3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
CostgAccounting:gAgManagerialgEmphasis,g16e,gGlobalgEditiong(Horngren)
Chapterg5g Activity-BasedgCostignggandgActivity-BasedgManagementg
5.1 Objectiveg5.1g
1) Whichg ofg theg followingg statementsg is g trueg ofg ag peanut-
butterg costingg system? g A)gAgpeanut-buttergcostinggsystemgtypicallyghas gmore-
homogeneous gindirectgcostgpools.g
B) Agpeanut-
buttergcostinggsystembroadly gaverages gorgspreads gthegcostgofgresources guniformlygtogcostg ob
jects.g
C) Agpeanut-buttergcosting gsystemgassumes gthatgallgcosts gare gvariable.g
D) Inga gpeanut-
buttergcostinggsystem,gcostsgofgactivities garegusedgtogassigngcosts gtogothergcostgobjects gsuchg a
sgproducts gorgservices gbasedgongthegactivities gthegproducts gorgservices gconsume.g
Answer:g B
g Difg fg:g
2g Objective:
g 1g
AACSB:g Analyticalg thinkingg
2) Overcostingg ag particularg product gmaygresult g
in:g A) g g pricingg g the g g productg g too
g g highg B) g g pricingg g theg g product
g g toog g lowg C)g operatingg efg g g f
g g g ig g g ciencies g D) gunderstatinggtotal
gproduct gcostsg
Answer:g A
g Difg fg:g
2g Objective:
g 1g
AACSB:g Analyticalg thinkingg
3) Forgagcompanygwithgdiverse gproducts,gundercostinggoverheadgofga gproductgwillgleadgtogproduct-crossg
-
subsidizationg g g whichg g g means g g g th
at:g A)g directglaborgcosts gofg thegproductgaregmi
sallocatedg B)gdirectgmaterialgcosts gofgthegproduct
garegmisallocatedg C)gindirectgcosts gofganothergpr
oductgaregmisaglocatedg
D)gdirectgcosts gofganothergproductgaregmisallocate
dg Answer:g Cg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
1
Copyrightg ©g 2018g Pearsong Education,g Ltd.
1/86
about:blank 1/86
,3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
4) Aquag Companyg produces gtwog products–
Alphag andg Beta.gAlphag has gag highg marketgsharegandg isg producedgingbulk.gProductiongofgBeta
gisgbasedgongcustomergorders gandgisgcustomgdesigned.gAlso,g55%gofg Beta's gcostgisgsharedgbetwe
engdesigngandgsetupgcosts,gwhilegAlpha'sgmajorgportions gofgcosts garegdirectgcosts.g Alphagis gusin
ggagsingle gcostgpoolgtogallocate gindirectgcosts.gWhichgofg thegfollowing gstatementsgis gtruegofg Aqu
a?g
A)gAquagwillgovercostgBeta's gdirectgcosts gas gitgis gusinggagsingle gcostgpoolgtogallocate gin
directgcosts.g B)gAquagwillgundercostgAlpha's gindirectgcostsgbecausegalphaghas ghighgdire
ctgcosts.g
C) Aquag willg overcostg Alpha'sgindirectgcostsgasgitgisg usinggagsingleg costgpoolgtogallocateg indirectg costs.g
D) Aqua gwillgovercost gBeta's gindirect gcosts gbecause gbeta ghasghighgindirec
tgcosts.g Answer:g Cg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
5) Product-costg g g g g cross-
subsidizationg g g g g g g g g g meansg g g g g g that:g A)g wheng oneg p
roductg is g overcosted,g itg results g ing moreg thang oneg otherg productg beingg overcostedg B)gwh
engagcompanygundercosts gmoregthangonegofgits gproducts,gitgwillgovercostgmoregthangonegofg its
gotherg productsg g g g g g g g g g g g g g g g g g g g g g
g g g g g g g g g g g C)g whengag companyg undercosts goneg ofg its g products,gi
tg willg overcostg atgleastgone g ofg its gotherg products g D)gwhengonegproductgis govercostedgitgres
ultsgingallgothergproducts gbeinggovercostedg
Answer:g C
g Difg fg:g
2g Objective:
g 1g
AACSB:g Analyticalg thinkingg
6) Which gofg the gfollowingg has gaccelerated gneedgfor grefg ig nedgcost gsy
stems?g A) gglobal gmonopolies g
B)g g g g g risingg g g g pr
ices g C)g g g intense g g g co
mpetitiong D)gagshiftgtowardgincrea
sedgdirectgcostsg Answer:g Cg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
7) Uniformlygassigninggthe gcosts gofgresources gtogcostgobjectsgwhengthosegresources garegactually
gusedgingag nonuniformgwaygisgcalledgactivitygbasedgcosting.g
Answer:g g g g g g g g g g g g g g g g g g g g g g g g
g g g FALSEg Explanation:g Peanut g butter g costingg occurs gwhengcostsgaregassignedg unifor
mlygamount gmultiple g productsg usingg average g costs g that g dog not g take gintogaccount g the g nonunifo
rgmwaygthe g resources gare g consumedg tog produce gthe gdifg fgerent gproducts.g
Difg f g: g1
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
2
Copyrightg ©g 2018g Pearsong Education,g Ltd.
