Do activity-based costing systems always provide more accurate ...

[EY67]

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

[sarah_brady415]

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]

TYSM

[ASDFGJLO]

Excellent