Exam 10: Activity Analysis: Costing and Management

Time-driven ABC is considered to be more accurate and less costly than ABC.

ABC systems measure the flow of resources in an entity.

Non value-added activities:

Which of these is not a benefit of Activity Based Costing?

Modern manufacturing organisations tend to have less reliance on direct labour resources.

Measurement errors in an ABC system can be caused by:

Managers are most likely to identify activities in an ABC system by:

The cost driver rate in time driven ABC is calculated using:

Finance costs would most likely be an example of an organisation sustaining cost in an ABC system.

The cost hierarchy helps identify activities and assign costs to activities in an activity based costing system.

Multiple cost pools and cost objects is a feature of :

As the number of activities in an ABC system increases, measurement error tends to:

The first step in ABC is to identify the relevant cost object.

Allocation bases should reflect the cost object's use of resources.

Evidence suggests that when combined with other initiatives such as total quality management and just in time production methods, ABC can produce improved financial performance.

Time-driven ABC provides more informed decision making in regards to the best use of practical capacity.

Swim4Life provides swimming classes and training in South East Queensland. Swim4Life offers four training levels: Learn to Swim Baby, Learn to Swim Junior, Learn to Swim Senior, Swim Squad. In November 2019, the firm's information system produced the following data No of Swirn Teachers No of Students Area Occupied Number of Classes Direct Costs Baby 4 20 10\% 108 \ 1,000 Jurior 3 24 40\% 94 \ 1,500 Serior 5 15 20\% 84 \ 3,000 Squad 3 9 30\% 48 \ 1,000 Regardless of level, students pay $15 per hour for lessons. Only 5 swimmers can be supervised by the teacher in each lesson. Swim4Life also provides lessons to school students who come with their school during school hours. These lessons are provided at a discounted rate of $12 per child. Costs associated with the Swim4Life operations for November 2019 included: Facility rent $2,500 Provision of Life Savers $800 Utilities $1,100 Computer equipment depreciation $800 Advertising $400 Training $1,500 Which of the following is the most logical allocation base for life saver costs if the relevant cost object is Swim Squad?

Uncertainties associated with ABC and ABM include: I Cost benefit analysis II The appropriate choice of cost drivers III Employee response to the system

Additional costs that result from customising products to meet individual customer specifications are most likely to be customer sustaining costs.

Time driven ABC uses a standardized cost per time unit of capacity in its model.