.
Answer: TRUE
Diff: 1
Terms: strategy
Objective: 2
AACSB: Reflective thinking
8
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
3) Management accounting innovations are usually developed by academics.
Answer: FALSE
Explanation: Management accounting innovations are usually developed by management
accountants in the field.
Diff: 2
Terms: management accounting
Objective: 2
AACSB: Reflective thinking
4) The first modern industry to develop and use large quantities of financial statistics to assess
and monitor organizational performance was:
A) steel companies.
B) lumber companies.
C) the railroads.
D) automobile companies.
Answer: C
Diff: 2
Terms: financial information
Objective: 2
AACSB: Reflective thinking
5) Which of the following companies is a service company?
A) Lands’ End
B) Schwinn Bicycles
C) Orkin Pest Control
D) British Petroleum
Answer: C
Diff: 1
Terms: service companies
Objective: 2
AACSB: Reflective thinking
6) Historically, service companies have:
A) operated in less competitive environments than manufacturing companies.
B) enjoyed global customer demand.
C) used management accounting information in much the same way as manufacturing
companies.
D) competed by managing costs to provide the best service at the lowest price.
Answer: A
Diff: 2
Terms: service companies
Objective: 2
AACSB: Reflective thinking
9
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
7) The Hawthorne study revealed that:
A) individuals alter their behavior when they know they are being studied.
B) groups alter their behavior when they know they are being studied.
C) People react when they are being measured.
D) All of the above are correct.
Answer: D
Diff: 2
Terms: nonfinancial information, Hawthorne study
Objective: 2
AACSB: Reflective thinking
8) _______ helped develop the Plan-Do-Check-Act (PDCA) cycle.
A) Hawthorne
B) Deming.
C) Carnegie
D) Ford
Answer: D
Diff: 2
Terms: plan-do-check-act cycle
Objective: 2
AACSB: Reflective thinking
9) Describe the steps in the PDCA cycle.
Answer: The Plan step of the PCDA cycle defines the organization’s purpose and selects the
focus and scope of its strategy. The Do step of the PDCA cycle involves the implementation of a
chosen course of action. In this setting, management accounting information gets communicated
to front-line and support employees to inform their daily decisions and work activities. The
check step in the PDCA cycle includes two components — measuring and monitoring ongoing
performance and taking short-term actions based on the measured performance. In the Act step
of the PDCA cycle, managers take actions to lower costs, change resource allocations, improve
the quality, cycle time and flexibility of processes, modify the product mix, change customer
relationships, and redesign and introduce new products.
Diff: 3
Terms: plan-do-check-act cycle
Objective: 2
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
10
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
10) What role has the increasingly competitive business environment played in the development
of management accounting?
Answer: The competitive environment has changed dramatically. There has been a deregulation
movement in North America and Europe during the 1970s and 1980s that changed the ground
rules under which service companies operate.
In addition, organizations encountered severe competition from overseas companies that offered
high-quality products at low prices. There has been an improvement of operational control
systems such that information is more current and provided more frequently. Employees need
better management accounting information and accurate and timely information to improve the
activities they perform and to make decisions. Employees also want innovations in management
accounting information. Nonfinancial information has become a critical feedback measure.
Finally, the focus of many firms is now on measuring and managing activities.
Diff: 3
Terms: financial accounting, management accounting
Objective: 2
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
Objective 3
1) At the highest level strategic planning involves choosing a strategy that provides the best fit
between the organization’s environment and its internal resources in order to achieve the
organization’s objectives.
Answer: TRUE
Diff: 2
Terms: strategy
Objective: 3
AACSB: Reflective thinking
2) Quality is the degree of conformance between what the customer is promised and what the
customer receives.
Answer: TRUE
Diff: 1
Terms: quality
Objective: 3
AACSB: Reflective thinking
3) Government and nonprofit organizations, as well as profit-seeking enterprises, are feeling the
pressures for improved performance.
