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B Com Exam  >  B Com Tests  >  Test: Activity Based Costing - 1 - B Com MCQ

Test: Activity Based Costing - 1 - B Com MCQ


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10 Questions MCQ Test - Test: Activity Based Costing - 1

Test: Activity Based Costing - 1 for B Com 2024 is part of B Com preparation. The Test: Activity Based Costing - 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Activity Based Costing - 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Activity Based Costing - 1 below.
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Test: Activity Based Costing - 1 - Question 1
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Which costing system has been developed to overcome the limitations of the traditional costing system?

Detailed Solution for Test: Activity Based Costing - 1 - Question 1
Activity-based costing (ABC) has been developed to overcome the limitations of the traditional costing system, as mentioned in the text. ABC is a modern approach that assigns overhead costs to products based on the activities required for their production.
Test: Activity Based Costing - 1 - Question 2
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What is the primary focus of activity-based costing (ABC) when assigning costs to products?

Detailed Solution for Test: Activity Based Costing - 1 - Question 2
In ABC, the primary focus when assigning costs to products is on activity consumption. It considers the activities involved in producing a product and how they consume resources, leading to more accurate cost determination.
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Test: Activity Based Costing - 1 - Question 3
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Why is the traditional costing system considered less effective in today's competitive environment?

Detailed Solution for Test: Activity Based Costing - 1 - Question 3
The traditional costing system was designed for mass production, which is different from today's competitive environment where companies produce a wide variety of products with different cost structures. Hence, it is considered less effective.
Test: Activity Based Costing - 1 - Question 4
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What is a cost driver in activity-based costing (ABC)?
Detailed Solution for Test: Activity Based Costing - 1 - Question 4
A cost driver in ABC is a factor that causes a change in the cost of an activity, reflecting the cause-and-effect relationship between activity consumption and cost.
Test: Activity Based Costing - 1 - Question 5
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How does activity-based costing (ABC) contribute to better decision-making?
Detailed Solution for Test: Activity Based Costing - 1 - Question 5
ABC contributes to better decision-making by highlighting inefficient operations, allowing management to focus on areas where costs can be reduced and processes can be improved.
Test: Activity Based Costing - 1 - Question 6
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What is the major advantage of activity-based costing (ABC) in terms of product cost determination?
Detailed Solution for Test: Activity Based Costing - 1 - Question 6
The major advantage of ABC in terms of product cost determination is that it offers a more accurate product cost compared to traditional costing systems.
Test: Activity Based Costing - 1 - Question 7
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What is the significance of cost pools in activity-based costing (ABC)?
Detailed Solution for Test: Activity Based Costing - 1 - Question 7
Cost pools in ABC are significant as they group together similar cost activities, allowing for more accurate allocation of costs to cost objects.
Test: Activity Based Costing - 1 - Question 8
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Why is it important to calculate the activity cost driver rate in activity-based costing (ABC)?
Detailed Solution for Test: Activity Based Costing - 1 - Question 8
Calculating the activity cost driver rate in ABC is essential to link costs with cost drivers, which helps in accurately assigning costs to cost objects based on their consumption of activities.
Test: Activity Based Costing - 1 - Question 9
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What is the primary focus of activity-based management (ABM) in ABC?
Detailed Solution for Test: Activity Based Costing - 1 - Question 9
The primary focus of activity-based management (ABM) within ABC is to manage activities to improve efficiency, leading to better performance and cost reduction.
Test: Activity Based Costing - 1 - Question 10
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What factors have influenced the development and application of activity-based costing (ABC)?
Detailed Solution for Test: Activity Based Costing - 1 - Question 10
The development and application of ABC have been influenced by factors such as high overhead costs, increased complexity, and automation in production processes, as mentioned in the text.
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