Question 1

The resource(s) consumed by the activity in producing its output is(are) called:

Accepted Answer

A) Value-added activities 
B) Activity outputs 
C) Driver analysis 
D) Activity inputs 
A) Value-added activities 
B) Activity outputs 
C) Driver analysis 
D) Activity inputs

Question 2

The objective of the cost dimension of activity-based management is:

Accepted Answer

A) reducing the number of trade debtors of a firm. 
B) increasing the sales of all products. 
C) improving the accuracy of cost assignments. 
D) reducing the amount of bad debts incurred by a firm. 
A) reducing the number of trade debtors of a firm. 
B) increasing the sales of all products. 
C) improving the accuracy of cost assignments. 
D) reducing the amount of bad debts incurred by a firm.

Question 3

What are the two dimensions of an activity-based management model?

Accepted Answer

A) the cost dimension and the project dimension 
B) the cost dimension and the process dimension 
C) the quality dimension and the process dimension 
D) the quality dimension and the activity dimension 
A) the cost dimension and the project dimension 
B) the cost dimension and the process dimension 
C) the quality dimension and the process dimension 
D) the quality dimension and the activity dimension

Question 4

The resources consumed by the activity in producing its output are called __________ .

Accepted Answer

The answer of The resources consumed by the activity in...

Question 5

Bandolero Corporation has developed ideal standards for four activities: labor, materials, inspection, and receiving. Information is as follows: $$\begin{array} { l l r r r } 
\text { Activity } & \text { Activity Driver } & \text { SQ } &{ \text { AQ } } & \text { SP } \
\text { Inspection } & \text { Inspection hours } & 0 & 40,000 & \$ 12 \
\text { Labor } & \text { Hours } & 50,000 & 56,000 & 18 \
\text { Materials } & \text { Pounds } & 100,000 & 105,000 & 15 \
\text { Receiving } & \text { Orders } & 150 & 190&450
\end{array}$$ The actual prices paid per unit of each activity driver were equal to the standard prices. The value-added costs for labor are

Accepted Answer

A) $792,000. 
B) $900,000. 
C) $84,000. 
D) $75,000. 
A) $792,000. 
B) $900,000. 
C) $84,000. 
D) $75,000.

Question 6

Lionel, Inc., has developed ideal standards for four activities: labor, materials, inspection, and receiving.
Information is as follows: $$\begin{array} { l l r r r } 
\text { Activity } & \text { Activity Driver } & \mathrm { SQ } & \mathrm { AQ } & \mathrm { SP } \
\text { Labor } & \text { Hours } & 500 & 550 & \$ 32 \
\text { Materials } & \text { Pounds } & 2,000 & 2,500 & 48 \
\text { Inspection } & \text { Inspection hours } & 0 & 375 & 22 \
\text { Receiving } & \text { Orders } & 60 & 75 & 800
\end{array}$$ 
The actual prices paid per unit of each activity driver were equal to the standard prices.
Required:
Complete the following cost report: 
$\begin{array} { l  }
\text { Activity }&\text { Value-Added } & \text { Non-value-Added } & \text { Actual }\\hline
 \text { Labor}&\$\_\_\_&\$\_\_\_&\$\_\_\_\
 \text {Materials }\
 \text { Inspection}\
 \text {Receiving }\
 \text { Totals}&\$\_\_\_&\$\_\_\_&\$\_\_\_\
\end{array}$

Accepted Answer

The answer of Lionel, Inc., has developed ideal standards for...

Question 7

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. Labor is $18 per hour. The value-added costs are

Accepted Answer

A) $27. 
B) $135. 
C) $81. 
D) $54. 
A) $27. 
B) $135. 
C) $81. 
D) $54.

Question 8

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time to 1 hour. Setup labor is $6 per hour. The non-value-added costs are

Accepted Answer

A) $72. 
B) $66. 
C) $12. 
D) $6. 
A) $72. 
B) $66. 
C) $12. 
D) $6.

Question 9

Which of the following is descriptive of financial-based responsibility accounting?

Accepted Answer

A) It assumes that activities are linked. 
B) It assigns responsibility to organization units. 
C) Its control emphasis is costs. 
D) Its goal is continuous improvement. 
A) It assumes that activities are linked. 
B) It assigns responsibility to organization units. 
C) Its control emphasis is costs. 
D) Its goal is continuous improvement.

Question 10

The process which refers to incremental or continual increases in the efficiency of an existing product is called:

Accepted Answer

A) Process elimination 
B) Process innovation 
C) Process creation 
D) Process improvement 
A) Process elimination 
B) Process innovation 
C) Process creation 
D) Process improvement

Question 11

Suburbia, Inc., sells one of its products for $150 each. Sales volume averages 800 units per year. Recently, its main competitor reduced the price of its product to $130. Suburbia expects sales to drop dramatically unless it matches the competitor's price. In addition, the current profit per unit must be maintained. Information about the product (for production of 800) is as follows:
 $\begin{array}{lrrr}&\mathrm{SQ} &\mathrm{AQ} & \text { Actual Q}\
\text { Materials (pounds) } & 14,400 & 15,000 & \$ 30, \
\text { Labor (hours) } & 2,000 & 2,400 & 18, \
\text { Setups (hours) } & 0 & 1,400 & 8 \text {, } \
\text { Material handling (moves) } & 0 & 600 & 4, \
\text { Warranties (number repaired) } & 0 & 400 & 20,
\end{array}$ 
Required: 
a.Calculate the target cost for maintaining current market share and profitability.
b.Calculate the non-value-added cost per unit.
c.If non-value-added costs can be reduced to zero, can the target cost be achieved?

