Question 1

Machine setup is normally considered a batch-level cost

Accepted Answer

A) True 
 B)False

Question 2

Activity-based costing and generally accepted accounting principles differ in that ABC

Accepted Answer

A)  does not define product costs in the same manner as GAAP. 
B)  cannot be used to compute an income statement, but GAAP can. 
C)  is concerned only with costs generated from automated processes, but GAAP is concerned with costs generated from both manual and automated processes. 
D)  information is useful only to managers, while GAAP information is useful to all organizational stakeholders. 
A)  does not define product costs in the same manner as GAAP. 
B)  cannot be used to compute an income statement, but GAAP can. 
C)  is concerned only with costs generated from automated processes, but GAAP is concerned with costs generated from both manual and automated processes. 
D)  information is useful only to managers, while GAAP information is useful to all organizational stakeholders.

Question 3

Activity-based costing systems generally use volume-based cost drivers.

Accepted Answer

A) True 
 B)False

Question 4

A value chart indicates

Accepted Answer

A)  all steps in a process and the time it takes for them to be completed. 
B)  the value-added steps in a process and the time it takes for them to be completed. 
C)  the time and cost of all value-added steps in a process. 
D)  the time and costs of all value-added and non-value-added steps in a process. 
A)  all steps in a process and the time it takes for them to be completed. 
B)  the value-added steps in a process and the time it takes for them to be completed. 
C)  the time and cost of all value-added steps in a process. 
D)  the time and costs of all value-added and non-value-added steps in a process.

Question 5

Engaging in which of the following will result in radical changes being made to an organization's processes?

Accepted Answer

A)  Continuous improvement 
B)  Benchmarking 
C)  Reengineering 
D)  Mass customization 
A)  Continuous improvement 
B)  Benchmarking 
C)  Reengineering 
D)  Mass customization

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

For a company that manufactures candy, how would the costs of product inspection be classified?

Accepted Answer

A)  Yes No 
B)  No Yes 
C)  Yes Yes 
D)  No No 
A)  Yes No 
B)  No Yes 
C)  Yes Yes 
D)  No No

Question 8

Chocolate Delights Company produces baking chocolate for use by commercial organizations. The company is analyzing its operations in preparation for reconfiguring its factory setup.
Currently, each batch of chocolate requires the following processes:
   a) Calculate the total cycle time necessary to manufacture a batch of chocolate.
b) Identify the value-added functions
c) Calculate the manufacturing cycle efficiency (MCE) of this process.
d) Assume that a management consultant has established a goal that Chocolate Delights
Company increase its MCE to 5 percent or greater. Identify three possible areas in which
the company could reduce its cycle time.

Accepted Answer

a) The total cycle time is 28,250 minute

Question 9

Best Brew Corporation manufactures two brands of wine: Regular and Extra Rich
Below is the current year production data for the company:
   The 335,000 pounds of material had a total cost of $753,750. Direct labor is $21 per hour.
The company has total overhead production costs of $2,212,125.
a. If Best Brew Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each brand
b. If Best Brew Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each brand.
c. Assume that Best Brew Corporation has established the following activity centers, cost drivers, and costs to apply factory overhead.
   Compute the total cost and the unit cost for each brand.
d. Explain why the unit cost for each model is different across the three methods of overhead application. How can this information benefit the organization?

Accepted Answer

@#IMG-DLM& d. The allocation of overhead using vol

Question 10

Discuss some of the factors that could motivate an organization to implement activity based costing.

Accepted Answer

Some of the motivational factors are:
1.

Question 11

An activity driver is used for which of the following reasons?

Accepted Answer

A)  yes yes 
B)  yes no 
C)  no yes 
D)  no no 
A)  yes yes 
B)  yes no 
C)  no yes 
D)  no no

Question 12

Mass customization is closely associated with

Accepted Answer

A)  yes no no yes 
B)  yes yes yes no 
C)  no yes no no 
D)  yes no yes yes 
A)  yes no no yes 
B)  yes yes yes no 
C)  no yes no no 
D)  yes no yes yes

Question 13

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:

Accepted Answer

A)  $35,000 
B)  $45,000 
C)  $46,875 
D)  $51,923 
A)  $35,000 
B)  $45,000 
C)  $46,875 
D)  $51,923

Question 14

Ada National Bank Ada National Bank had the following activities, traceable costs, and
Physical flow of driver units:
  The above activities are used by the Broken Arrow branch and the Choctaw branch:
  Refer to Ada National Bank. What is the cost per driver unit for the deposit activity?

