Exam 4: Activity-Based Management and Activity-Based Costing

Parrish Company Parrish Company uses activity-based costing.The company produces two products: IPods and MP3 players.The annual production and sales volume of IPods is 8,000 units and of MP3 players is 6,000 units.There are three activity cost pools with the following expected activities and estimated total costs: Refer to Parrish Company.Using ABC,the cost per unit of IPods is approximately:

Executive Images Corporation produces two types of wooden bookends: plain and hand-carved.The following information about the production process is available: Total factory overhead is $1,200,000.Of this overhead,$500,000 is related to utilities and the remainder is related to quality control. a.Determine the total overhead cost assigned to each type of bookend using machine hours as the allocation base.Calculate the gross profit per unit for each product. b.Determine the total overhead cost assigned to each type of bookend if overhead is assigned using allocation bases appropriate to the overhead costs.Calculate the gross profit per unit of each product. c.Explain why the unit cost for each model is different between the two methods of allocation.

Lead time in a production process includes both value and non-value added time.

There is a direct relationship between the complexity of a production process and overhead costs.

Which of the following falls under the Activity-Based Management umbrella?

Levine Company Levine Company produces two products: A and B)The company has three overhead functions that are required for both products. Below is production information for Products A and B: B)The company has three overhead functions that are required for both products. Below is production information for Products A and B:B The company has three overhead functions that are required for both products. Below is production information for Products A and B:

Business value-added activities add value to a product.

Video Corporation Video Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year: Refer to Video Corporation.If the company uses an activity-based costing (ABC)system to allocate factory overhead,the machine maintenance cost allocated to projection TVs would be:

Which of the following is/are part of activity-based management?

A value chart should include which of the following?

Which of the following have an impact on long-term variable costs?

A just-in-time manufacturing process should have substantially less of which of the following than a traditional manufacturing process?

Video Corporation Video Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year: Refer to Video Corporation.If the company uses total direct labor hours to allocate factory overhead,the materials handing cost allocated to LCD TVs would be:

Activity-based costing is appropriate for a company that manufactures a wide variety of products

Video Corporation Video Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year: Refer to Video Corporation.If the company uses number of units produced to allocate factory overhead,the materials handing cost allocated to projection TVs would be:

An objective of activity-based management is to

Costs that support an overall production or service process are referred to as ______________________________. or

Stone Company Stone Company produces 50,000 units of Product Q and 6,000 units of Product Z during a period.In that period,four set-ups were required for color changes.All units of Product Q are black,which is the color in the process at the beginning of the period.A set-up was made for 1,000 blue units of Product Z; a set-up was made for 4,500 red units of Product Z; a set-up was made for 500 green units of Product Z.A set-up was then made to return the process to its standard black coloration and the units of Product Q were run.Each set-up costs $500. Refer to Stone Company.If set-up cost is assigned on a volume basis for the department,what is the approximate per-unit set-up cost for the red units of Product Z?

Activity based costing is most effective when it is implemented in an environment that supports total quality management

The "Rule of One" underlies the premise that all costs are