Answer the Following Questions Using the Information Below

question 5

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 labour 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 types of wood used.The new cost of a set of chess pieces was determined to be $298.00 per set.
-A key reason for using an ABC system rather than a department-costing system is because ABC assigns indirect costs:

• A)more simply than a department-costing system.
• B)in a less costly manner.
• C)to reflect differences required by different processes as well as customers.
• D)using broader averages.