Which ONE of the following is an advantage of Activity Based Costing? a. It provides more accurate product costs b. It is simple to apply c. It is a form of marginal costing and so is relevant to decision making d. It is particularly useful when fixed overheads are very low 39 What are the main purposes of budgeting? (i) to give authority to spend (ii) to control expenditure (iii) to aid decision making. a. (i) only b. (i) and (ii) only c. (ii) only d. i), (ii) and (iii) 40 Which of the following is NOT a purpose of budgeting? a. Planning b. Co‐ordination c. Consultation d. Communication 41 What is a flexible budget? a. budget for semi‐variable overhead costs only b. a budget which, by recognizing different cost behavior patterns, is designed to c. change as volume of activity changes d. a budget for a twelve-month period which includes planned revenues, expenses, assets and liabilities 42 What is a purpose of a flexible budget? a. to cap discretionary expenditure b. to produce a revised forecast by changing the original budget when actual costs are known c. to control resource efficiency d. to communicate target activity levels within an organization by setting a budget in advance of the period to which it relates 43 What is a fixed budget? a. a budget for a single level of activity b. a budget used when the mix of products is fixed in advance of the budget period c. a budget which ignores inflation d. an overhead cost budget

A primary benefit of Activity-based costing (ABC) is that it helps to establish a more accurate cost for each unit of product or service. Another benefit would be that, __________________.           a.        the expense of obtaining the cost data required by the system is very minimal.           b.        all the required data can be easily generated internally within a business’s financial accounting system.           c.        it makes managers more aware of their responsibility to control the activities that generate costs.           d.        it provides relevant information for decision making when the products produced are very similar.

Select all that applyWhich of the following are true of activity-based costing?Multiple select question.Activity-based costing is based on the concept that products consume activities and activities consume resources.Activity-based costing uses a single cost pool for the entire plant.Activity-based costing is a two-stage product costing method.Activity-based costing is a single-stage product costing method.

Multiple Choice QuestionThe first step in applying activity-based costing isMultiple choice question.allocating overhead costs to cost objects.identifying the activities.compute rate for each activity.

Fill in the Blank QuestionFill in the blank question.The basic principle of activity-based costing is that a(n) is what causes overhead cost to be incurred.

Multiple Choice QuestionThe basis of the activity-based costing method is a(n)Multiple choice question.operationdirect labor costsdirect labor hoursactivity