Exam 4: Activity-Based Costing and Cost Management

Calverton,Inc.produces two different products (Standard and Luxury)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Machining activity is used by Luxury?

The approach to cost management that calls for setting cost reduction goals across numerous stages such as product introduction,growth,maturity,and decline is

Life cycle cost management involves analyzing the functionality of the product to determine which functions add value to the customer and then finding ways to deliver those functions while meeting the target cost.Value engineering involves analyzing the functionality of the product to determine which functions add value to the customer and then finding ways to deliver those functions while meeting the target cost.

External failure costs occur before a defective product makes its way into the hands of the customer.External failure costs occur after a defective product makes its way into the hands of the customer.

When forming activity cost pools,the goal is to create as few cost pools as possible,while still capturing major activities.Minimizing cost pools while still capturing major activities keeps the cost system manageable.

Sonora,Inc.is launching a new product that it estimates will sell for $25 per unit.Annual demand is estimated to be 70,000 units.Sonora estimates that using its current manufacturing technology,it can manufacture the units for $23 per unit,but if it purchases a new machine,the units can be manufactured for $22 per unit.Sonora has a target profit of 20% return on sales.Under target costing,what is the target cost for the new product?

Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.Usage of the activity drivers are as follows: What is the amount of Inspection cost assigned to Product A?

Using non-volume-based activity drivers allows activity based costing to

Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.Usage of the activity drivers are as follows: What is the amount of Machining cost assigned to Product A?

The cost of quality training is an example of what type of quality cost?

Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.Usage of the activity drivers are as follows: What is the amount of Machining cost assigned to Product X?

Which of the following is not true of activity cost drivers?

The gross margin is calculated by subtracting total nonmanufacturing cost per unit from the unit sales price.The gross margin is calculated by subtracting the total manufacturing cost per unit from the unit sales price.

Calverton,Inc.produces two different products (Standard and Luxury)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Machining activity is used by Standard?

External failure costs are costs that

Internal failure costs are costs that

Activity Based Costing divides activities into two categories: unit-level activities and facility level activities.Activity Based Costing divides activities into four categories.

Which of the following best defines a product-level activity?

Portland,Inc.has formed four activity cost pools: Product Design,Machining and Production,Machine Setup,and Inspection.Gina Taylor,Production Manager at Portland,oversees processes that are considered part of Machining and Production,Machine Setup,and Inspection.Taylor's salary should be

A just-in-time (JIT)system is a demand-push system.JIT is a demand-pull system in which materials and products are pulled through the manufacturing system based on customer demand.