Answer: TRUE
Diff: 1
Terms: government and nonprofit organizations
Objective: 3
AACSB: Reflective thinking
11
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
4) Management accounting information allows managers to compare actual and planned costs
and to identify areas and opportunities for process improvement.
Answer: TRUE
Diff: 1
Terms: management accounting
Objective: 3
AACSB: Reflective thinking
5) Management accounting can provide information on customer satisfaction.
Answer: TRUE
Diff: 2
Terms: management accounting
Objective: 3
AACSB: Reflective thinking
6) Planning activities include all of the following EXCEPT:
A) estimate the cost and profit consequences from a course of action.
B) evaluating the quality of the service provided.
C) projecting labor requirements.
D) budgeting.
Answer: B
Diff: 2
Terms: plan-do-check-act cycle
Objective: 3
AACSB: Reflective thinking
7) The most important factor in successful organizations is:
A) weaknesses.
B) competition.
C) strategy.
D) definition of quality.
Answer: C
Diff: 2
Terms: strategy
Objective: 3
AACSB: Reflective thinking
8) A key element of any organization’s strategy is identifying:
A) its potential shareholders.
B) its target customers.
C) competitor’s products.
D) employee needs.
Answer: B
Diff: 3
Terms: strategy
Objective: 3
AACSB: Reflective thinking
Purchase For Continue….Â
Management Accounting, 6e (Atkinson et al.)
Chapter 5 Activity-Based Cost Systems
Objective 1
1) Traditional cost systems use actual departments or cost centers for defining cost pools to
accumulate and redistribute costs.
Answer: TRUE
Diff: 1
Terms: cost pools
Objective: 1
AACSB: Reflective thinking
2) Activity-based cost systems use cost centers to accumulate costs.
Answer: FALSE
Explanation: Activity-based cost systems use cost pools to accumulate costs.
Diff: 1
Terms: cost pools
Objective: 1
AACSB: Reflective thinking
3) Traditional cost systems are likely to overcost simple products with higher production volume.
Answer: TRUE
Diff: 2
Terms: traditional costing system
Objective: 1
AACSB: Reflective thinking
4) The first step in designing an activity-based cost system is to develop an activity dictionary.
Answer: TRUE
Diff: 1
Terms: activity based costing
Objective: 1
AACSB: Reflective thinking
5) Traditional cost systems are likely to overcost complex products with lower production
volume.
Answer: FALSE
Explanation: Traditional costing systems are likely to undercost complex products with lower
production volume.
Diff: 2
Terms: activity based costing
Objective: 1
AACSB: Reflective thinking
2
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
6) ________ and ________ are typically the measures of volume of activity in traditional
volume-based cost systems.
A) Practical capacity; products sold
B) Direct labor hours; practical capacity
C) Direct labor hours; machine hours
D) Square footage; machine hours
Answer: C
Diff: 1
Terms: traditional costing system, cost driver
Objective: 1
AACSB: Reflective thinking
7) Traditional cost systems distort product costs because:
A) they do not know how to identify the appropriate units.
B) excess capacity costs are ignored.
C) they emphasize financial accounting requirements.
D) they use unit-level cost drivers to allocate overhead costs to products.
Answer: D
Diff: 2
Terms: traditional costing system, overhead
Objective: 1
AACSB: Reflective thinking
8) Unit-level cost drivers in traditional cost systems distort product costs because they:
A) assume that all overhead activities affect all products.
B) recognize specific activities that are required to produce a product.
C) do not consistently record costs.
D) fail to measure the correct amount of total costs for all products.
Answer: A
Diff: 2
Terms: traditional costing system, cost driver
Objective: 1
AACSB: Reflective thinking
9) Smaller cost distortions occur when the traditional cost systems’ unit-level assignments and
the alternative activity cost driver assignments:
A) are different in proportion to each other.
B) are similar in proportion to each other.
C) are more different than alike.
D) use the same cost driver units.
Answer: B
Diff: 2
Terms: volume-based costs systems, cost driver
Objective: 1
AACSB: Reflective thinking
3
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
10) The use of unit-related measures to assign overhead costs is more likely to:
A) undercost high-volume products.
