Questions:
1. The costs of activities that are classified as unit-level should be proportional to the number of units produced.
2. Batch-level activities are performed each time a batch is handled or processed, regardless of how many units are in the batch.
3. Product-level activities relate to specific products and typically must be carried out regardless of how many batches are run or units of product are made.
4. Activity-based management seeks to eliminate waste by allocating costs to products that waste resources.
5. Activity-based costing may supplement, rather than replace, a company"s formal cost accounting system.
6. In activity-based costing, nonmanufacturing costs as well as manufacturing costs may be assigned to products.
7. When activity-based costing is used for internal decision-making, the costs of idle capacity should be considered period costs that flow through to the income statement as an expense of the current period.
8. A transaction driver provides a simple count of the number of times that an activity occurs.
9. In activity-based costing, all manufacturing costs must be included in product costs.
10. The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to activity cost pools.
11. The activity rates computed in activity-based costing can provide valuable clues concerning where there is waste and scope for improvement in an organization.
12. In the second-stage allocation in activity-based costing, costs that were not allocated in the first stage are assigned to the company"s most profitable products.
13. If a product has a negative product margin (i.e., loss) according to an activity-based costing system, it should be dropped.
14. When a company implements activity-based costing system, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the high volume products.
15. An action analysis report provides more detail about costs and how they might adjust to changes in activity than a conventional activity-based costing analysis.