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What is the difference between Activity-based costing and traditional cost accounting?
Activity-based costing is a more accurate cost management system than TCA. One would use the ABC method when overhead is high, products are diverse, cost of errors high and competition is stiff. Traditional Cost Accounting is unable to calculate the 'true' cost of the product. TCA arbitrarily allocates overhead to the costs of objects. Total company's overhead is allocated to the products based on volume based measure e.g. labor hours, machine hours.
A well-designed activity-based costing system starts with?
assigning manufacturing overhead costs for each activity cost pool to products
A variable cost changes in proportion to changes in the volume in activity?
the answer is Variable Cost
What is curvilinear cost in accounting?
A Curvilinear cost is a cost that changes with volume(activity) but not at a constant rate.
Activity-based costing is a means of more accurately accounting for direct labor cost?
False. Activity-based costing is used to allocate indirect cost into direct costs.Regardng direct cost, traditional costing is as appropriate as activity-based costing.
Which of the following costs are included in the cost classification that is based on the relationship between total cost and volume of activity?
Varable cost and fixed cost
What is the difference between Activity-based costing and traditional cost accounting?
Activity-based costing is a more accurate cost management system than TCA. One would use the ABC method when overhead is high, products are diverse, cost of errors high and competition is stiff. Traditional Cost Accounting is unable to calculate the 'true' cost of the product. TCA arbitrarily allocates overhead to the costs of objects. Total company's overhead is allocated to the products based on volume based measure e.g. labor hours, machine hours.
A well-designed activity-based costing system starts with?
assigning manufacturing overhead costs for each activity cost pool to products
How is activity based costing better than traditional cost assignment systems?
Activity-based costing tries to take the nonuniformity of resource consumption across products into account in the assignment of costs.
A variable cost changes in proportion to changes in the volume in activity?
the answer is Variable Cost
What is break even analysis and how does it work with cost volume profit analysis?
cost volume profit is use anlyse how cost and profit change with change in volume of activity
What is curvilinear cost in accounting?
A Curvilinear cost is a cost that changes with volume(activity) but not at a constant rate.
Activity-based costing is a means of more accurately accounting for direct labor cost?
False. Activity-based costing is used to allocate indirect cost into direct costs.Regardng direct cost, traditional costing is as appropriate as activity-based costing.
When company shifts to abc costing and manufacturing overhead is based on direct labor hours do unit product costs of high volume products decrease and low volume products increase?
ABC Costing: Under this method costs varies according to activity so if high volume of product is produced then direct labour also utilized accordingly and manufacturing cost will be increase or decrease according to the utilization of direct labour hours.
What type of cost should not be assigned to products in an activity-based costing system?
Organization-sustaining costs, customer-level costs, and the costs of idle capacity should not be assigned to products. These costs represent resources that are not consumed by the products.
Distinguish between volume based and non-volume based cost drivers?
Volume based drivers are cost drivers which relates to the things like no. of units made, direct labout cost and number of direct labour costs etc and is similar to the tpe of cost driver for unit-related activities
How can activity based systems help managers in a global marketplace?
Activity-based systems can help managers in a global marketplace by providing accurate cost information for decision-making. By tracking costs at a detailed activity level, managers can better understand the cost drivers of their products/services across different markets. This enables them to identify areas for cost reduction or optimization, leading to improved competitiveness and profitability in the global market.
