Question 1

Product costing systems in use over the last 40 years

Accepted Answer

A)  concentrated on using multiple cost pools and cost drivers. 
B)  were often technologically incapable of handling activity-based costing information. 
C)  have generally been responsive to changes in the manufacturing environment. 
D)  have been appropriate for managerial decision purposes as long as they met the requirements of generally accepted accounting principles. 
A)  concentrated on using multiple cost pools and cost drivers. 
B)  were often technologically incapable of handling activity-based costing information. 
C)  have generally been responsive to changes in the manufacturing environment. 
D)  have been appropriate for managerial decision purposes as long as they met the requirements of generally accepted accounting principles.

Question 2

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?

Accepted Answer

A)  $.04. 
B)  $.25. 
C)  $.50. 
D)  None of the responses are correct. 
A)  $.04. 
B)  $.25. 
C)  $.50. 
D)  None of the responses are correct.

Question 3

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 machine maintenance cost allocated to LCD TV's would be:

Accepted Answer

A)  $51,923 
B)  $55,385 
C)  $69,231 
D)  $72,000 
A)  $51,923 
B)  $55,385 
C)  $69,231 
D)  $72,000

Question 4

When non-value added time is greater, manufacturing cycle efficiency is higher.

Accepted Answer

A) True 
 B)False

Question 5

ABC has been criticized for a variety of reasons. Discuss these criticisms.

Accepted Answer

The first criticism of ABC is that it re

Question 6

A cost accumulation system should most likely be reevaluated when a company has

Accepted Answer

A)  automated one or more production processes. 
B)  introduced new products to its customers. 
C)  had its industry deregulated. 
D)  all of the above. 
A)  automated one or more production processes. 
B)  introduced new products to its customers. 
C)  had its industry deregulated. 
D)  all of the above.

Question 7

Memory Chest Corporation manufactures hand-made pine storage boxes for a variety of clients. As production manager, you have developed the following value chart:

Accepted Answer

The answer of Memory Chest Corporation manufactures hand-made pine storage...

Question 8

Cost allocation bases in activity-based costing should be

Accepted Answer

A)  cost drivers. 
B)  value-added activities. 
C)  activity centers. 
D)  processes. 
A)  cost drivers. 
B)  value-added activities. 
C)  activity centers. 
D)  processes.

Question 9

An objective of activity-based management is to

Accepted Answer

A)  eliminate the majority of centralized activities in an organization. 
B)  reduce or eliminate non-value-added activities incurred to make a product or provide a service. 
C)  institute responsibility accounting systems in decentralized organizations. 
D)  all of the above 
A)  eliminate the majority of centralized activities in an organization. 
B)  reduce or eliminate non-value-added activities incurred to make a product or provide a service. 
C)  institute responsibility accounting systems in decentralized organizations. 
D)  all of the above

Question 10

Non-value-added activities that are necessary to businesses, but not costs that customers are willing to pay for are known as

Accepted Answer

A)  business-value-added activities. 
B)  long-term variable activities. 
C)  short-term variable activities. 
D)  superior business activities. 
A)  business-value-added activities. 
B)  long-term variable activities. 
C)  short-term variable activities. 
D)  superior business activities.

Question 11

Which of the following is considered a value-added activity?

Accepted Answer

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

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Which of the following cost drivers is often disregarded in a traditional costing system?

Accepted Answer

A)  Pounds of direct material 
B)  Machine hours 
C)  Direct labor dollars 
D)  Variety of products manufactured 
A)  Pounds of direct material 
B)  Machine hours 
C)  Direct labor dollars 
D)  Variety of products manufactured

Question 14

The sum of the non-value-added time and the value-added time equals

Accepted Answer

A)  inspection time. 
B)  production time. 
C)  the product life cycle. 
D)  cycle time. 
A)  inspection time. 
B)  production time. 
C)  the product life cycle. 
D)  cycle time.

Question 15

A process map

Accepted Answer

A)  should indicate only value-added activities. 
B)  is also known as a detailed flowchart. 
C)  should indicate only those steps/processes that are obvious in the production of goods/services. 
D)  is also known as a value chart. 
A)  should indicate only value-added activities. 
B)  is also known as a detailed flowchart. 
C)  should indicate only those steps/processes that are obvious in the production of goods/services. 
D)  is also known as a value chart.

Question 16

Activity analysis allows managers to

Accepted Answer

A)  classify activities so that processes can be eliminated. 
B)  devise ways to minimize or eliminate non-value-added activities. 
C)  evaluate process performance to gain competitive advantages. 
D)  all of the above. 
A)  classify activities so that processes can be eliminated. 
B)  devise ways to minimize or eliminate non-value-added activities. 
C)  evaluate process performance to gain competitive advantages. 
D)  all of the above.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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:

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 19

Building depreciation is generally considered a product or process level cost.

Accepted Answer

A) True 
 B)False

Question 20

Office Innovations Corporation produces two types of electronic data organizers: basic and deluxe. The following information about the production process is available:
   Total factory overhead is $10,000,000. Of this overhead, $4,000,000 is related to utilities and the remainder is related to quality control.
a. Determine the total overhead cost assigned to each type of data organizer 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 data organizer 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.

Accepted Answer

@#IMG-DLM& c) When machine hours are used to alloc

Product costing systems in use over the last 40 years

When non-value added time is greater, manufacturing cycle efficiency is higher.

ABC has been criticized for a variety of reasons. Discuss these criticisms.

A cost accumulation system should most likely be reevaluated when a company has

Memory Chest Corporation manufactures hand-made pine storage boxes for a variety of clients. As production manager, you have developed the following value chart:

Cost allocation bases in activity-based costing should be

An objective of activity-based management is to

Non-value-added activities that are necessary to businesses, but not costs that customers are willing to pay for are known as

Which of the following is considered a value-added activity?

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

Which of the following cost drivers is often disregarded in a traditional costing system?

The sum of the non-value-added time and the value-added time equals

A process map

Activity analysis allows managers to

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

Building depreciation is generally considered a product or process level cost.

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

Product costing systems in use over the last 40 years

When non-value added time is greater, manufacturing cycle efficiency is higher.

ABC has been criticized for a variety of reasons. Discuss these criticisms.

A cost accumulation system should most likely be reevaluated when a company has

Memory Chest Corporation manufactures hand-made pine storage boxes for a variety of clients. As production manager, you have developed the following value chart:

Cost allocation bases in activity-based costing should be

An objective of activity-based management is to

Non-value-added activities that are necessary to businesses, but not costs that customers are willing to pay for are known as

Which of the following is considered a value-added activity?

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

Which of the following cost drivers is often disregarded in a traditional costing system?

The sum of the non-value-added time and the value-added time equals

A process map

Activity analysis allows managers to

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

Building depreciation is generally considered a product or process level cost.

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