2/86
about:blank 2/86
,3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
8)Product-costgcross-
subsidizationgis gverygcommon gwhengcosts gareguniformlygspreadgacross gvarious g products.g
Answer:g TRUE
g Difg fg:g2 g
Objective: g 1g
AACSB:g Analyticalg thinkingg
9)Companies gthat govercost gproducts griskgbecominggless gefg fgective gon gpricingg andglosinggmark
etgshareg whengcompetition gutilizes gmoregaccurategcost gsystems. g
Answer:g TRU
Eg Difg fg:g1
g Objective: g 1
g
AACSB:g Analyticalg thinkingg
10) Ifgcompaniesgincrease gmarketgsharegingaggivengproductglinegbecause gtheirgreportedgcostsgar
egless gthang theirgactualgcosts,gtheygwillgbecomegmoregprofg igtable gingtheglonggrun.g
Answer:g g g g g g g g g g g g g g g g g g g g g g g g g g
g g FALSEg Explanation: g Thegactualgcosts gwillgincreasegbecause gofg thegadditionalgsalesgandgt
hegotherg productglines g (whichgaregsubsidizinggthegundercostinggofgtheggrowinggproductgline)gwillg
sufg fger.gThegnetgresultgwillgbegtheg companyghavinggaglowergoperatinggincome gthangitgcouldgha
veghad.g
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
11)As gproductgdiversitygandgindirectgcosts gincrease,gitgis gusuallygbestgtogswitchgawaygfro
mgagbroadg averaginggsystemgtogangactivity-basedgcostgsystem.g
Answer:g TRU
Eg Difg fg:g1
g Objective: g 1
g
AACSB:g Analyticalg thinkingg
12) Thegriskgofgpeanut-
buttergcostinggrises gwhengbroadgaverages garegusedgacrossgmultiple gproductsg withoutgmanagers
gconsideringgthegtruegamounts gofgresources gconsumedgingthegmakinggofgeachgproduct.g Answe
r:g TRUEg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
13) Explaing howg ag top-
sellingg productg mayg actuallyg resultg ing losses g forg theg company. g Answer:g Ifg indirectgco
stsgareg notgproperlygallocatedg togtheg products,gagproductgmaygappearg togcostglessg thangitgactu
allygdoes gcostgtogproduce. gIfgthegsellinggpricegis gbasedgongtheseglowergcosts,gthegsellinggpricegm
ayg actuallygbeglowergthangthegcosts gneededgtogproduce gthegproductgresultingginglossesgforgthegc
ompany.gThis g
wouldgmakeg undercosted gproducts gappear gmore gprofg ig tablegandg therefore gmakinggmarketinggef
g fg orts g tog promote gthegundercosted gproduct gcounter gproductive. g
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
3
Copyrightg ©g 2018g Pearsong Education,g Ltd.
