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

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 overhead activity hours used, the total product cost per unit assigned to Product A will be

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 machine maintenance cost allocated to projection TVs would be:

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:

Direct materials are normally considered unit-level costs.

How has the increase in product variety affected the costs of American business?

When a company is labor-intensive, the cost driver that is probably least significant would be

The actual time taken to perform all necessary manufacturing functions in a process is 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 Product Z?

For traditional costing purposes, R&D costs are

Management should strive to reduce or eliminate non-value added activities from a production process.

The term cost driver refers to

Of the following, which is the best reason for using activity-based costing?

In the pharmaceutical or food industries, quality control inspections would most likely be viewed as

Manufacturing cycle efficiency should be increased by employing which of the following techniques?

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 green units of Product Z?

Costs that are associated with the production of a single unit of a product are referred to as _________________________.

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

Traditional overhead allocations result in which of the following situations?

Discuss the four different levels of costs identified by activity based costing (ABC). How should these types of costs be treated in the determination of product cost?

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: