Exam 4: Cost Management Systems and an Introduction to Activity-Based Costing

In general, allocating fixed cost is less challenging than allocating variable cost.

_____ is an example of the operational purpose of the cost management system.

Using the output of an activity-based cost accounting system to aid strategic decision making and to improve the operational control of an organization.

Value-added costs are not necessary.

A value-added cost is the cost of an activity that a company cannot eliminate without affecting a product's value to the customer.

_____ is the process of collecting costs by classification.

If the vast majority of costs were directly traceable, then cost allocation would be a minor issue.

_____ is not a direct cost of a furniture manufacturer.

Costs are allocated for all the following purposes except to _____.

A cost accounting system first assigns costs to organizational units and then accumulates these costs within the unit.

A cost is consumption of resources for a particular purpose.

A cost pool is a group of individual costs that is allocated to cost objectives using multiple cost drivers.

Examples of factory overhead costs include property taxes on the factory and factory depreciation.

Evaluating the cost of a production process is an example of the strategic purpose of the cost-management system.

A sacrifice or consumption of resources for a particular purpose

A _____ is an activity for which a separate measurement is desired.

The equation for cost of goods sold

_____ is the process of reassigning cost to a cost object.

A manufacturing firm typically has _____ inventory accounts).