Exam 4: Activity-Based Costing and Cost Management

Washington,Inc.produces two different products (Product C and Product 2)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 $750,000,while the cost of Inspection is $90,000.The activity drivers are used as follows: What is the activity rate for Machining?

Total quality management aims to improve quality by doing all of the following except:

Which of the following sets just-in-time systems apart from traditional manufacturing systems?

Which of the following is not true of activity cost drivers?

In a traditional volume-based cost system,total manufacturing costs are calculated by:

Using the activity-proportion method results in:

Which of the following would not be directly related to a volume-based allocation measure?

Amy Andrews is a CPA who works as a managerial accounting consultant for a variety of firms.To determine her hourly rate,Amy uses a cost-plus pricing system,which she updates each year.The hourly cost of her assistant (including taxes and benefits)is $18,the hourly cost of her office space is $4,the hourly cost of her marketing and other overhead materials is $6,and Amy's own hourly salary (again,including taxes and benefits)is $62.Amy adds a 20% premium to her costs.What is her hourly rate using a cost-plus pricing strategy?

Which of the following would be considered a non-volume-based cost driver?

Jefferson,Inc.produces two different products (Product 5 and Product Z)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.The activity drivers are used as follows: What proportion of Inspection activity is used by Product Z?

In target costing,the target cost should be determined:

Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows: Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor. Required: a.Calculate the Design activity proportions for Products A and B. b.Calculate the Machining activity proportions for Products A and B. c.Calculate the Inspection activity proportions for Products A and B. d.Determine the indirect costs assigned to Product A. e.Determine the indirect costs assigned to Product B. f.Determine the manufacturing cost per unit for Product A. g.Determine the manufacturing cost per unit for Product B. h.Determine the gross profit per unit for Product A. i.Determine the gross profit per unit for Product B.

Jackson,Inc.produces two different products (Product 5 and Product Z)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.Product 5 uses 20% of total machine hours and 75% of total batches.What is the total Inspection cost assigned to Product Z?

Cottonwood,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 uses 30% of total machine hours and 70% of total batches.What is the total activity cost assigned to Luxury?

Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows: Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor. Required: a.Calculate the activity rate for Design. b.Calculate the activity rate for Machining. c.Calculate the activity rate for Inspection. d.Determine the indirect costs assigned to Product A. e.Determine the indirect costs assigned to Product B. f.Determine the manufacturing cost per unit for Product A. g.Determine the manufacturing cost per unit for Product B. h.Determine the gross profit per unit for Product A. i.Determine the gross profit per unit for Product B.

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 Inspection is $750 per batch.What is the total cost of Inspection?

How is the cost of a batch-level activity similar to the cost of a unit-level activity?

Which of the following should a manager using activity-based management attempt to reduce or eliminate?

Which of the following statements is not correct about how an ABC system might be adapted to provide managers with sustainability-related information that would affect the triple bottom line?

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 X?