hitechpathshala

Q. 1

An activity which generates costs

An item of production overheads

A common cost which is shared over cost centres

Any cost relating to transport

An activity which generates costs

Q. 2

In activity-based costing, costs are accumulated by activity using:

Cost drivers

Cost objects

Cost pools

Cost benefit analysis

Q. 3

A cost driver:

Is a force behind the overhead cost

Is an allocation base

Is a transaction that is a significant determinant of cost

All of the above

Q. 4

Transactions undertaken by support department personnel are the appropriate cost drivers. Find the one which is not appropriate:

The number of purchase, supplies and customers9 orders drives the cost associated with new material inventory, work-in-progress and finished goods inventory

The number of productions runs undertaken drives production scheduling, inspection and material handling

The quality of raw material issued drives the cost of receiving department costs

The number of packing orders drives the packing costs

Q. 5

Steps in ABC include:

Identification of activities and their respective costs

Identification of cost driver of each activity and computation of an allocation rate per activity

Allocation of overhead cost to products/ services based on the activities involved

All of the above

Q. 6

Which of the following is not a benefit of ABC?

Accurate cost allocation

Improved decision making

Better control on activity and costs

Reduction of prime cost

Q. 7

The steps involved for installation of ABC in a manufacturing company include the following except:

Borrowing fund

Feasibility study

Building up necessary IT infrastructure and training of line employees

Strategy and value chain analysis

Q. 8

Which of the following statements are true:
(1) Activity based Management involves activity analysis and performance measurement.
(2) Activity based costing serves as a major source of information in ABM.

(1) True; (2) False

(1) True; (2) True

(1) False; (2) True

(1) False; (2) False

Q. 9

The key elements of activity-based budgeting are:

Type of activity to be performed

Quantity of activity to be performed

Cost of activity to be performed

All of the above

COST5- ACTIVITY BASED COSTING

Marks: 9