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APICS Exam CPIM-Part-2 Topic 1 Question 34 Discussion

Actual exam question for APICS's CPIM-Part-2 exam
Question #: 34
Topic #: 1
[All CPIM-Part-2 Questions]

An advantage of activity-based costing (ABC) is:

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Suggested Answer: B

A quantitative model is a mathematical representation of a real-world situation that involves numbers, variables, equations, and logic. A quantitative model can be used to support sales and operations planning (S&OP), which is a process of aligning the demand and supply plans of an organization at an aggregate level. To develop a quantitative model for S&OP, the following statements are most true:

It isnotnecessary to capture all of the detail in order to create a useful model. In fact, too much detail can make the model complex, unrealistic, and difficult to solve.A useful model should capture the essential features of the situation and simplify the irrelevant or insignificant aspects1.

Aggregation will benecessaryto develop an appropriate model. Aggregation is the process of combining data or information into higher-level categories or groups. For example, products can be aggregated into product families, customers can be aggregated into market segments, and time periods can be aggregated into months or quarters.Aggregation can help reduce the size and complexity of the model, as well as improve its accuracy and reliability2.

Clear objectives arenecessaryto begin the modeling process. Objectives are the desired outcomes or goals that the model aims to achieve or optimize. For example, an objective of S&OP could be to maximize profit, minimize cost, or balance inventory.Clear objectives can help define the scope, structure, and criteria of the model3.

Asignificantlevel of effort is required to develop a model. Developing a model involves several steps, such as defining the problem, collecting and analyzing data, formulating and testing the model, implementing and validating the solution, and evaluating and improving the results.Each step requires careful planning, execution, and evaluation4.


by Louis at Jan 15, 2025, 04:32 PM

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Delfina
2 months ago
If I had a penny for every time someone tried to 'evenly' allocate overhead, I'd be rich! B) is clearly the correct answer here.
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Teddy
25 days ago
Glad we're on the same page about this!
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Lazaro
29 days ago
It's a much more accurate way to assign overhead costs.
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Graciela
1 months ago
Definitely, that's the key advantage of activity-based costing.
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Cherilyn
2 months ago
I agree, B) it uses cost drivers to allocate costs to products.
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Sophia
2 months ago
Ah, the age-old debate of ABC vs traditional costing. I'm going with B) because it just makes more sense to me than the other options.
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Verlene
2 months ago
B) is the way to go. I remember learning that ABC is all about identifying the activities that drive costs and assigning those costs accordingly.
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Alishia
1 months ago
B) is the way to go. I remember learning that ABC is all about identifying the activities that drive costs and assigning those costs accordingly.
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Fernanda
2 months ago
B) it uses cost drivers to allocate costs to products.
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Sharee
2 months ago
A) it allows raw material costs to be allocated on a per unit basis.
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Noah
3 months ago
I was going to say D), but then I realized that evenly allocating overhead across all products kind of defeats the purpose of ABC.
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Arlyne
1 months ago
C) it is easier to establish standard costs.
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Gwenn
2 months ago
B) it uses cost drivers to allocate costs to products.
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Elbert
2 months ago
A) it allows raw material costs to be allocated on a per unit basis.
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Penney
3 months ago
B) It uses cost drivers to allocate costs to products. This allows for a more accurate representation of the true costs associated with each product.
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Donte
1 months ago
C) it is easier to establish standard costs.
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Laurena
1 months ago
B) it uses cost drivers to allocate costs to products.
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Staci
2 months ago
A) it allows raw material costs to be allocated on a per unit basis.
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Laura
3 months ago
I believe D is incorrect because ABC enables overhead costs to be allocated based on the actual usage by each product.
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Alease
4 months ago
I agree with Edelmira. Cost drivers help in more accurate cost allocation.
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Edelmira
4 months ago
I think the advantage of ABC is that it uses cost drivers to allocate costs to products.
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