B) undercost specialty low-volume products.
C) undercost complex products.
D) undercost specialty low-volume and complex products.
Answer: D
Diff: 2
Terms: volume-based costs systems, overhead
Objective: 1
AACSB: Reflective thinking
11) Misleading product cost numbers are MOST likely the result of misallocating:
A) direct material costs.
B) direct manufacturing labor costs.
C) overhead costs.
D) All of the above are correct.
Answer: C
Diff: 1
Terms: overhead
Objective: 1
AACSB: Reflective thinking
12) Undercosting of a product is MOST likely to result from:
A) misallocating direct labor costs.
B) underpricing the product.
C) overcosting another product.
D) understating total product costs.
Answer: C
Diff: 1
Terms: overhead
Objective: 1
AACSB: Reflective thinking
13) Overcosting a particular product may result in:
A) gain of market share for the product.
B) higher profits per unit for the product.
C) operating efficiencies.
D) overstating total costs of all the products.
Answer: B
Diff: 1
Terms: overhead
Objective: 1
AACSB: Reflective thinking
4
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
14) Explain how traditional cost systems, using only unit level cost drivers, distort product costs.
Answer: Unit-related measures can distort product costing because the demand for overhead
activities may be driven by batch-related, product-sustaining, customer-sustaining, or businesssustaining
activities. Volume may not drive the demand for overhead activities, cost distortions
are larger when the traditional systems’ unit-level cost drivers and the alternative activity cost
drivers differ proportionately more from each other. Traditional cost systems are likely to
undercost specialty products with lower production volumes (relatively fewer units of
production) and overcost standard products with higher production volumes (relatively greater
units of production).
Diff: 2
Terms: activity based costing, cost driver, traditional costing system
Objective: 1
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
15) Explain how traditional cost systems, using only unit level cost drivers, distort customer
costs.
Answer: Unit-related measures can distort customer costing because different customers may
have different demands for overhead activities. Cost distortions are larger when the traditional
cost systems’ unit-level cost drivers and the alternative activity cost drivers differ proportionately
more from each other. Traditional cost systems are likely to undercost customers who demand
specialized services and concessions.
Diff: 2
Terms: activity based costing, cost driver, traditional costing system
Objective: 1
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
Objective 2
1) Product lines that produce different variations (models, styles, or colors) often require
specialized activities that translate into lower overhead costs for each product line.
Answer: FALSE
Explanation: Product lines that produce different variations (models, styles, or colors) often
require specialized activities that translate into higher costs for each product line.
Diff: 2
Terms: activity based costing
Objective: 2
AACSB: Reflective thinking
5
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
2) Specialized engineering drawings of products, product quality specifications and quality
control testing, inventoried raw materials, and material control systems are examples of activities
that equate to greater overhead costs.
Answer: TRUE
Diff: 1
Terms: activity based costing, overhead
Objective: 2
AACSB: Reflective thinking
3) It is important that the product costs reflect as much of the diversity and complexity of the
manufacturing process so that:
A) product costs will reflect their relative consumption of resources.
B) better information related to resource constraints can be captured and communicated.
C) there is more likelihood of cost distortions.
D) All of the above are correct.
Answer: A
Diff: 1
Terms: activity based costing
Objective: 2
AACSB: Reflective thinking
4) Activity-based costing (ABC) can eliminate cost distortions because ABC:
A) develops cost drivers that directly link the activities performed to the products manufactured.
B) establishes multiple cost pools.
C) employs capacity-related cost drivers.
D) recognizes interactions between different departments in assigning overhead costs.
Answer: A
Diff: 1
Terms: activity based costing, cost drivers
Objective: 2
AACSB: Reflective thinking
5) Different products consume different proportions of overhead costs because of differences in
all of the following EXCEPT:
A) sales prices.
B) customers’ customization specifications.
C) setup times.
D) product design.
