Transcription of 9 Activity-Based Costing Solutions to Review Questions
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9 Activity-Based Costing Solutions to Review Questions
1 9 Activity-Based Costing Solutions to Review Questions 9-1. Give examples of cost drivers commonly used to allocate overhead costs to products and services. Common allocation bases are direct labor-hours, direct labor costs, and machine-hours. Somewhat less common is direct material costs. 9-2. Give examples of cost drivers commonly used to allocate overhead costs to products and services. The term death spiral refers to a process that begins by attempting to increase prices to meet reported product costs. Higher prices reduce demand, leading to production and still higher reported product costs. Eventually, the firm loses products as the market will not support them and goes out of business. The death spiral is not the result of the cost system directly, but the result of managers making decisions (in this case raising prices) based on the cost system that is (often inaccurately) signaling increased costs. 9-3. Give examples of cost drivers commonly used to allocate overhead costs to products and services.
time-driven activity-based costing? The two questions a manager must answer when implementing time- driven activity-based costing are (1) what is the cost of the resources supplied to a department and (2) how much time it takes to …
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