$17$: OPTIONAL Practice Questions $($EXTRA CREDIT AVALLABLE$)$

$7\%$

$17\mathrm{.}1$ Traditional vs$.$ Activity$-$Based Costing

Of the following firms, which would most likely derive the greatest benefit from the use of an activity based costing system for allocating overhead?

A firm that produces three types of products that require regular design adjustments and are manufactured using equipment that needs frequent maintenance and reengineering.

A firm that produces four types of products using equipment that requires little maintenance or updating but nearly constant operation by skilled employees.

A firm that produces one type of product using fully automated equipment that requires minimal maintenance or reengineering.

A firm that produces two types of products, each of which is entirely manufactured by hand.

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