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 MP3 players is approximately:

The term cost driver refers to

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 Product Z?

_________________________ refers to the number of products made.

A series of activities that when performed together satisfy a specific objective is referred to as a ____________________.

Greenspan Company Greenspan Company manufactures two products: digital cameras and video cameras.The company uses an activity-based costing system.The annual production and sales volume of digital cameras is 10,000 units and of video cameras is 8,000 units.Direct costs for the digital cameras are $122; for the video cameras,direct costs are $153. For overhead costs,there are three activity cost pools with the following expected activities and estimated total costs: Refer to Greenspan Company.Using ABC,the total cost per video camera is approximately:

Traditional costing systems tend to misallocate overhead to high-volume standard products

Costs that support a product type or process are referred to as ________________________.

Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of manufacturing because they

In activity-based costing,final cost allocations assign costs to

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: The company produces 800 units of Product A and 8,000 units of Product B each period. The overhead functions have the following hourly costs: Refer to Levine Company If total overhead is assigned to A and B on the basis of units produced,Product B will have an overhead cost per unit of

Batch level costs occur once for each unit produced.

The costs of non-quality work do not include

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.Assume that Stone Company has decided to allocate overhead costs using levels of cost drivers.What would be the approximate per-unit set-up cost for the blue units of Product Z?

Product complexity refers to the number of processes through which a product flows.

The Pareto principle is important to consider when an organization is

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 materials handing cost allocated to projection TVs would be:

There is a positive relationship between value-added (VA)activities and manufacturing cycle efficiency (MCE).

Discuss how activity-based costing and activity based management support continuous improvement in an organization.

Costs that are common to many different activities within an organization are known as ____ costs.