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Benefits & Limitations of Activity-Based Costing

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

Which of the following is a disadvantage of using an activity-based costing system?

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1. What type of costs are allocated using an activity-based costing system?

2. What is a cost pool?

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About This Quiz & Worksheet

Measure your understanding of ABC systems through this interactive quiz and printable worksheet combo. Advantages and limitations of ABC systems, cost pools, and the allocation of costs will be considered in this quiz.

Quiz & Worksheet Goals

Topics of practice questions will include:

  • Allocation of costs using an ABC system
  • Advantages of ABC systems
  • Definition of a cost pool
  • Cost pool based on cost driver
  • Limitation of ABC

Skills Practiced

You will showcase your ability in the areas of:

  • Defining key concepts - ensure that you can accurately define main phrases, such as cost pool
  • Critical thinking - apply relevant concepts to examine information about identifying a cost pool in which costs are accumulated in a different light
  • Knowledge application - use your knowledge to answer questions about the possible advantages of ABC systems
  • Interpreting information - verify that you can read information regarding the limitations of ABC and interpret it correctly

Additional Learning

Learn more about this business topic by reviewing the related lesson named, Benefits & Limitations of Activity-Based Costing. This lesson will cover the following goals:

  • Define relevant vocabulary, such as activity-based costing and cost drivers
  • Explain the relationship between cost pools and cost drivers
  • Understand how ABC systems work
  • Apply ABC to a relevant business scenario in the lesson
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