Question 1: ABC (activity-based costing) uses activity allocation rates in product costing. How are activity cost drivers used in ABM (activity-based management)?
Question 2: Difference between Unit-Based Costing and Activity-Based Costing
Which one of the following statements best summarizes the difference between unit-based costing (UBC) and activity-based costing (ABC)?
a. With UBC, costs are first allocated to departments; with ABC, costs are first allocated to activities.
b. With UBC, costs are first allocated to activities; with ABC, costs are first allocated to departments.
c. With UBC, costs are first allocated to departments; with ABC, costs are first allocated to products.
d. With UBC, costs are first allocated to products; with ABC, costs are first allocated to departments.
Question 3: Activity-Based Management
Which one of the following is a correct flow of information in activity-based management?
a. Activities to Costs to Products
b. Activity Cost Drivers to Performance Measures to Activities
c. Activity Cost Drivers to Activities to Performance Measures
d. Activity Cost Drivers to Activities to Performance Measures
e. Products to Activities to Cost