Canton's Corp

question 157

Multiple Choice

Canton's Corp.manufactures two sizes of ceramic paperweights,regular and jumbo.The following information applies to their expectations for the planning period:


Expected direct costs amounts to $9,130,000 for the period.Support cost requirements of both products are substantially different from one another.Canton uses an ABC costing system.
Which of the following statements is true of implementing an ABC system?

• A)Managers should never compromise on the cause-and-effect relationship of cost drivers and costs.
• B)The three guidelines for refining costing systems should be ignored while implementing an ABC costing system.
• C)The heterogeneous cost pools give managers greater confidence in the activity and product cost numbers from the ABC system.
• D)Identifying the cost-allocation bases defines the number of activity pools into which costs must be grouped in an ABC system.

---

Definitions:

Bacteria

Microscopic, single-celled organisms found in virtually every environment on Earth, some of which are beneficial while others can cause diseases.

Alkaline

Relating to or denoting substances that have a pH greater than 7, characterized by the presence of hydroxide ions (OH-).

Acidic

Refers to substances with a pH value less than 7, characterized by their sour taste and ability to turn litmus paper red.

Clarity

Clarity means the quality of being clear, in terms of perception, understanding, or expression.