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Author Question: Do activity-based costing systems always provide more accurate product costs than conventional cost ... (Read 124 times)

EY67

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on: Jul 5, 2018
Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?
 
  What will be an ideal response?

Question 2

Mandy withdraws 600 from her business. This transaction increases cash but decreases owner's equity.
 a. True
   b. False
   Indicate whether the statement is true or false


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sarah_brady415

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Reply #1 on: Jul 5, 2018
Answer to Question 1

Answer: No. Traditional systems contain smaller and fewer cost distortions when the traditional systems' unit-level assignments and the alternative activity-cost drivers are relatively similar in proportion to each other. Still, the use of unit-level measures to assign indirect costs is more likely to undercost low-volume products and more complex products. Both traditional product-costing systems and ABC product-costing systems seek to assign all manufacturing costs to products. Cost distortions occur when a mismatch (incorrect association) occurs between the way support costs are incurred and the basis for their assignment to individual products.

Answer to Question 2

False


EY67

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Reply 2 on: Jul 5, 2018
YES! Correct, THANKS for helping me on my review

parshano

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Reply 3 on: Yesterday
:D TYSM

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