Which of the following would not be treated as an activity in an activity based costing system direct materials cost machine setup designing of product packaging of product The absorption costing method allows managers to increase operating income just by producing more products than needed True False An activity based costing system is developed in four steps below a Identify activities and estimate their total indirect costs b Compute the predetermined overhead overhead allocation rates for each activity c Identify the allocation base for each activity and estimate the total quantity of each allocation base d Allocate indirect costs to the cost objects What is the correct order of the steps a, b, c, d a, c, b, d d, b, c, a d, a, b, c Under variable costing, costs are considered product costs variable manufacturing overhead fixed manufacturing overhead fixed selling and administrative property tax on the administrative office Summer 20 Company uses an ABC system in producing breadboxes Based on the following, what is the TOTAL manufacturing cost of one breadbox Activity Indirect Costs Material Handling cost based on number of parts $1 00 Assembling cost based on number of parts $0 50 Number of parts per breadbox 4 Packaging based on number of breadboxes $0 30 Direct Costs Direct Materials cost per box $7 80 Direct Labor cost per box $8 00 $1 80 $15 80 $22 10 $17 60 Summer 20 began business in the current year and uses variable costing It produced 12,000 units and sold 11,000 units therefore its value of ending finished goods inventory reported in the balance sheet will be higher than under absorption costing its operating income for the period will be higher than under absorption costing its operating income for the period will be lower than under absorption costing its operating income will be the same under both absorption costing and variable costing

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Which of the following would not be treated as an activity in an activity based costing system?

direct materials cost

machine setup

designing of product

packaging of product
The absorption costing method allows managers to increase operating income just by producing more products than needed.

True

False
An activity based costing system is developed in four steps below.

a. Identify activities and estimate their total indirect costs.

b. Compute the predetermined overhead overhead allocation rates for each activity.

c. Identify the allocation base for each activity and estimate the total quantity of each allocation base.

d. Allocate indirect costs to the cost objects.

What is the correct order of the steps?

a, b, c, d

a, c, b, d

d, b, c, a

d, a, b, c
Under variable costing, ______________ costs are considered product costs.

variable manufacturing overhead

fixed manufacturing overhead

fixed selling and administrative

property tax on the administrative office

Summer 20 Company uses an ABC system in producing breadboxes.
Based on the following, what is the TOTAL manufacturing cost of one breadbox?

Activity-Indirect Costs
Material Handling cost based on number of parts	$1.00
Assembling cost based on number of parts	$0.50
Number of parts per breadbox	4
Packaging based on number of breadboxes	$0.30

Direct Costs
Direct Materials cost per box	$7.80
Direct Labor cost per box	$8.00

Summer 20 began business in the current year and uses variable costing. It produced 12,000 units and sold 11,000 units therefore

		its value of ending finished goods inventory reported in the balance sheet will be higher than under absorption costing
		its operating income for the period will be higher than under absorption costing.
		its operating income for the period will be lower than under absorption costing.
		its operating income will be the same under both absorption costing and variable costing.