Management Accounting, 1st edition, by Catherine Gowthorpe, Chapter 4
Quiz
Which one of the following statements is correct?
The basic principle of Activity-Based Costing is that:
- Costs are absorbed on the basis of labour productivity.
- Costs are apportioned to cost units via direct labour hours.
- Costs are incurred only in respect of the organisation’s principal activities.
- Cost units should bear the cost of the activities they cause.
Which one of the following statements about Activity-Based Costing (ABC) is correct?
ABC:
- Has the advantage of being much cheaper to implement than other costing systems.
- Has been in use in advanced industrial economies for over a century.
- Takes into account the effects of activities that actually occur during the production process.
- Is a relatively old-fashioned system that is gradually being replaced by new methods of absorption costing.
Which one of the following statements is correct?
Overheads allocated to identified activities in Activity-Based Costing (ABC) are known as cost:
- accounts.
- allocations.
- drivers.
- pools.
Which one of the following statements about Activity-Based Costing (ABC) is correct?
ABC:
- Is used exclusively in the public sector.
- Has been found by academic researchers to produce positive benefits.
- Is an academic theory of costing that has rarely been implemented in practice.
- Is cheap and easy to implement.
Which one of the following statements about Activity-Based Management is correct?
Activity-Based Management:
- involves managing a firm’s usage of indirect overheads.
- is part of the New Public Management approach, and so only is relevant in the public sector.
- requires businesses to compare value for money between departments.
- can be used effectively only in businesses that have a single product or activity.