Which of the following is different in ABC when compared to traditional costing?
Going through the Activity Based Costing (ABC) – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts. Show Activity Based Costing (ABC) – Corporate and Management Accounting MCQsQuestion 1. Question 2. Question 3. Question 4. Question 5. Question 6. Question 7. Question 8 Question 9. Question 10. Question 11. Question 12. Question 13. Question 14. Question 15. Question 16. Question 17. Question 18. Question 19. Question 20. Question 21. Question 22. Question 23. Question 24. Question 25. Question 26. Question 27. Question 28. Question 29. Question 30. Question 31. Question 32. Question 33. Question 34. Question 35. Question 36. Question 37. Question 38. Question 39. Question 40. Question 41. Answer: (A) ₹ 85,260 Calls for retail division = 7,000 – 2,940 = 4,060 4,060 2,03,000 × \(\frac{4,060}{7,000}\)=1,17,740 Question 42. Question 43. Question 44. Question 45. Question 46. The amount of overhead for Activity 3 if current activity was 1,340: (A) ₹ 38,519.00 (B) ₹ 39,704.20 (C) ₹ 38,564.00 (D) ₹ 23,876.80 Use the following information to answer next 2 questions. Company Y estimated that it will incur a total overhead cost of 16,00,000. It considers implementing activity based costing. Three cost pools and respective activity measures have been identified: The company currently uses traditional costing and allocates overhead based on direct labour hours. Answer: (B) 38,519 × \(\frac{1,340}{1,300}\)=39,704 Question 47. Question 48. Question 49. Question 50. The following information pertains to each product line of DVD players for next year Answer: (B) \(\frac{3,80,000}{5,000}\)=76 Question 51. Question 52. Question 53. Question 54. Question 55. Question 56. Question 57. Question 58. Question 59. The annual overheads are as under: Volume related activity costs : ₹ 5,50,000 Set-up related costs :₹ 8,20,000 Purchase related costs : ₹ 6,18,000 Answer: (D) 38,80,000 ×\(\frac{10,000}{34,000}\)=11,41,176 Question 60. Question 61. Question 62. Question 63. Question 64. The activity rate under the activity based costing system for this activity is closest to: (A) ₹ 4.00 (B) ₹ 8.59 (C) ₹ 18.00 (D) ₹ 20.00 Use the following information to answer next 4 questions. Best Chair Company makes two types of chairs, hand-built lounge chair (HC) and a folding beach chair (FC). The company had used a job order costing system and applies overhead on the basis of direct labour hours. Best Chair expects to produce 40,000 HC and 1,00,000 FC next year. Total direct material costs are ₹ 32,00,000 for HC and ₹ 10,00,000 FC. Best Chair has begun changing to an activity based costing system. The company has reported the following results from the first stage cost allocations for year’s production: Activity ——– Overheads Labour related — 3,00,000 Machine related — 4,50,000 Machine set-up — 7,30,000 Order processing — 6,00,000 General factory — 5,00,000 Answer: (D) Question 65. Question 66. Question 67. Question 68. Question 69. Question 70. Question 71. Question 72. Question 73. Question 74. Question 75. Question 76. Question 77. Question 78. Question 79. Question 80. Answer: (D) Question 81. Question 82. Question 83. Question 84. Question 85. Question 86. Question 87. Question 88. Question 89. Answer: (A) Question 90. Inspection cost per hour = 73,000 = 146 = 500. Inspection cost for Product B = 20 × 4 × 500 = 40,000. Question 91. Question 92. Question 93. Question 94. Question 95. Question 96. Question 97. Question 98. Which of the following is different in ABC when compared to traditional costing Mcq?traditional costing treats only unit level costs as variable, while ABC systems treat unit level, batch level and product level costs as variable. c. traditional cost allocations are usually based on a plant wide overhead rate, while ABC systems use departmental overhead rates. d.
What is the difference between ABC costing and a traditional costing system?A fundamental difference between traditional costing and ABC costing is that ABC methods expand the number of indirect cost pools that can be allocated to specific products. The traditional method takes one pool of a company's total overhead costs to allocate universally to all products.
What is activityTraditional costing can only be used for the absorption of manufacturing overheads but activity based costing can effectively be used to allocate manufacturing as well as non-manufacturing overheads like selling, administration etc.
Why is activityActivity-based costing provides a more accurate method of product/service costing, leading to more accurate pricing decisions. It increases understanding of overheads and cost drivers; and makes costly and non-value adding activities more visible, allowing managers to reduce or eliminate them.
|