Answer – Activity-Based Costing (ABC)

Activity-Based Costing (ABC)

With this overview in mind please answer the following questions (answers are below):

1. A Traditional costing model might entail which of the following aspects?

  • A. An embroidered recognition of achievement affixed to a plaque
  • B. The accounting practice of basing costs on machine usage per hour


  • 1. B.
  • 2. D.
  • 3. A and D.
  • 4. B.
  • C. Conventional wisdom with regard to inventory depreciation methods
  • D. Wages established by regional standards for a five year period

2. A company which routinely adjusts factory procedures to pursue impromptu opportunities might benefit from which of the following accounting models?

  • A. Lone Wolf  Accounting Software
  • B. Senate sub-committee accounting principles
  • C. Labor Department pay rate guidelines
  • D. Activity-based accounting model

3. How might the possession of the most accurate production costs benefit a company?

  • A. Allow the sales team more certainty in marketing and promotion materials.
  • B. Encourage competitors to utilize prison labor.
  • C. Remove accounting method sanctions
  • D. Facilitate project bids based on more accurate cost estimates

4. Which of the following might be a negative outcome resulting from utilizing the Traditional costing model?

  • A. Negative Citing by the Basic Register of Illegal Activities
  • B. Increased production without corresponding increased profits
  • C. Increased incidence of basic occurrences
  • D. Revocation of membership to Activity Based Council