3/86
about:blank 3/86
, 3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
5.2 Objectiveg5.2g
1) Refg g g g ig g ningg g ag g costg g systeminvolves g g whichg g ofg g theg
g following? g A)g g classifg yingg g asg g manyg g costs g g asg g indirectg g cos
tsg g as g g is g g feasible g B)g g creatingg asg g manyg g costg g pools g g as g g po
ssibleg g g tog g capture g g allg g costs g C)gidentifyinggthegactivitiesginvolvedgingagpr
ocess g andgunderstandingghowgthosegactivities gconsume g
resourcesg g g g g g g g g g g g g g g g g
g g g g g g g D)gSeekinggangeasier gandgmoregcost gefg fgecti
vegwaygtogcalculate gaverage gcosts g Answer:g Cg
Difg fg :g1g
Objective: g 2
g
AACSB:g Analyticalg thinkingg
2) Whichg ofg g theg following g is g trueg ofg g refg g g ig g nementg ofg g ag g costin
gg system?g A)gWhilegrefg igninggagcostinggsystem,gcompanies gshouldgidentifygas gmanygindire
ctgcosts gas gis geconomically g feasible.g
B) Ag homogeneousg costg poolg willg usegmultiplegcostg driversgtog allocategcosts.g
C) Itg reduces g the g useg ofg broadg averages g forg assigningg the g costg ofg resources g tog costg
objects.g D)gItgis glikelygtogyieldgthegmostgdecision-
makinggbenefg igts gwhengdirectgcosts garegaghighgpercentage gofgtotalg costs.g
Answer:g C
g Difg fg:g
2g Objective:
g 2g
AACSB:g Analyticalg thinkingg
3) Which gofg thegfollowinggis gagreason gthatghas gaccelerated gthe gdemand gfor grefg ignementsgtogth
egcostingg system?g
A) The g decliningg demand g forg customizedg products ghas g led g managers g tog decreaseg the g varietyg of
g products g andgservices gtheir gcompanies gofg fger.g
B) The guse gofgproduct gand gprocess gtechnology ghas gledgtogangincrease gingindirectgcosts gandga
gdecreaseging directgcosts.g
C) The gincreased gofgautomated gprocesses ghasgledgtogthe gincrease gingdirectgmanufacturing gcostgle
adinggtogag decreasegingbreakgevengpoint.g
D) The gincreasinggcompetition gingproduct gmarkets ghas gledgtogangincrease gingcontribution gmargin
gresultingg ingagdecreasegofgbreakgevengpoint.g
Answer:g B
g Difg fg:g3
g Objective:
g 2g
AACSB:g Analyticalg thinkingg
4)Demandgforg refg ignementsgtogthegcostinggsystemghasgacceleratedgdueg
tog
.gA)gincreasegingdirectgcostsg
B)g decreaseg ing productgdiversit
yg C)g decreaseg ing indirect g
costs g D)gcompetitiongingprodu
ctgmarkets g Answer:g Dg
Difg fg :g1g
Objective: g 2
g
AACSB:g Analyticalg thinkingg
5) JohnsongSuperiorgProducts gInc.gproduces ghospitalgequipmentgandgthegsetupgrequirements gvary
gfromg productgtogproduct. gJohnsongproduces gits gproductsgbasedgongcustomergorders gandg uses g
ABCgcosting.gIng onegofgits gindirectgcostgpools,gsetupgcosts gandgdistribution gcosts garegpooledgt
ogether.gCosts ging this gpoolgareg allocatedgusinggnumbergofgcustomergordersgforgthegeasiness gof
gcostinggoperations.gBasedgongtheg informationgprovided,gwhichgofg thegfollowinggarguments gisg
valid?g
A) Johnsonghasgclearlygfailedg tog identifyg asg manyg directg costsgasgisgeconomicallyg feasible.g
4
Copyrightg ©g 2018g Pearsong Education,g Ltd.
