Reference no: EM132966443

Problem 1: Which of the following is NOT a limitation of activity-based costing?

Select one:

a. In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs.

b. Maintaining an activity-based costing system is more costly than maintaining a traditional direct labour-based costing system.

c. More accurate product costs may result in increasing the selling prices of some products.

d. Changing from a traditional direct labour-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers.

Problem 2: Burger Bob's Boathouse sells only one product. 7,000 units were sold In year resulting in $70,000 of sales revenue. Variable costs were $28,000 for the year, and fixed costs were $12,000. Break-even point in volume is:

Select one:

a. 3,000 units

b. 7,000 units

c. 2,797 units

d. 2,000 units