Question

Consider the following statements regarding traditional costing systems:

Answer 1

Answer:

Question 1, overhead cost are applied to products on the basis of only one appropriate basis (absorption basis) and no overhead manufacturing cost is traceable to the goods. Traditional costing systems allocates the overhead cost to products on inappropriate basis.

So the answer is Option-C.

Question 12

Option A is incorrect because it is Activity based costing that identifies the cost drivers that are the cause of the cost generation.

Option B is also incorrect because in traditional absorption costing, the manufacturing overheads are not written off, they are absorbed in the unit product cost.

Option C is correct because there is no concept of cost drivers in absorption costing so saying that all the funds are aggregated to one cost pool generally known as manufacturing overhead cost.

Option D false again. it is the activity based costing that improves the overhead absorption basis.

Option E is also incorrect because activity based costing is superior than traditional costing.

Question 13

Option C is correct simply because it is its definition. Cost estimation, cost prediction and cost approximation is about forecasting techniques whereas cost analysis is about different cost arising and managing & controlling them.

Question 14

Cost estimation is about forecasting cost that is on relevant basis like using activity - cost relation.

Question 15

Variable cost changes in direct relation to the activity level. Fixed does not changes with activity level. Semi fixed is fixed and variable as well. Step fixed remains fixed for the threshold and then again remains fixed for another threshold level of activity.