An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:
QUESTION 1

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:

under activity-based costing the sum of all product costs does not equal the total costs of the company

under activity-based costing manufacturing costs are assigned to products

activity-based costing has not been approved by the United Nation’s International Accounting Board

activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours

QUESTION 2

The plant manager’s salary is an example of a(n):

Unit-level activity

Batch-level activity

Product-level activity

Organization-sustaining activity

QUESTION 3

Grammer Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:

Costs:
Wages and salaries $240,000
Depreciation 160,000
Occupancy 140,000
Total $540,000

The distribution of resource consumption across the three activity cost pools is given below:

Activity Cost Pools
Fabricating Order Processing Other Total
Wages and salaries 30% 45% 25% 100%
Depreciation 20% 35% 45% 100%
Occupancy 5% 65% 30% 100%

How
How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool?
$135,000

$174,000

$162,000

$180,000

QUESTION 4

Poskey Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:

Costs:

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