6. Costing Techniques

Activity Based Costing — Quiz

Test your understanding of activity based costing with 5 practice questions.

Practice Questions

Question 1

Which of the following activities would most likely be classified as a product-level activity in an Activity Based Costing system?

Question 2

A company uses Activity Based Costing. If the total overhead cost for “Machine Maintenance” is $$ \$75,000 $ and the cost driver is “Machine Hours” with $ 15,000 $$ machine hours, what is the cost driver rate for machine maintenance?

Question 3

In Activity Based Costing, what is the primary purpose of a cost pool?

Question 4

Which of the following scenarios would most benefit from the implementation of Activity Based Costing (ABC)?

Question 5

A company manufactures two products, Alpha and Beta. The total cost for “Material Handling” is $$ \$60,000 $. The cost driver is “Number of Material Moves”. Product Alpha requires $ 2,000 $ material moves and Product Beta requires $ 4,000 $$ material moves. What is the material handling cost allocated to Product Beta?