Question 1

Each individual indirect cost should be assigned to one activity when forming activity cost pools.

Accepted Answer

A) True 
 B)False

Question 2

If the total activity cost were unknown,it could be calculated by:

Accepted Answer

A) dividing the total activity driver by the activity rate. 
B) multiplying the total activity driver by the activity rate. 
C) adding the total activity driver to the activity rate. 
D) subtracting the activity rate from the total activity driver. 
A) dividing the total activity driver by the activity rate. 
B) multiplying the total activity driver by the activity rate. 
C) adding the total activity driver to the activity rate. 
D) subtracting the activity rate from the total activity driver.

Question 3

Using non-volume-based activity drivers allows activity-based costing to:

Accepted Answer

A) assign more indirect costs to products whose production volume is higher. 
B) assign more direct costs to products whose production volume is higher. 
C) assign more indirect costs to products whose complexity is higher. 
D) assign more direct costs to products whose complexity is higher. 
A) assign more indirect costs to products whose production volume is higher. 
B) assign more direct costs to products whose production volume is higher. 
C) assign more indirect costs to products whose complexity is higher. 
D) assign more direct costs to products whose complexity is higher.

Question 4

Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.The activity drivers are used as follows:   What is the amount of Machining cost assigned to Product A?

Accepted Answer

A) $7,500 
B) $125,000 
C) $375,000 
D) $500,000 
A) $7,500 
B) $125,000 
C) $375,000 
D) $500,000

Question 5

External failure costs occur ________ a defective product makes its way to the customer,while internal failure costs occur ________ a defective product makes its way to the customer.

Accepted Answer

A) before,before 
B) before,after 
C) after,before 
D) after,after 
A) before,before 
B) before,after 
C) after,before 
D) after,after

Question 6

A volume-based allocation measure is directly related to the number of units produced or the number of customers served.

Accepted Answer

A) True 
 B)False

Question 7

Life cycle cost management takes into consideration the fact that costs and revenues:

Accepted Answer

A) are higher in the early stages of the product life cycle than in later stages. 
B) are not constant across different stages of the product's life cycle. 
C) slow down in the maturity stage of the product life cycle. 
D) are higher when products use more activities. 
A) are higher in the early stages of the product life cycle than in later stages. 
B) are not constant across different stages of the product's life cycle. 
C) slow down in the maturity stage of the product life cycle. 
D) are higher when products use more activities.

Question 8

GG's Personal Training Services is owned by Gina Garfield.Gina provides personal training and coaching to individuals or small groups using the local fitness facility and pool.Gina rents the group training room at the local fitness facility or the pool for scheduled classes.For one-on-one training,she meets clients at the fitness facility where she is a member.Gina is currently learning Zumba and plans to offer a Zumba class in the group training room on Wednesday mornings starting next month.To advertise this class and all her other services,Gina developed a company Facebook page.The development of the Facebook page is considered a ________ activity for GG's.

Accepted Answer

A) facility-level 
B) service-level 
C) group-level 
D) customer-level 
A) facility-level 
B) service-level 
C) group-level 
D) customer-level

Question 9

Culver,Inc.produces two different products (Product V3 and Product G8)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity drivers are used as follows:   The activity rate for Machining is $67.50 per machine hour.What is the total cost of Machining?

Accepted Answer

A) $274,050 
B) $67,500 
C) $202,500 
D) $270,000 
A) $274,050 
B) $67,500 
C) $202,500 
D) $270,000

Question 10

The activity-rate method involves:

Accepted Answer

A) dividing the total activity driver by the total activity cost. 
B) calculating the proportion of each activity driver used by each product. 
C) calculating an activity rate that is similar to the predetermined overhead rate. 
D) multiplying the total activity cost by the total activity driver. 
A) dividing the total activity driver by the total activity cost. 
B) calculating the proportion of each activity driver used by each product. 
C) calculating an activity rate that is similar to the predetermined overhead rate. 
D) multiplying the total activity cost by the total activity driver.

Question 11

Which of the following is the best example of a facility-level activity?

Accepted Answer

A) Human resources 
B) Research and development 
C) Painting a final product 
D) Product testing 
A) Human resources 
B) Research and development 
C) Painting a final product 
D) Product testing

Question 12

To assign activity costs using the activity proportion method,multiply the activity rate by the activity requirements of each individual product.

Accepted Answer

A) True 
 B)False

Question 13

Lynwood,Inc.produces two different products (Product A and Product X)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.The activity drivers are used as follows:   What is the amount of Inspection cost assigned to Product X?

Accepted Answer

A) $7,500 
B) $22,500 
C) $30,000 
D) $125,000 
A) $7,500 
B) $22,500 
C) $30,000 
D) $125,000

Question 14

A large company that uses activity based costing would do which of the following?

Accepted Answer

A) Use a volume-based cost driver for each activity. 
B) Form a cost pool for each activity performed by the company. 
C) Use a single cost pool. 
D) Group activities together to simplify the number of activities. 
A) Use a volume-based cost driver for each activity. 
B) Form a cost pool for each activity performed by the company. 
C) Use a single cost pool. 
D) Group activities together to simplify the number of activities.