4/86
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gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
CostgAccounting:gAgManagerialgEmphasis,g16e,gGlobalgEditiong(Horngren)
Chapterg5g Activity-BasedgCostignggandgActivity-BasedgManagementg
5.1 Objectiveg5.1g
1) Whichg ofg theg followingg statementsg is g trueg ofg ag peanut-
butterg costingg system? g A)gAgpeanut-buttergcostinggsystemgtypicallyghas gmore-
homogeneous gindirectgcostgpools.g
B) Agpeanut-
buttergcostinggsystembroadly gaverages gorgspreads gthegcostgofgresources guniformlygtogcostg ob
jects.g
C) Agpeanut-buttergcosting gsystemgassumes gthatgallgcosts gare gvariable.g
D) Inga gpeanut-
buttergcostinggsystem,gcostsgofgactivities garegusedgtogassigngcosts gtogothergcostgobjects gsuchg a
sgproducts gorgservices gbasedgongthegactivities gthegproducts gorgservices gconsume.g
Answer:g B
g Difg fg:g
2g Objective:
g 1g
AACSB:g Analyticalg thinkingg
2) Overcostingg ag particularg product gmaygresult g
in:g A) g g pricingg g the g g productg g too
g g highg B) g g pricingg g theg g product
g g toog g lowg C)g operatingg efg g g f
g g g ig g g ciencies g D) gunderstatinggtotal
gproduct gcostsg
Answer:g A
g Difg fg:g
2g Objective:
g 1g
AACSB:g Analyticalg thinkingg
3) Forgagcompanygwithgdiverse gproducts,gundercostinggoverheadgofga gproductgwillgleadgtogproduct-crossg
-
subsidizationg g g whichg g g means g g g th
at:g A)g directglaborgcosts gofg thegproductgaregmi
sallocatedg B)gdirectgmaterialgcosts gofgthegproduct
garegmisallocatedg C)gindirectgcosts gofganothergpr
oductgaregmisaglocatedg
D)gdirectgcosts gofganothergproductgaregmisallocate
dg Answer:g Cg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
1
Copyrightg ©g 2018g Pearsong Education,g Ltd.
1/86
about:blank 1/86
,3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
4) Aquag Companyg produces gtwog products–
Alphag andg Beta.gAlphag has gag highg marketgsharegandg isg producedgingbulk.gProductiongofgBeta
gisgbasedgongcustomergorders gandgisgcustomgdesigned.gAlso,g55%gofg Beta's gcostgisgsharedgbetwe
engdesigngandgsetupgcosts,gwhilegAlpha'sgmajorgportions gofgcosts garegdirectgcosts.g Alphagis gusin
ggagsingle gcostgpoolgtogallocate gindirectgcosts.gWhichgofg thegfollowing gstatementsgis gtruegofg Aqu
a?g
A)gAquagwillgovercostgBeta's gdirectgcosts gas gitgis gusinggagsingle gcostgpoolgtogallocate gin
directgcosts.g B)gAquagwillgundercostgAlpha's gindirectgcostsgbecausegalphaghas ghighgdire
ctgcosts.g
C) Aquag willg overcostg Alpha'sgindirectgcostsgasgitgisg usinggagsingleg costgpoolgtogallocateg indirectg costs.g
D) Aqua gwillgovercost gBeta's gindirect gcosts gbecause gbeta ghasghighgindirec
tgcosts.g Answer:g Cg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
5) Product-costg g g g g cross-
subsidizationg g g g g g g g g g meansg g g g g g that:g A)g wheng oneg p
roductg is g overcosted,g itg results g ing moreg thang oneg otherg productg beingg overcostedg B)gwh
engagcompanygundercosts gmoregthangonegofgits gproducts,gitgwillgovercostgmoregthangonegofg its
gotherg productsg g g g g g g g g g g g g g g g g g g g g g
g g g g g g g g g g g C)g whengag companyg undercosts goneg ofg its g products,gi
tg willg overcostg atgleastgone g ofg its gotherg products g D)gwhengonegproductgis govercostedgitgres
ultsgingallgothergproducts gbeinggovercostedg
Answer:g C
g Difg fg:g
2g Objective:
g 1g
AACSB:g Analyticalg thinkingg
6) Which gofg the gfollowingg has gaccelerated gneedgfor grefg ig nedgcost gsy
stems?g A) gglobal gmonopolies g
B)g g g g g risingg g g g pr
ices g C)g g g intense g g g co
mpetitiong D)gagshiftgtowardgincrea
sedgdirectgcostsg Answer:g Cg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
7) Uniformlygassigninggthe gcosts gofgresources gtogcostgobjectsgwhengthosegresources garegactually
gusedgingag nonuniformgwaygisgcalledgactivitygbasedgcosting.g
Answer:g g g g g g g g g g g g g g g g g g g g g g g g
g g g FALSEg Explanation:g Peanut g butter g costingg occurs gwhengcostsgaregassignedg unifor
mlygamount gmultiple g productsg usingg average g costs g that g dog not g take gintogaccount g the g nonunifo
rgmwaygthe g resources gare g consumedg tog produce gthe gdifg fgerent gproducts.g
Difg f g: g1
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
2
Copyrightg ©g 2018g Pearsong Education,g Ltd.
