Activity Based Costing (ABC) – Corporate and Management Accounting MCQBy CACSMockTest / November 24, 2022 1 Activity Based Costing (ABC) – Corporate and Management Accounting MCQ 1 / 25 : In ABC System, the allocation basis that is used for applying costs to services or procedures are called: (A) Cost Pool (B) Cost Absorption (C) Cost Object (D) Cost Driver 2 / 25 : ABC emphasizes on: (A) More precise profit analysis (B) More accurate costing (C) Improved cost control (D) All of the above three 3 / 25 encourages managers to identify which activities are value-added activities. (A) Standard Costing (B) Activity-based Costing (C) Uniform Costing (D) Direct Costing 4 / 25 Dec 2018: Level Activities are identified in traditional Absorption Costing. (A) Unit (B) Batch (C) Product (D) Business 5 / 25 Costs that are caused by a group of things being made or processed at a single time are referred to as: (A) Product-level costs (B) Cost pool (C) Organizational-level costs (D) Batch level costs 6 / 25 June 2018: The division of activities into the unit level, batch level, product level, and facility-level categories is commonly known as a: (A) Cost object (B) Cost application (C) Cost hierarchy (D) Cost estimation 7 / 25 : Performing periodic maintenance on buildings and general use equipment is an example of: (A) Facility level activity (B) Unit-level activity (C) Batch level activity (D) Product level activity 8 / 25 Which of the following statement is not true in respect of Activity-based costing? (A) Activity-based costing improves control over overhead costs. (B) Setting up equipment is a batch-level activity. (C) In Activity-based costing each cost pool has its own predetermined overhead rate. (D) Activity-based costing is less expensive to implement than traditional costing. 9 / 25 Dec 2017: Fast Ltd., manufactures three types of products A, B, and C following ABC System. During a period the company incurred ₹ 73,000 as inspection cost and it was worked for 10, 20 and 9 production runs respectively for producing products A, B, and C. The inspection costs for product B under the ABC system was: (A) ₹ 15,000 (B) ₹ 40,000 (C) ₹ 18,000 (D) ₹ 24,000 10 / 25 Assertion (A):Implementation of the ABC System requires substantial resources which are costly to maintain. Reason (R): Activity-Based Costing is a two-stage product costing. (A) Both A and R are true and R is the correct explanation of A (B) Both A and R are true but R is not the correct explanation of A (C) A is true, but R is false (D) A is false, but R is true 11 / 25 Dec 2017: An Activity-Based Costing, an inspection of the product is a level activity. (A) Unit (B) Batch (C) Product (D) Facility 12 / 25 Dec 2017: The main reason for the usage of Activity Based Costing, by replacing the traditional costing system is that: (A) The overhead recovery rates used in traditional costing systems are inappropriate for decision-mak¬ing. (B) The companies deal with more number of product at present (C) No scope for cause and effect relationship in traditional costing (D) The new manufacturing technology needs information for feedback of performance even the product is in progress. 13 / 25 :In Traditional absorption costing system cost are first traced to: (A) Activities (B) Organizational unit (C) Products (D) Cost centers 14 / 25 A homogeneous cost pool is one that ___ (A) Does not change over time (B) Needs many activity drivers to be allocated to a cost object (C) Can be explained with a single activity driver (D) Has only one type of material assigned to it 15 / 25 Assertion (A)Activity-based costing is not normally used for external reporting purposes. Reason (R)Activity-based costing does not conform to generally accepted principles.Select the correct answer from the options given below: (A) Both A and R are true and R is the correct explanation of A (B) Both A and R are true but R is not the correct explanation of A (C) A is true, but R is false (D) A is false, but R is true 16 / 25 Which of the following is the main cost driver of customer order processing activity — (A) Flow of the product from the assembly line (B) Order value (C) Number of problem suppliers (D) Number of machine charges 17 / 25 What is the proper sequence of events in an ‘activity based costing’ system —(i) Calculation of overheads application rates.(ii) Identification of cost drivers(iii) Identification of cost pools(iv) Assignment of overheads cost to products. (A) (i), (iii), (iv), (ii) (B) (ii), (iii), (i), (iv) (C) (iii), (ii), (i), (iv) (D) (ii), (iii), (iv), (i) 18 / 25 The key area(s) of activity-based costing is/are___ (A) Product cost differentiation (B) Identification of non-value-added cost (C) Distribution between fixed and variable cost (D) Both (A) and (B) above 19 / 25 Dec 2015: The basis of apportionment of overheads which takes into account the profitability of various departments is called___ (A) FIFO basis (B) LIFO basis (C) Ability to pay basis (D) Activity basis 20 / 25 June 2015: According to the Chartered Institute of Management Accountants (CIMA), cost attribution to cost units on the basis of benefits received from indirect activities e.g. ordering, setting¬up, assuring quality is known as___ (A) Absorption costing (B) Marginal costing (C) Activity-based costing (D) Job costing 21 / 25 Under activity-based costing, ‘material ordering’ is considered as — (A) Unit-level activity (B) Batch level activity (C) Product level activity (D) Facility level activity 22 / 25 June 2015: In activity-based costing, an item for which cost measurement is required is called — (A) Cost driver (B) Cost object (C) Allocation (D) Cost pool 23 / 25 In activity-based costing, the allocation basis used for applying costs to services or products is called— (A) Cost driver (B) Cost object (C) Allocation (D) Applicator 24 / 25 : Which of the following is not included in batch level activities___ (A) Material ordering cost (B) Machine set-up cost (C) Inspection cost (D) Designing the product 25 / 25 Cost attribution to cost units on the basis of benefit received from indirect activities, such as ordering, setting-up, assuring quality is known as: (A) Allocation (B) Activity-based costing (C) Always better control (D) Absorption Your score is LinkedIn Facebook Twitter VKontakte Related