Accepted Answer

A)  $0.09 
B)  $0.075 
C)  $30.00 
D)  $50.00 
A)  $0.09 
B)  $0.075 
C)  $30.00 
D)  $50.00

Question 15

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

Accepted Answer

A)  product- or process-level 
B)  organizational-level 
C)  batch-level 
D)  unit-level 
A)  product- or process-level 
B)  organizational-level 
C)  batch-level 
D)  unit-level

Question 16

For a CPA firm, how would the wages of staff auditors be classified?

Accepted Answer

A)  Yes No 
B)  No Yes 
C)  Yes Yes 
D)  No No 
A)  Yes No 
B)  No Yes 
C)  Yes Yes 
D)  No No

Question 17

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 direct labor hours, Product B will have an overhead cost per unit of

Accepted Answer

A)  $76.97 
B)  $87.75 
C)  $88.64 
D)  None of the responses are correct. 
A)  $76.97 
B)  $87.75 
C)  $88.64 
D)  None of the responses are correct.

Question 18

Seattle Grace Corporation manufactures two models of a medical device: Model 101 and Model 102.
Below is the current year production data for the company:
   The 210,000 units of material had a total cost of $1,365,000. Direct labor is $17 per hour.
The company has total overhead production costs of $1,850,000.
a. If Seattle Grace Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each model
b. If Seattle Grace Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each model.
c. Assume that Seattle Grace Corporation has established the following activity centers, costs drivers, and costs to apply factory overhead.
   Compute the total cost and the unit cost for each model.
d. Explain why the unit cost for each model is different across the three methods of overhead application. How can such information benefit an organization?

Accepted Answer

@#IMG-DLM& d. The allocation of overhead using vol

Question 19

Ada National Bank Ada National Bank had the following activities, traceable costs, and
Physical flow of driver units:
  The above activities are used by the Broken Arrow branch and the Choctaw branch:
  Refer to Ada National Bank. What is the cost per driver unit for the loan application activity?

Accepted Answer

A)  $0.09 
B)  $0.075 
C)  $30.00 
D)  $50.00 
A)  $0.09 
B)  $0.075 
C)  $30.00 
D)  $50.00

Question 20

In activity-based costing, how are cost drivers selected?

Accepted Answer

Cost drivers are selected based on their

Machine setup is normally considered a batch-level cost

Activity-based costing and generally accepted accounting principles differ in that ABC

Activity-based costing systems generally use volume-based cost drivers.

A value chart indicates

Engaging in which of the following will result in radical changes being made to an organization's processes?

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

For a company that manufactures candy, how would the costs of product inspection be classified?

Discuss some of the factors that could motivate an organization to implement activity based costing.

An activity driver is used for which of the following reasons?

Mass customization is closely associated with

Ada National Bank Ada National Bank had the following activities, traceable costs, and Physical flow of driver units: The above activities are used by the Broken Arrow branch and the Choctaw branch: Refer to Ada National Bank. What is the cost per driver unit for the deposit activity?

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

For a CPA firm, how would the wages of staff auditors be classified?

Ada National Bank Ada National Bank had the following activities, traceable costs, and Physical flow of driver units: The above activities are used by the Broken Arrow branch and the Choctaw branch: Refer to Ada National Bank. What is the cost per driver unit for the loan application activity?

In activity-based costing, how are cost drivers selected?

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Performance Measurement, Balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

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

Machine setup is normally considered a batch-level cost

Activity-based costing and generally accepted accounting principles differ in that ABC

Activity-based costing systems generally use volume-based cost drivers.

A value chart indicates

Engaging in which of the following will result in radical changes being made to an organization's processes?

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

For a company that manufactures candy, how would the costs of product inspection be classified?

Discuss some of the factors that could motivate an organization to implement activity based costing.

An activity driver is used for which of the following reasons?

Mass customization is closely associated with

Ada National Bank Ada National Bank had the following activities, traceable costs, and Physical flow of driver units: The above activities are used by the Broken Arrow branch and the Choctaw branch: Refer to Ada National Bank. What is the cost per driver unit for the deposit activity?

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

For a CPA firm, how would the wages of staff auditors be classified?

Ada National Bank Ada National Bank had the following activities, traceable costs, and Physical flow of driver units: The above activities are used by the Broken Arrow branch and the Choctaw branch: Refer to Ada National Bank. What is the cost per driver unit for the loan application activity?

In activity-based costing, how are cost drivers selected?

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting, Support Department Allocations, and Transfer Pricing

Performance Measurement, Balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters