Answer the following statements true (T) or false (F)
1. In the first step in developing an activity-based costing system for a manufacturing company, the management team must determine the activities that incur the majority of the product and period costs.
2. The main difference between activity-based costing and traditional costing systems is that activity-based costing uses a separate allocation base for each activity.
3 In ABC systems, the best allocation base is the primary factor that causes the cost to increase or decrease.
4. Activity-based costing focuses on a single predetermined overhead rate for cost analysis.
5. Traditional costing systems employ multiple allocation rates for manufacturing overhead costs, but an activity-based costing system uses only one rate for allocating manufacturing overhead costs.
1. FALSE- Explanation: In the first step in developing an activity-based costing system for a manufacturing company, the management team must determine the activities that incur the majority of the manufacturing overhead costs.
2. TRUE
3. TRUE
4. FALSE
5. FALSE
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What will be an ideal response?
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