If Activity-Based Costing Is Implemented in an Organization Without Any

question 100

Multiple Choice

If activity-based costing is implemented in an organization without any other changes being implemented,total overhead manufacturing costs will

• A)be reduced because of the elimination of non-value-added activities.
• B)be reduced because organizational costs will not be assigned to products or services.
• C)be increased because of the need for additional people to gather information on cost drivers and cost pools.
• D)remain constant and simply be spread over products using different cost drivers.

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Definitions:

TPS

Toyota Production System, a highly influential production philosophy focused on eliminating waste, improving productivity, and achieving efficiency in manufacturing.

Kanban Size

Refers to the capacity or limit set for a kanban, a tool in lean manufacturing and just-in-time production, which signals when more materials or work is needed.

Setup Cost

A fixed cost incurred each time a production process or activity is initiated, which includes costs associated with preparing equipment and facilities for manufacturing.

Carrying Cost

The expenses associated with storing and maintaining inventory, including warehousing, insurance, and spoilage costs.