Answer the Following Questions Using the Information Below

question 7

Multiple Choice

Answer the following questions using the information below:
Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours) , the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set.
-The goal of a properly constructed ABC system is to ________.

• A) have the most accurate cost system
• B) identify more indirect costs
• C) develop the best cost system that meets the cost/benefit test
• D) have separate allocation rates for each department

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Definitions:

Participants

Individuals who take part in a study or experiment, often referred to as subjects, especially in research contexts.

Experiment

A scientific procedure undertaken to make a discovery, test a hypothesis, or demonstrate a known fact.

Validity

The extent to which a test, measurement, or study accurately reflects or assesses the specific concept it is intended to measure.

Electric Shocks

A sudden discharge of electricity through a part of the body, which can be therapeutic or accidental.