Answer the Following Questions Using the Information Below

question 81

Multiple Choice

Answer the following questions using the information below:
Products S5 and CP8 each are assigned $100.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, S5 requires 45 minutes less setup time than CP8.
-According to an ABC system,S5 uses a disproportionately ________.

• A) smaller amount of unit-level costs
• B) larger amount of unit-level costs
• C) smaller amount of batch-level costs
• D) larger amount of batch-level costs

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Definitions:

Ending Inventory

Ending inventory is the total value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Conversion Costs

The combined costs of direct labor and manufacturing overhead and conversion costs are used to transform raw materials into finished products.

Equivalent Unit

A concept in cost accounting used to apportion costs to partially completed goods, treating them as a fraction of a fully completed unit.

Process Costing System

An accounting methodology used to allocate costs to units of product in continuous processes or industries where the products are indistinguishable from each other.