A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.
can be used to eliminate nonvalue-added activities
is easy to analyze and interpret
takes the choices and judgment challenges away from the managers
emphasizes how managers can achieve higher sales
The unique feature of an ABC system is the emphasis on ________.
costing individual jobs
department indirect-cost rates
multiple-cost pools
individual activities
Which of the following is a sign that an ABC system may be useful for an organization?
Significant amounts of indirect costs are allocated using multiple cost pools.
Products make similar demands on resources because of similarities in volume, process steps, batch size, or complexity.
Many indirect costs are described as batch-level costs, product-sustaining costs, or facility-sustaining costs.
Operations staff disagrees with accountants about the costs of manufacturing and marketing products and services.
It only makes sense to implement an ABC system when ________.
a single product is produced in bulk
its benefits exceed its implementation costs
it traces more costs as direct costs
production process is labor-intensive
Product-cost cross-subsidization ________.
exists when one overcosted product results in more than one other product being overcosted
means that if a company undercosts more than one of its products, it will overcost more than one of its other products
means that if a company undercosts one of its products, it will overcost at least one of its other products
exists only when one overcosted product results in all other products being overcosted
