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    Activity-based costing uses many cost drivers and cost pools to allocate costs, and can use industrial engineering, conference, and regression analysis to estimate relationships between cost drivers and cost pools. The more cost pools used, the greater the chance of error in estimation. A nonlinear cost function over the short run would likely result from quantity discounts, purchasing large new equipment, or hiring more supervisors, but not necessarily from increased utility costs per machine hour.

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    AB-18

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    Activity-based costing uses many cost drivers and cost pools to allocate costs, and can use industrial engineering, conference, and regression analysis to estimate relationships between cost drivers and cost pools. The more cost pools used, the greater the chance of error in estimation. A nonlinear cost function over the short run would likely result from quantity discounts, purchasing large new equipment, or hiring more supervisors, but not necessarily from increased utility costs per machine hour.

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    9 views1 page

    Ab 18

    Uploaded by

    Spade X
    Activity-based costing uses many cost drivers and cost pools to allocate costs, and can use industrial engineering, conference, and regression analysis to estimate relationships between cost drivers and cost pools. The more cost pools used, the greater the chance of error in estimation. A nonlinear cost function over the short run would likely result from quantity discounts, purchasing large new equipment, or hiring more supervisors, but not necessarily from increased utility costs per machine hour.

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    of 1

    1.

    When using activity-based costing all of the following are true EXCEPT that:
    a. all cost drivers should be output unit-level cost drivers
    b. there are a great number and variety of cost drivers and cost pools
    c. industrial engineering, conference, and regression analysis can be used to
    estimate slope coefficients
    d. the more cost pools, the greater the chance of estimation error
    Answer: a Difficulty: 2 Objective: 5
    Terms to Learn: cost function, cost estimation

    2. Over the short run, a nonlinear cost function would MOST likely result from all of
    the following EXCEPT:
    a. quantity discounts for each additional 10,000 parts purchased
    b. purchasing another $250,000 printing machine to double production
    c. hiring a third production supervisor
    d. incurring greater total utility costs for each machine-hour of operation
    Answer: d Difficulty: 3 Objective: 6
    Terms to Learn: cost function, nonlinear cost function

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