Question 15

Sherman,Inc.manufactures chainsaws that sell for $58.Each chainsaw uses $10 in direct materials and $3 in direct labor per unit.Sherman has two activities: Machining,which is applied at the rate of $2 per machine hour,and Finishing,which is applied at the rate of $20 per batch.This month,Sherman made 200 chainsaws,using 1,000 machine hours in 40 batches.What is the total manufacturing cost for one chainsaw?

Accepted Answer

A) $13 
B) $14 
C) $27 
D) $30 
A) $13 
B) $14 
C) $27 
D) $30

Question 16

Linden,Inc.uses a 5,000 square foot factory space that it rents for $2,500 a month for all its manufacturing activities.Linden has decided to switch to an activity-based costing system,and has identified its activities as follows: Preparation and Setup,Machining,Finishing,and Quality Control.500 square feet of the factory are used for machining,while 2,000 square feet (each)are used for Preparation and Setup and Quality Control.Finishing uses 500 square feet.When assigning indirect costs to each activity,how much factory rent should be assigned to the Preparation and Setup cost pool?

Accepted Answer

A) $250 
B) $500 
C) $1,000 
D) $2,000 
A) $250 
B) $500 
C) $1,000 
D) $2,000

Question 17

Volume-based cost systems tend to:

Accepted Answer

A) under-cost low-volume products and under-cost high-volume products. 
B) under-cost low-volume products and over-cost high-volume products. 
C) over-cost low-volume products and under-cost high-volume products. 
D) over-cost low-volume products and over-cost high-volume products. 
A) under-cost low-volume products and under-cost high-volume products. 
B) under-cost low-volume products and over-cost high-volume products. 
C) over-cost low-volume products and under-cost high-volume products. 
D) over-cost low-volume products and over-cost high-volume products.

Question 18

Monroe,Inc.randomly selects ten units from each production run to be inspected for quality,regardless of the size of the production run.The inspection of these units would most likely be classified as a:

Accepted Answer

A) facility or companywide activity. 
B) product-level activity. 
C) batch-level activity. 
D) unit-level activity. 
A) facility or companywide activity. 
B) product-level activity. 
C) batch-level activity. 
D) unit-level activity.

Question 19

Calverton,Inc.produces two different products (Standard and Luxury)using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Inspection activity is used by Standard?

Accepted Answer

A) 25% 
B) 33% 
C) 67% 
D) 75% 
A) 25% 
B) 33% 
C) 67% 
D) 75%

Question 20

Which of the following is the best example of a unit-level activity?

Accepted Answer

A) Human resources 
B) Research and development 
C) Painting a final product 
D) Product testing 
A) Human resources 
B) Research and development 
C) Painting a final product 
D) Product testing

Each individual indirect cost should be assigned to one activity when forming activity cost pools.

If the total activity cost were unknown,it could be calculated by:

Using non-volume-based activity drivers allows activity-based costing to:

External failure costs occur a defective product makes its way to the customer,while internal failure costs occur a defective product makes its way to the customer.

A volume-based allocation measure is directly related to the number of units produced or the number of customers served.

Life cycle cost management takes into consideration the fact that costs and revenues:

The activity-rate method involves:

Which of the following is the best example of a facility-level activity?

To assign activity costs using the activity proportion method,multiply the activity rate by the activity requirements of each individual product.

A large company that uses activity based costing would do which of the following?

Volume-based cost systems tend to:

Monroe,Inc.randomly selects ten units from each production run to be inspected for quality,regardless of the size of the production run.The inspection of these units would most likely be classified as a:

Which of the following is the best example of a unit-level activity?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variance Analysis

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 4: Activity-Based Costing and Cost Management

Each individual indirect cost should be assigned to one activity when forming activity cost pools.

If the total activity cost were unknown,it could be calculated by:

Using non-volume-based activity drivers allows activity-based costing to:

External failure costs occur ________ a defective product makes its way to the customer,while internal failure costs occur ________ a defective product makes its way to the customer.

A volume-based allocation measure is directly related to the number of units produced or the number of customers served.

Life cycle cost management takes into consideration the fact that costs and revenues:

The activity-rate method involves:

Which of the following is the best example of a facility-level activity?

To assign activity costs using the activity proportion method,multiply the activity rate by the activity requirements of each individual product.

A large company that uses activity based costing would do which of the following?

Volume-based cost systems tend to:

Monroe,Inc.randomly selects ten units from each production run to be inspected for quality,regardless of the size of the production run.The inspection of these units would most likely be classified as a:

Which of the following is the best example of a unit-level activity?

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Incremental Analysis for Short-Term Decision Making

Budgetary Planning

Standard Costing and Variance Analysis

Decentralized Performance Evaluation

Capital Budgeting

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

External failure costs occur a defective product makes its way to the customer,while internal failure costs occur a defective product makes its way to the customer.