This document provides a quiz with 30 multiple choice questions on cost accounting concepts from Chapter 5. It covers topics like activity-based costing, cost pools, cost drivers, direct vs. indirect costs, cost allocation bases, and using cost information for management decisions. The questions test understanding of how activity-based costing systems work and how they can provide more accurate product costs than traditional costing systems. Purchasing the full tutorial would provide the answers to these questions.

1. ACC 350 WK 6 Quiz 4 Chapter 5
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1)
A top-selling product might actually result in losses for the company.
Answer:
2)
Companies that undercost products will most likely lose market share.
Answer:
3)
If companies increase market share in a given product line because their reported costs are less than
their actual costs, they will become more profitable in the long run.
Answer:
4)
As product diversity and indirect costs increase, it is usually best to switch away from an activity based
cost system to a broad averaging system.
Answer:
5)
If a company undercosts one of its products, then it will overcost at least one of its other products.
Answer:
6)
Direct costs plus indirect costs equal total costs.
Answer:

2. 7)
When refining a costing system, a company should classify as many costs as possible as indirect costs.
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8)
In a homogeneous cost pool, all costs have a similar cause-and-effect relationship with the cost-
allocation base.
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9)
Indirect labor and distribution costs would most likely be in the same activity-cost pool.
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10)
Activity-based costing helps identify various activities that explain why costs are incurred.
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11)
Direct tracing of costs improves cost accuracy.
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12)
A cost-allocation base is a necessary element when using a strategy that will refine a costing system.
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13)
An activity-based costing system is necessary for costing services that are similar.
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3. 14)
Traditional systems are likely to undercost complex products with lower production volume.
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15)
For activity-based cost systems, activity costs are assigned to products in the proportion of the demand
they place on activity resources.
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16)
Unit-level measures can distort product costing because the demand for overhead resources may be
driven by batch-level or product-sustaining activities.
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17)
Output unit-level costs cannot be determined unless you know how many units are in a given batch.
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18)
Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system.
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19)
Misleading cost numbers are larger when unit-level assignments and the alternative activity-cost-driver
assignments are proportionately similar to each other.
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20)
Availability of reliable data and measures should be considered when choosing a cost-allocation base.
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4. 21)
When designing a costing system, it is easiest to calculate total costs first, and then per-unit costs.
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22)
ABC systems attempt to trace more costs as direct costs.
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23)
ABC systems create homogeneous cost pools linked to different activities.
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24)
ABC systems seek a cost allocation base that has a cause-and-effect relationship with costs in the cost
pool.
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25)
For service organizations, activity-based cost systems may be used to clarify appropriate cost
assignments.
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26)
ABC reveals opportunities for improving the way work is done.
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27)
Activity-based management refers to the use of information derived from ABC analysis to analyze and

5. improve operations.
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28)
Information derived from an ABC analysis might be used to eliminate nonvalue-added activities.
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29)
ABC costing systems are primarily for use in manufacturing and marketing and not for design
engineering.
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30)
Department-costing systems are a further refinement of ABC systems.
Answer:
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assignment 1 Cost Accounting and Management Decisions