Question 1

When a traditional,volume-based costing system is used,which of the following products is most likely to suffer from cost distortion?

Accepted Answer

A) A high-volume,medium-complexity product 
B) A low-volume,low-complexity product 
C) A low-volume,medium-complexity product 
D) A low-volume,high-complexity product 
A) A high-volume,medium-complexity product 
B) A low-volume,low-complexity product 
C) A low-volume,medium-complexity product 
D) A low-volume,high-complexity product

Question 2

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 Machining cost assigned to Product 5?

Accepted Answer

A) $7,500 
B) $22,500 
C) $100,000 
D) $375,000 
A) $7,500 
B) $22,500 
C) $100,000 
D) $375,000

Question 3

Parsons and Sons Woodworks manufactures baseball bats and wooden tops.Currently,Parsons and Sons makes 5,000 baseball bats each month.Each bat uses $1.00 in direct materials and $0.50 in direct labor.Parsons and Sons uses two activities in manufacturing the baseball bats: Cutting and Finishing.The cost associated with Cutting is $7,500 a month,allocated on the basis of direct labor hours.The cost associated with Finishing is $12,000 a month,allocated on the basis of batches.Baseball bats use 1/3 of the direct labor hours,and 40% of total batches.What is the total manufacturing cost for one baseball bat?

Accepted Answer

A) $1.46 
B) $1.50 
C) $2.96 
D) $3.94 
A) $1.46 
B) $1.50 
C) $2.96 
D) $3.94

Question 4

An activity that is performed for each individual unit is a ________ level activity.

Accepted Answer

A) batch 
B) facility 
C) product 
D) unit 
A) batch 
B) facility 
C) product 
D) unit

Question 5

Portland,Inc.has formed four activity cost pools: Product Design,Machining and Production,Machine Setup,and Inspection.Gina Taylor,Production Manager at Portland,oversees processes that are considered part of Machining and Production,Machine Setup,and Inspection.Taylor's salary should be:

Accepted Answer

A) assigned to the activity she spends the most time on. 
B) considered as a separate activity. 
C) expensed in the period incurred. 
D) allocated among Machining and Production,Machine Setup,and Inspection. 
A) assigned to the activity she spends the most time on. 
B) considered as a separate activity. 
C) expensed in the period incurred. 
D) allocated among Machining and Production,Machine Setup,and Inspection.

Question 6

The approach to cost management that calls for setting cost reduction goals across numerous stages such as product introduction,growth,maturity,and decline is:

Accepted Answer

A) life cycle cost management. 
B) total quality management. 
C) target costing. 
D) just-in-time inventory. 
A) life cycle cost management. 
B) total quality management. 
C) target costing. 
D) just-in-time inventory.

Question 7

One side benefit of JIT is that:

Accepted Answer

A) the accounting system is more complicated. 
B) the company maintains more connections with suppliers since it uses more of them. 
C) the accounting system is simplified. 
D) it enables accountants to be measurement experts. 
A) the accounting system is more complicated. 
B) the company maintains more connections with suppliers since it uses more of them. 
C) the accounting system is simplified. 
D) it enables accountants to be measurement experts.

Question 8

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 5?

Accepted Answer

A) $7,500 
B) $22,500 
C) $125,000 
D) $375,000 
A) $7,500 
B) $22,500 
C) $125,000 
D) $375,000

Question 9

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 Inspection?

Accepted Answer

A) $45,000 per batch 
B) $1,500 per batch 
C) $6,000 per batch 
D) $2,000 per batch 
A) $45,000 per batch 
B) $1,500 per batch 
C) $6,000 per batch 
D) $2,000 per batch

Question 10

An activity that is performed for a group of units all at once is a(n):

Accepted Answer

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

Question 11

External failure costs are costs that:

Accepted Answer

A) are incurred to prevent quality problems from occurring in the first place. 
B) are incurred to identify defective products before products are shipped to the customer. 
C) result from defects that are caught before the product is shipped to the customer. 
D) occur when a defective product makes its way into the hands of the customer. 
A) are incurred to prevent quality problems from occurring in the first place. 
B) are incurred to identify defective products before products are shipped to the customer. 
C) result from defects that are caught before the product is shipped to the customer. 
D) occur when a defective product makes its way into the hands of the customer.

Question 12

Internal failure costs are costs that:

Accepted Answer

A) are incurred to prevent quality problems from occurring in the first place. 
B) are incurred to identify defective products before products are shipped to the customer. 
C) result from defects that are caught before the product is shipped to the customer. 
D) occur when a defective product makes its way into the hands of the customer. 
A) are incurred to prevent quality problems from occurring in the first place. 
B) are incurred to identify defective products before products are shipped to the customer. 
C) result from defects that are caught before the product is shipped to the customer. 
D) occur when a defective product makes its way into the hands of the customer.

When a traditional,volume-based costing system is used,which of the following products is most likely to suffer from cost distortion?

An activity that is performed for each individual unit is a ________ level activity.

Portland,Inc.has formed four activity cost pools: Product Design,Machining and Production,Machine Setup,and Inspection.Gina Taylor,Production Manager at Portland,oversees processes that are considered part of Machining and Production,Machine Setup,and Inspection.Taylor's salary should be:

The approach to cost management that calls for setting cost reduction goals across numerous stages such as product introduction,growth,maturity,and decline is:

One side benefit of JIT is that:

An activity that is performed for a group of units all at once is a(n):

External failure costs are costs that:

Internal failure costs are costs that:

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

When a traditional,volume-based costing system is used,which of the following products is most likely to suffer from cost distortion?

An activity that is performed for each individual unit is a ________ level activity.

Portland,Inc.has formed four activity cost pools: Product Design,Machining and Production,Machine Setup,and Inspection.Gina Taylor,Production Manager at Portland,oversees processes that are considered part of Machining and Production,Machine Setup,and Inspection.Taylor's salary should be:

The approach to cost management that calls for setting cost reduction goals across numerous stages such as product introduction,growth,maturity,and decline is:

One side benefit of JIT is that:

An activity that is performed for a group of units all at once is a(n):

External failure costs are costs that:

Internal failure costs are costs that:

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