Managerial Accounting Conceptual Problems With
Accurate Solutions
1. Unit-level activities are performed each time a unit is produced.
True False Right Ans - True
2. Organization-sustaining activities are activities of the general organization
that support specific products.
True False Right Ans - False
3. Costs classified as batch-level costs should depend on the number of
batches processed rather than on the number of units produced, the number
of units sold, or other measures of volume.
True False Right Ans - True
4. Customer-level activities relate to specific customers and are not tied to any
specific products.
True False Right Ans - True
5. Managing and sustaining product diversity requires many more overhead
resources such as production schedulers and product design engineers than
managing and sustaining a single product. The costs of these resources can be
accurately allocated to products on the basis of direct labor-hours.
True False Right Ans - False
6. Activity-based costing is a costing method that is designed to provide
managers with product cost information for external financial reports.
True False Right Ans - False
7. Transaction drivers usually take more effort to record than duration
drivers.
True False Right Ans - False
8. In general, duration drivers are more accurate measures of the
consumption of resources than transaction drivers.
True False Right Ans - True
, 9. Even departmental overhead rates will not correctly assign overhead costs
in situations where a company has a range of products that differ in volume,
lot size, or complexity of production.
True False Right Ans - True
10. In activity-based costing, some manufacturing costs may be excluded from
product costs.
True False Right Ans - True
11. In activity-based costing, there are a number of activity cost pools, each of
which is allocated to products and other costing objects using its own unique
measure of activity.
True False Right Ans - True
12. The practice of assigning the costs of idle capacity to products can result in
unstable unit product costs.
True False Right Ans - True
13. An activity-based costing system should include all of the activities carried
out in an organization because any simplification will inevitably result in
inaccuracy.
True False Right Ans - False
14. The costs of a particular department should not be split up among activity
cost pools in an activity-based costing system.
True False Right Ans - False
15. Personnel administration is an example of (an):
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Organization-sustaining activity Right Ans - D. Organization-sustaining
activity.
Organization-sustaining activities are carried out regardless of which
customers are served, which products are produced, how many batches are
run, or how many units are made.
Accurate Solutions
1. Unit-level activities are performed each time a unit is produced.
True False Right Ans - True
2. Organization-sustaining activities are activities of the general organization
that support specific products.
True False Right Ans - False
3. Costs classified as batch-level costs should depend on the number of
batches processed rather than on the number of units produced, the number
of units sold, or other measures of volume.
True False Right Ans - True
4. Customer-level activities relate to specific customers and are not tied to any
specific products.
True False Right Ans - True
5. Managing and sustaining product diversity requires many more overhead
resources such as production schedulers and product design engineers than
managing and sustaining a single product. The costs of these resources can be
accurately allocated to products on the basis of direct labor-hours.
True False Right Ans - False
6. Activity-based costing is a costing method that is designed to provide
managers with product cost information for external financial reports.
True False Right Ans - False
7. Transaction drivers usually take more effort to record than duration
drivers.
True False Right Ans - False
8. In general, duration drivers are more accurate measures of the
consumption of resources than transaction drivers.
True False Right Ans - True
, 9. Even departmental overhead rates will not correctly assign overhead costs
in situations where a company has a range of products that differ in volume,
lot size, or complexity of production.
True False Right Ans - True
10. In activity-based costing, some manufacturing costs may be excluded from
product costs.
True False Right Ans - True
11. In activity-based costing, there are a number of activity cost pools, each of
which is allocated to products and other costing objects using its own unique
measure of activity.
True False Right Ans - True
12. The practice of assigning the costs of idle capacity to products can result in
unstable unit product costs.
True False Right Ans - True
13. An activity-based costing system should include all of the activities carried
out in an organization because any simplification will inevitably result in
inaccuracy.
True False Right Ans - False
14. The costs of a particular department should not be split up among activity
cost pools in an activity-based costing system.
True False Right Ans - False
15. Personnel administration is an example of (an):
A. Unit-level activity.
B. Batch-level activity.
C. Product-level activity.
D. Organization-sustaining activity Right Ans - D. Organization-sustaining
activity.
Organization-sustaining activities are carried out regardless of which
customers are served, which products are produced, how many batches are
run, or how many units are made.
