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CS Executive Practice Test: Activity Based Costing (ABC) – Corporate and Management Accounting
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CS Executive Practice Test: Activity Based Costing (ABC) – Corporate and Management Accounting
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25 Questions

1. Level Activities are identified in traditional Absorption Costing
2. What is the proper sequence of events in an ‘activity based costing’ system —
(i) Calculation of overheads application rates.
(ii) Identification of cost drivers
(iii) Identification of cost pools
(iv) Assignment of overheads cost to products.
Select the correct answer from the options given below:
3. ABC emphasizes on:
4. Which of the following statement is not true in respect of Activity-based costing
5. encourages managers to identify which activities are value-added activities
6. Assertion (A):
Implementation of the ABC System requires substantial resources which are costly to maintain.
Reason (R):
Activity-Based Costing is a two-stage product costing.


Select the correct answer from the options given below:
7. Level Activities are identified in traditional Absorption Costing
8. Assertion (A)
Activity-based costing is not normally used for external reporting purposes.
Reason (R)
Activity-based costing does not conform to generally accepted principles.
Select the correct answer from the options given below:
9. The key area(s) of activity-based costing is/are___
10. Costs that are caused by a group of things being made or processed at a single time are referred to as:
11. In activity-based costing, the allocation basis used for applying costs to services or products is called—
12. The basis of apportionment of overheads which takes into account the profitability of various departments is called___
13. encourages managers to identify which activities are value-added activities
14. In ABC System, the allocation basis that is used for applying costs to services or procedures are called:
15. In Traditional absorption costing system cost are first traced to:
16. The main reason for the usage of Activity Based Costing, by replacing the traditional costing system is that:
17. Under activity-based costing, ‘material ordering’ is considered as —
18. Assertion (A):
Implementation of the ABC System requires substantial resources which are costly to maintain.
Reason (R):
Activity-Based Costing is a two-stage product costing.


Select the correct answer from the options given below:
19. The key area(s) of activity-based costing is/are___
20. A homogeneous cost pool is one that ___
21. In activity-based costing, an item for which cost measurement is required is called —
22. Which of the following is the main cost driver of customer order processing activity —
23. Performing periodic maintenance on buildings and general use equipment is an example of:
24. According to the Chartered Institute of Management Accountants (CIMA), cost attribution to cost units on the basis of benefits received from indirect activities e.g. ordering, setting¬up, assuring quality is known as___
25. The division of activities into the unit level, batch level, product level, and facility-level categories is commonly known as a:

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