2/86
about:blank 2/86
,3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
8)Product-costgcross-
subsidizationgis gverygcommon gwhengcosts gareguniformlygspreadgacross gvarious g products.g
Answer:g TRUE
g Difg fg:g2 g
Objective: g 1g
AACSB:g Analyticalg thinkingg
9)Companies gthat govercost gproducts griskgbecominggless gefg fgective gon gpricingg andglosinggmark
etgshareg whengcompetition gutilizes gmoregaccurategcost gsystems. g
Answer:g TRU
Eg Difg fg:g1
g Objective: g 1
g
AACSB:g Analyticalg thinkingg
10) Ifgcompaniesgincrease gmarketgsharegingaggivengproductglinegbecause gtheirgreportedgcostsgar
egless gthang theirgactualgcosts,gtheygwillgbecomegmoregprofg igtable gingtheglonggrun.g
Answer:g g g g g g g g g g g g g g g g g g g g g g g g g g
g g FALSEg Explanation: g Thegactualgcosts gwillgincreasegbecause gofg thegadditionalgsalesgandgt
hegotherg productglines g (whichgaregsubsidizinggthegundercostinggofgtheggrowinggproductgline)gwillg
sufg fger.gThegnetgresultgwillgbegtheg companyghavinggaglowergoperatinggincome gthangitgcouldgha
veghad.g
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
11)As gproductgdiversitygandgindirectgcosts gincrease,gitgis gusuallygbestgtogswitchgawaygfro
mgagbroadg averaginggsystemgtogangactivity-basedgcostgsystem.g
Answer:g TRU
Eg Difg fg:g1
g Objective: g 1
g
AACSB:g Analyticalg thinkingg
12) Thegriskgofgpeanut-
buttergcostinggrises gwhengbroadgaverages garegusedgacrossgmultiple gproductsg withoutgmanagers
gconsideringgthegtruegamounts gofgresources gconsumedgingthegmakinggofgeachgproduct.g Answe
r:g TRUEg
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
13) Explaing howg ag top-
sellingg productg mayg actuallyg resultg ing losses g forg theg company. g Answer:g Ifg indirectgco
stsgareg notgproperlygallocatedg togtheg products,gagproductgmaygappearg togcostglessg thangitgactu
allygdoes gcostgtogproduce. gIfgthegsellinggpricegis gbasedgongtheseglowergcosts,gthegsellinggpricegm
ayg actuallygbeglowergthangthegcosts gneededgtogproduce gthegproductgresultingginglossesgforgthegc
ompany.gThis g
wouldgmakeg undercosted gproducts gappear gmore gprofg ig tablegandg therefore gmakinggmarketinggef
g fg orts g tog promote gthegundercosted gproduct gcounter gproductive. g
Difg fg :g 2
g Objective:
g 1g
AACSB:g Analyticalg thinkingg
3
Copyrightg ©g 2018g Pearsong Education,g Ltd.