Accepted Answer

The answer of Suburbia, Inc., sells one of its products...

Question 12

One of the major reasons for the failure of ABM is lack of upper management support.

Accepted Answer

A) True 
 B)False

Question 13

Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day.
The value-added costs are

Accepted Answer

A) $0. 
B) $40,000. 
C) $20,000. 
D) $80,000. 
A) $0. 
B) $40,000. 
C) $20,000. 
D) $80,000.

Question 14

Which of the following is an example of a non-value-added manufacturing activity?

Accepted Answer

A) assembly 
B) scheduling 
C) finishing 
D) All of these are value-added activities. 
A) assembly 
B) scheduling 
C) finishing 
D) All of these are value-added activities.

Question 15

The responsibility accounting system developed for operations in a continuous improvement environment would be

Accepted Answer

A) financial-based responsibility accounting. 
B) functional-based responsibility accounting. 
C) activity-based responsibility accounting. 
D) strategy-based responsibility accounting. 
A) financial-based responsibility accounting. 
B) functional-based responsibility accounting. 
C) activity-based responsibility accounting. 
D) strategy-based responsibility accounting.

Question 16

A well accepted approach for reducing costs by eliminating waste is called __________ costing.

Accepted Answer

The answer of A well accepted approach for reducing costs...

Question 17

What is the purpose of driver analysis?

Accepted Answer

A) identify activities in a process 
B) identify number of processes 
C) identify root causes of activity costs 
D) identify complexity of processes 
A) identify activities in a process 
B) identify number of processes 
C) identify root causes of activity costs 
D) identify complexity of processes

Question 18

Activities that contribute to customer value and are necessary to remain in business are called __________ activities.

Accepted Answer

The answer of Activities that contribute to customer value and...

Question 19

Which of the following focuses on the relationship of activity outputs to activity inputs?

Accepted Answer

A) activity reduction 
B) quality 
C) time 
D) efficiency 
A) activity reduction 
B) quality 
C) time 
D) efficiency

Question 20

Cheshire Cat Company sells one of its products for $100 each. Sales volume averages 750 units per year. Recently, its main competitor reduced the price of its product to $80. Cheshire Cat Company expects sales to drop dramatically unless it matches the competitor's price. In addition, the current profit per unit must be maintained. Information about the product (for production of 750) is as follows: $\begin{array}{lrrr}&\mathrm{SQ} &\mathrm{AQ}& \text { Actual Cost }\
\text { Materials (pounds) } & 2,000 & 2,500 & \$ 50,000 \
\text { Labor (hours) } & 450 & 500 & 25,000 \
\text { Setups (hours) } & 0 & 600 & 7,500 \
\text { Material handling (moves) } & 0 & 300 & 3,750 \
\text { Warranties (number repaired) } & 0 & 200 & 15,000
\end{array}$ The non-value-added cost per unit is

Accepted Answer

A) $49.67. 
B) $48.33. 
C) $48.67. 
D) $51.67. 
A) $49.67. 
B) $48.33. 
C) $48.67. 
D) $51.67.

The resource(s) consumed by the activity in producing its output is(are) called:

The objective of the cost dimension of activity-based management is:

What are the two dimensions of an activity-based management model?

The resources consumed by the activity in producing its output are called __________ .

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. Labor is $18 per hour. The value-added costs are

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time to 1 hour. Setup labor is $6 per hour. The non-value-added costs are

Which of the following is descriptive of financial-based responsibility accounting?

The process which refers to incremental or continual increases in the efficiency of an existing product is called:

One of the major reasons for the failure of ABM is lack of upper management support.

Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day. The value-added costs are

Which of the following is an example of a non-value-added manufacturing activity?

The responsibility accounting system developed for operations in a continuous improvement environment would be

A well accepted approach for reducing costs by eliminating waste is called __________ costing.

What is the purpose of driver analysis?

Activities that contribute to customer value and are necessary to remain in business are called __________ activities.

Which of the following focuses on the relationship of activity outputs to activity inputs?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 12: Activity-Based Management

The resource(s) consumed by the activity in producing its output is(are) called:

The objective of the cost dimension of activity-based management is:

What are the two dimensions of an activity-based management model?

The resources consumed by the activity in producing its output are called __________ .

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. Labor is $18 per hour. The value-added costs are

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time to 1 hour. Setup labor is $6 per hour. The non-value-added costs are

Which of the following is descriptive of financial-based responsibility accounting?

The process which refers to incremental or continual increases in the efficiency of an existing product is called:

One of the major reasons for the failure of ABM is lack of upper management support.

Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day. The value-added costs are

Which of the following is an example of a non-value-added manufacturing activity?

The responsibility accounting system developed for operations in a continuous improvement environment would be

A well accepted approach for reducing costs by eliminating waste is called __________ costing.

What is the purpose of driver analysis?

Activities that contribute to customer value and are necessary to remain in business are called __________ activities.

Which of the following focuses on the relationship of activity outputs to activity inputs?

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters