A primary benefit of Activity-based costing (ABC) is that it helps to establish a more accurate cost for each unit of product or service. Another benefit would be that, __________________.           a.        the expense of obtaining the cost data required by the system is very minimal.           b.        all the required data can be easily generated internally within a business’s financial accounting system.           c.        it makes managers more aware of their responsibility to control the activities that generate costs.           d.        it provides relevant information for decision making when the products produced are very similar.

Which ONE of the following is an advantage of Activity Based Costing? a. It provides more accurate product costs b. It is simple to apply c. It is a form of marginal costing and so is relevant to decision making d. It is particularly useful when fixed overheads are very low 39 What are the main purposes of budgeting? (i) to give authority to spend (ii) to control expenditure (iii) to aid decision making. a. (i) only b. (i) and (ii) only c. (ii) only d. i), (ii) and (iii) 40 Which of the following is NOT a purpose of budgeting? a. Planning b. Co‐ordination c. Consultation d. Communication 41 What is a flexible budget? a. budget for semi‐variable overhead costs only b. a budget which, by recognizing different cost behavior patterns, is designed to c. change as volume of activity changes d. a budget for a twelve-month period which includes planned revenues, expenses, assets and liabilities 42 What is a purpose of a flexible budget? a. to cap discretionary expenditure b. to produce a revised forecast by changing the original budget when actual costs are known c. to control resource efficiency d. to communicate target activity levels within an organization by setting a budget in advance of the period to which it relates 43 What is a fixed budget? a. a budget for a single level of activity b. a budget used when the mix of products is fixed in advance of the budget period c. a budget which ignores inflation d. an overhead cost budget

Activity-based costing (ABC) is a two-stage cost allocation system that first assigns costs to activities and then to products based on each product’s use of the activities.Group startsTrue or FalseTrue, unselectedFalse, unselected

Fill in the Blank QuestionFill in the blank question.The basic principle of activity-based costing is that a(n) is what causes overhead cost to be incurred.

A managing director was heard to remark: ‘Activity-based costing may offer some entitiesadvantages, but given our situation I do not think the cost of implementing such a system can bejustified.’ Is this stance reasonable? Discuss.

Fill in the Blank QuestionFill in the blank question. (Identifying, Assigning,Tracing) activities is the first step in applying activity-based costing.