3/86
about:blank 3/86
, 3/9/24,g10:21gAM TestgBankgHorngrengChapterg5g-
gABC
3/24/22,g5:06gPM Chapterg5gtestgbankgwithganswersgHorngren'sgCostgAccounting:gAgManageri…
5.2 Objectiveg5.2g
1) Refg g g g ig g ningg g ag g costg g systeminvolves g g whichg g ofg g theg
g following? g A)g g classifg yingg g asg g manyg g costs g g asg g indirectg g cos
tsg g as g g is g g feasible g B)g g creatingg asg g manyg g costg g pools g g as g g po
ssibleg g g tog g capture g g allg g costs g C)gidentifyinggthegactivitiesginvolvedgingagpr
ocess g andgunderstandingghowgthosegactivities gconsume g
resourcesg g g g g g g g g g g g g g g g g
g g g g g g g D)gSeekinggangeasier gandgmoregcost gefg fgecti
vegwaygtogcalculate gaverage gcosts g Answer:g Cg
Difg fg :g1g
Objective: g 2
g
AACSB:g Analyticalg thinkingg
2) Whichg ofg g theg following g is g trueg ofg g refg g g ig g nementg ofg g ag g costin
gg system?g A)gWhilegrefg igninggagcostinggsystem,gcompanies gshouldgidentifygas gmanygindire
ctgcosts gas gis geconomically g feasible.g
B) Ag homogeneousg costg poolg willg usegmultiplegcostg driversgtog allocategcosts.g
C) Itg reduces g the g useg ofg broadg averages g forg assigningg the g costg ofg resources g tog costg
objects.g D)gItgis glikelygtogyieldgthegmostgdecision-
makinggbenefg igts gwhengdirectgcosts garegaghighgpercentage gofgtotalg costs.g
Answer:g C
g Difg fg:g
2g Objective:
g 2g
AACSB:g Analyticalg thinkingg
3) Which gofg thegfollowinggis gagreason gthatghas gaccelerated gthe gdemand gfor grefg ignementsgtogth
egcostingg system?g
A) The g decliningg demand g forg customizedg products ghas g led g managers g tog decreaseg the g varietyg of
g products g andgservices gtheir gcompanies gofg fger.g
B) The guse gofgproduct gand gprocess gtechnology ghas gledgtogangincrease gingindirectgcosts gandga
gdecreaseging directgcosts.g
C) The gincreased gofgautomated gprocesses ghasgledgtogthe gincrease gingdirectgmanufacturing gcostgle
adinggtogag decreasegingbreakgevengpoint.g
D) The gincreasinggcompetition gingproduct gmarkets ghas gledgtogangincrease gingcontribution gmargin
gresultingg ingagdecreasegofgbreakgevengpoint.g
Answer:g B
g Difg fg:g3
g Objective:
g 2g
AACSB:g Analyticalg thinkingg
4)Demandgforg refg ignementsgtogthegcostinggsystemghasgacceleratedgdueg
tog
.gA)gincreasegingdirectgcostsg
B)g decreaseg ing productgdiversit
yg C)g decreaseg ing indirect g
costs g D)gcompetitiongingprodu
ctgmarkets g Answer:g Dg
Difg fg :g1g
Objective: g 2
g
AACSB:g Analyticalg thinkingg
5) JohnsongSuperiorgProducts gInc.gproduces ghospitalgequipmentgandgthegsetupgrequirements gvary
gfromg productgtogproduct. gJohnsongproduces gits gproductsgbasedgongcustomergorders gandg uses g
ABCgcosting.gIng onegofgits gindirectgcostgpools,gsetupgcosts gandgdistribution gcosts garegpooledgt
ogether.gCosts ging this gpoolgareg allocatedgusinggnumbergofgcustomergordersgforgthegeasiness gof
gcostinggoperations.gBasedgongtheg informationgprovided,gwhichgofg thegfollowinggarguments gisg
valid?g
A) Johnsonghasgclearlygfailedg tog identifyg asg manyg directg costsgasgisgeconomicallyg feasible.g
4
Copyrightg ©g 2018g Pearsong Education,g Ltd.
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