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:

Rejection Region

The range of values in hypothesis testing for which the null hypothesis is rejected, based on the chosen level of significance.

Two-Sided Hypothesis

A hypothesis test that allows for an effect in two directions, either greater than or less than a specific value, not limiting the expected effect to one direction.

Null Hypothesis

A stated hypothesis that there is no significant difference or effect, often denoted as H0, to be tested against the alternative hypothesis.

Type I Error

The incorrect rejection of a true null hypothesis or a false positive in hypothesis testing.