CIMA Exam CIMAPRO19-P02-1 Topic 1 Question 84 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 84
Topic #: 1

Which of the following statements is TRUE about the activity based costing system when compared to absorption costing method?

AABC is easier to administer than an absorption costing system

BABC will be less detailed than an absorption costing system

CABC will provide more accurate overhead allocation than absorption costing

DABC will cost less to administer than an absorption costing system

Show Suggested Answer

Suggested Answer: C

by Gail at Apr 13, 2024, 06:47 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Katy

10 days ago

Alright, alright, let's not get too carried away here. I think the key is that ABC will provide more accurate costing, even if it's a bit more of a hassle to implement. In the long run, the improved decision-making from better cost data makes it worth it.

upvoted 0 times

...

Felix

12 days ago

Haha, yeah, I can just imagine the poor accountants trying to wrangle all the activity drivers and cost pools for ABC. Sounds like a nightmare compared to the good old days of just using direct labor hours!

upvoted 0 times

...

Edna

13 days ago

That's a good point. ABC does require more data collection and analysis, which could make it more costly and time-consuming to set up and maintain. The simpler absorption costing might be preferable in some situations.

upvoted 0 times

...

Robt

14 days ago

But isn't ABC also more complex and resource-intensive to implement? I'm not so sure about the 'easier to administer' and 'cost less' claims in A and D.

upvoted 0 times

...

Ayesha

16 days ago

I agree with Curt. ABC is designed to be more granular and precise in how it allocates overhead, which should lead to a more accurate cost assignment compared to the broader, volume-based approach of absorption costing.

upvoted 0 times

...

Curt

18 days ago

Hmm, this is a tricky question. I think the correct answer is C - ABC will provide more accurate overhead allocation than absorption costing. The whole point of activity-based costing is to more accurately assign overhead costs to products based on the specific activities and resources they consume.

upvoted 0 times

...