An Activity-Based Cost Allocation System

question 32

Multiple Choice

An activity-based cost allocation system:

• A)Is one form of a direct or variable costing system.
• B)Does not provide total unit cost data.
• C)Traces costs to products on the basis of activities performed on them.
• D)Does not provide for the allocation of any cost to products that cannot be directly traced to those products.
• E)Does not involve the level of detail and the number of allocations that companies make with traditional allocation methods.

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Definitions:

Test Equipment

Devices or instruments used to assess, measure, or inspect conditions, variables, or performance of materials or systems in various fields.

Internal Failure Costs

Costs incurred due to defects in products before they are shipped to customers, such as scrap and rework expenses.

Quality Cost Report

A document that identifies the costs associated with preventing, detecting, and correcting defects in products.

Circle K Toys

Presumed to be a fictional or specific brand name related to toy retail, without specific universal definition or recognition as a significant entity.