Go to the companion Web site at www.cengage.com/accounting/vanderbeck and click on the link to Activity-based costing from Economist.com.
Required:
Answer the following questions based on the article:
1. If two activities use the same amount of direct costs, will they also consume approximately the same amount of overhead costs? Explain with an example.
2. As new technologies make it easier for firms to customize products, will activity-based costing become more or less important?
3. Name four activities that ‘‘purchasing’’ could be subdivided into for the purpose of allocating costs in an activity-based costing system.
4. Has activity-based costing been consistently popular since its introduction in the 1980s?
5. What did Kaplan say were the only two questions that needed to be answered in applying time-driven activity-based costing?