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

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 84
Topic #: 1
[All CIMAPRO19-P02-1 Questions]

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

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Suggested Answer: C

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

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Henriette
9 months ago
I see your point, I think B) ABC will be less detailed than an absorption costing system could also be a valid answer.
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Bulah
9 months ago
But wouldn't ABC require more resources to track activities and costs, making it more expensive to administer?
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Dorthy
9 months ago
I disagree, I believe it's D) ABC will cost less to administer than an absorption costing system.
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Bulah
9 months ago
I think the correct answer is C) ABC will provide more accurate overhead allocation than absorption costing.
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Jennifer
9 months ago
I think the answer is A because ABC is actually more complex to administer.
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Jin
10 months ago
I'm leaning towards B because ABC is usually more detailed than absorption costing.
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Lindy
10 months ago
I disagree, I believe the answer is D because ABC is cheaper to administer.
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Gladys
10 months ago
I think the answer is C because ABC provides more accurate overhead allocation.
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Alisha
9 months ago
I agree. ABC will provide more accurate overhead allocation than absorption costing.
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Elsa
9 months ago
I think the answer is C. ABC provides more accurate overhead allocation.
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Katy
10 months 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.
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Felix
10 months 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!
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Edna
11 months 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.
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Robt
11 months 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.
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Ayesha
11 months 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.
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Curt
11 months 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.
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