ACC 604 Homework Chapter 6 (National University)
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<strong>ACC</strong> <strong>604</strong> <strong>Homework</strong> <strong>Chapter</strong> 6<br />
(<strong>National</strong> <strong>University</strong>)<br />
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<strong>Chapter</strong> Six:<br />
1. In what fundamental ways does activity-based costing differ from traditional costing methods such<br />
as job-order costing as described in <strong>Chapter</strong> 4?<br />
2. Why is direct labor a poor base for allocating overhead in many companies?<br />
3. Why are top management support and cross-functional involvement crucial when attempting to<br />
implement an activity-based costing system?<br />
4. What are unit-level, batch-level, product-level, customer-level, and organization sustaining activities?<br />
5. What types of costs should not be assigned to products in an activity-based costing system?<br />
6. Why are there two stages of allocation in activity-based costing?<br />
7. Why is the first stage of the allocation process in activity-based costing often based on interviews?<br />
8. When activity-based costing is used, why do manufacturing overhead costs often shift from high<br />
volume products to low-volume products?<br />
9. How can the activity rates (i.e., cost per activity) for the various activities be used to target process<br />
improvements?<br />
10. Why is activity-based costing, described in this chapter, is unacceptable for external financial<br />
reports?
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