Answer: A
Diff: 1
Terms: activity based costing, overhead
Objective: 2
AACSB: Reflective thinking
6
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
6) Which of the following is a sign that an ABC system may be useful?
A) There are small amounts of overhead costs.
B) Products make diverse demands on resources because of differences in volume, process steps,
batch size, or complexity.
C) Products a company all show large profits.
D) Operations throughout the plant are fairly similar.
Answer: B
Diff: 1
Terms: activity based costing
Objective: 2
AACSB: Reflective thinking
7) Units of production are most appropriate as an overhead cost assignment base when:
A) it is a service department.
B) only one product is manufactured.
C) direct labor costs are low.
D) factories produce a complex and varied mix of products.
Answer: B
Diff: 1
Terms: overhead
Objective: 2
AACSB: Reflective thinking
8) Product lines that produce different variations (models, styles, or colors) often require
specialized activities that translate into:
A) lower overhead costs for each product line.
B) decisions to drop product variations.
C) more favorable direct labor cost ratios.
D) more overhead costs for each product line.
Answer: D
Diff: 2
Terms: activity based costing, overhead
Objective: 2
AACSB: Reflective thinking
9) When a company manufactures a variety of complex products, several unit-level cost drivers
can capture the complexity and diversity of the production processes:
A) always.
B) frequently.
C) infrequently.
D) never.
Answer: D
Diff: 1
Terms: cost driver
Objective: 2
AACSB: Reflective thinking
7
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
10) Greater manufacturing overhead costs are associated with:
A) specialized engineering drawings of new products.
B) quality specifications for products and quality control testing.
C) inventoried materials and material control systems.
D) All of the above are correct.
Answer: D
Diff: 1
Terms: overhead
Objective: 2
AACSB: Reflective thinking
11) A company produces three products; if one product is undercosted then:
A) one product is overcosted.
B) one or two products are overcosted.
C) two products are overcosted.
D) no products are overcosted.
Answer: B
Diff: 1
Terms: overhead
Objective: 2
AACSB: Reflective thinking
12) In general, factories producing a more varied and complex mix of products have higher costs
than factories producing only a narrow range of products. Explain why this is generally true.
Answer: Factories producing a more varied and complex mix of products have higher costs than
factories producing only a narrow range of products because more variations and complexities
require more activities. The Ericson Ice Cream Company in the text case provides an illustration
of why producing more flavors of ice cream adds higher costs. Extending the product lines into
new flavors requires special additional activities that translate into greater overhead costs for the
new flavors.
Diff: 2
Terms: activity based costing
Objective: 2
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
8
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
13) Provide at least two examples of types of costs that would be higher for factories producing a
more varied and complex mix of products than for factories producing only a narrow range of
products.
Answer: Specialized engineering drawings of products, quality specifications for products and
quality control testing, inventoried materials and material control systems, and scheduling are
examples of activities that equate to greater overhead costs. Different products consume different
proportions of manufacturing overhead costs because of differences in customers’ customization
specifications, setup times, and product designs.
Diff: 2
Terms: activity based costing, cost driver
Objective: 2
AACSB: Reflective thinking
MAL: This question is not available in MyAccountingLab.
Objective 3
1) For activity-based cost systems, activity costs are assigned to products in the proportion of the
demand they place on activity resources.
Answer: TRUE
Diff: 1
Terms: activity based costing
Objective: 3
AACSB: Reflective thinking
2) An activity-based costing system is necessary for costing services that are different.
Answer: TRUE
Diff: 1
Terms: activity based costing
Objective: 3
AACSB: Reflective thinking
3) ABC systems seek an activity cost allocation driver that has a cause-and-effect relationship
with costs in the cost pool.
Answer: TRUE
Diff: 1
Terms: activity based costing
Objective: 3
AACSB: Reflective thinking
4) In general, the selection of activity cost drivers requires making trade-offs between accuracy
and the cost of measurement.
Answer: TRUE
Diff: 1
Terms: activity based costing, cost driver
Objective: 3
AACSB: Reflective thinking
Purchase For Continue….Â
