Q.1 What are the main costs and limitations of implementing ABC systems?

The main costs and limitations of implementing ABC systems are: (Select all that apply.)

A. Even basic ABC systems require many calculations to determine costs of products and services.

B. ABC systems assign manufacturing overhead to units produced.

C. ABC systems employ a volume-based driver, such as direct labour hours or machine hours, for the assignment of all manufacturing overhead costs.

D. Sometimes the allocations necessary to calculate activity costs often result in activity-cost pools and quantities of cost drivers being measured with error.

E. Activity-cost rates often need to be updated regularly.

Q.2 What is a customer preference map and why is it useful?

A. A customer preference map describes how different competitors perform across various marketing campaigns desired by customers, such as safety, warranty, and durability.

B. A customer preference map describes how different competitors perform across various product attributes desired by customers, such as price, quality, customer service, and product features.

C. A customer preference map describes how different competitors perform across various marketing campaigns desired by customers, such as media type, campaign message, and length of campaign.

D. None of the above.

Q.3 "The trouble with discounted cash flow techniques is that they ignore amortization costs." Do you agree? Explain.

A. No. The discounted cash-flow techniques implicitly consider depreciation in rate of return computations; the compound interest tables automatically allow for recovery of investment. The net initial investment of an asset is usually regarded as a lump-sum outflow at time zero.

B. No. Where taxes are included in the DCF analysis, depreciation costs are excluded from the computation of the taxable income number that is used to compute the tax payment cash flow.

C. Yes. The discounted cash-flow techniques implicitly ignore depreciation in rate of return computations; the compound interest tables automatically allow for recovery of investment. Where taxes are included in the DCF analysis, depreciation costs are included in the computation of the taxable income number that is used to compute the tax payment cash flow.

D. Yes. The discounted cash-flow techniques implicitly ignore depreciation in rate of return computations; the compound interest tables automatically allow for recovery of investment. The net initial investment of an asset is usually regarded as a lump-sum outflow at time zero.