1. Property taxes and insurance is an example of a cost that would beconsidered to be:A. unit-level.B. batch-level.C. product-level.D. organization-sustaining.2. Personnel administration is an example of a/an:A. unit-level activity.B. batch-level activity.C. product-level activity.D. organization-sustaining activity.3. Matt Company uses activity-based costing. The company has twoproducts: A and B. The annual production and sales of Product A is8,000 units and of Product B is 6,000 units. There are three activitycost pools, with estimated total cost and expected activity asfollows:Estimated Expected Activity Activity Cost Pool Cost Product A Product B Total Activity 1 R20,000 100 400 500 Activity 2 R37,000 800 200 1,000 Activity 3 R91,200 800 3,000 3,800 COST AND MANAGEMENT ACCOUNTINGCMA03A3/BSR3A01/FNM03A3 Activity based costing Question Bank Multiple Choice QuestionsThe cost per unit of Product A under activity-based costing is closest to: A. R2.40. B. R3.90. C. R10.59. D. R6.60. 4. Leeds Catering uses activity-based costing for allocating its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system: Activity Cost Pools Preparing Arranging Meals Functions Wages R0.80 R180.00 Supplies R0.40 R290.00 Other expenses R0.20 R140.00 The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool. Management would like to know whether the company made any money on a recent function at which 90 meals were served. The company catered the function for a fixed price of R25.00 per meal. The cost of the raw ingredients for the meals was R13.90 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above. For the purposes of preparing action analyses, management has assigned ease of adjustment codes to the costs as follows: wages are classified as a Yellow cost; supplies and raw ingredients as a Green cost; and other expenses as a Red cost. Suppose an action analysis report is prepared for the function mentioned above. What would be the ‘yellow margin' in the action analysis report? (Round to the nearest whole pound.) A. R421 B. R601 C. R496 D. R5465. Leeds Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system: Activity Cost Pools Preparing Arranging Meals Functions Wages R0.80 R180.00 Supplies R0.40 R290.00 Other expenses R0.20 R140.00 The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool. Management would like to know whether the company made any money on a recent function at which 90 meals were served. The company catered the function for a fixed price of R25.00 per meal. The cost of the raw ingredients for the meals was R13.90 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above. For the purposes of preparing action analyses, management has assigned ease of adjustment codes to the costs as follows: wages are classified as a Yellow cost; supplies and raw ingredients as a Green cost; and other expenses as a Red cost. Suppose an action analysis report is prepared for the function mentioned above. What would be the ‘red margin' in the action analysis report? (Round to the nearest whole pound.) A. R263 B. R113 C. R163 D. R4136. Jennifer Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the three activity cost pools are as follows. Estimated Expected Activity Activity Cost Pool Cost Product A Product B Total Activity 1 R23,500 400 100 500 Activity 2 R18,000 500 200 700 Activity 3 R34,600 600 300 900 The activity rate under the activity-based costing system for Activity 3 is closest to: A. R36.24. B. R38.44. C. R84.56. D. R115.33. 7. In activity-based costing, there are a number of activity cost pools, each of which is allocated to products and other costing objects using its own unique measure of activity. • True • False 8. Bridget Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 2,000 units and of Product B is 3,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows. Estimated Expected Activity Activity Cost Pool Cost Product A Product B Total Activity 1 R9,000 400 350 750 Activity 2 R12,000 100 400 500 Activity 3 R48,000 400 1,200 1,600 The cost per unit of Product A under activity-based costing is closest to: A. R6.00.B. R9.60. C. R8.63. D. R13.80. 9. An activity-based costing system that is designed for internal decision-making will not conform to externally regulated accounting principles because: A. some manufacturing costs (i.e., the costs of idle capacity and organisation-sustaining costs) will not be assigned to products. B. some non-manufacturing costs are assigned to products. C. first-stage allocations may be based on subjective interview data. D. all of the these are reasons why an activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles. 10. Paul Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: Estimated Expected Activity Activity Cost Pool Cost Product A Product B Total Activity 1 R22,000 400 100 500 Activity 2 R16,240 380 200 580 Activity 3 R14,600 500 250 750 The activity rate under the activity-based costing system for Activity 3 is closest to: A. R70.45. B. R28.87. C. R19.47. D. R58.40. 11. When combining activities in an activity-based costing system, batch-level activities should be combined with unit-level activities whenever possible. • True • False12. Which of the following is not a limitation of activity-based costing? A. Maintaining an activity-based costing system is more costly than maintaining a traditional direct labour-based costing system. B. Changing from a traditional direct labour-based