Answer the Following Questions Using the Information Below

question 73

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.
-Given this change in the cost structure ________.

• A) The costing results for chess pieces under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system.
• B) Chess pieces have benefited from the new system.
• C) Chess pieces are definitely more accurately costed.
• D) Chess will now have a lower sales price.

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Definitions:

Multinomial

Related to outcomes or processes that can fall into more than two categories in statistical experiments.

Categories

Distinct groups or classes into which items or individuals can be sorted based on shared qualities or characteristics.

Proportion

A statistical measure that indicates the fraction of the total population that possesses a particular attribute or characteristic.

Chi-squared Goodness-of-fit Test

This test assesses if observed frequencies in a single categorical variable match expected frequencies determined from a theoretical distribution.