26. Activity-based management seeks to eliminate waste by allocating costs to pr

Question

26.

Activity-based management seeks to eliminate waste by allocating costs to products that waste resources.

True

False

27.

In activity-based costing, nonmanufacturing costs are not assigned to products.

True

False

28.

Activity-based costing uses a number of activity cost pools, each of which may have a different allocation base.

True

False

29.

Batch-level activities are performed each time a unit is produced.

True

False

30.

The costs of activities that are classified as unit-level should be fixed respect to the number of units produced.

True

False

Explanation / Answer

Answer 26. False Activity Based Costing: A management approach that focuses on managing activities as a way of eliminating waste and reducing delays and defects. Answer 27. False Activity Based Costing : A two-stage costing method in which overhead costs whether manufacturing or non manufacturing overheads are applied to products on the basis of the activities they require. Answer 28. False A predetermined overhead rate in activity-based costing. Each activity cost pool has its own activity rate which is used to apply overhead to products and services. Answer 29. True Activities that are performed each time a batch of goods is handled or processed, regardless of how many units are in a batch. The amount of resources consumed depends on the number of batches run rather than on the number of units in the batch. Answer 30. False Unit level activities are those activities which are performed each time a unit is produced. They are repetitive activities. Cost of unit level activities vary with the number of units produced.

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