Indicate whether each of the following statements is true or false.

T: True

F: False

a. Building complexity into the costing process is an important part of the ABC philosophy.

b. The levels of activities in ABC are unit, batch, facility-sustaining, and conversion costs.

c. In an ABC system, many product-sustaining activities are reclassified as unit-level activities.

d. A good driver for cafeteria costs is the number of machine production hours, and a good driver for quality control is square feet of floor space.

e. Undercosting standard products and overcosting specialty products are trends in traditional cost accounting systems that average overhead.

f. Material handling and setup costs are typically treated as batch costs in ABC systems.

g. ABC’s strength lies in its ability to refine the distribution of batch and facility-sustaining costs.

h. ABC is compatible with both lean accounting and just-in-time (JIT) manufacturing.

i. Storyboarding is a tool used to depict processes and identify process improvements.

j. Some common sources of non–value-added costs are poor training, poor procedures, poor documentation, lack of understanding of capacity needs and  usage, incorrect orders, lack of understanding of customer needs, poor scheduling, improper use or lack of use of technology, and budget errors.

k. When a plantwide application rate is based on direct labor hours, the following are likely to be found: Engineers will focus on minimizing the direct labor component with little regard for number of parts or machine time, and total inventory costs in the financial statements will be more correctly costed.

l. Most companies use traditional costing to evaluate general, selling, and administrative costs and allocate these costs properly to each class of customers.

m. In an ABC system, costs (resources) need to be assigned in stage 1 to activities. Some appropriate resource drivers are number of units for rent, number of machines for depreciation, and number of employees for salaries.

n. Some appropriate resource drivers are number of units for rent, number of machines for depreciation, and number of employees for salaries.