Question 1

Which of the following is an example of batch-level activity in a company marketing cell phones?

Accepted Answer

A) internet advertising 
B) preparing monthly customer invoices 
C) rent for kiosks in shopping malls 
D) offering discounts on monthly payment plans 
A) internet advertising 
B) preparing monthly customer invoices 
C) rent for kiosks in shopping malls 
D) offering discounts on monthly payment plans

Question 2

Jaime Inc.manufactures 2 products, sweaters and jackets.The company has estimated its overhead in the order-processing department to be $180,000.The company produces 50,000 sweaters and 80,000 jackets each year.Sweater production requires 25,000 machine hours, jacket production requires 50,000 machine hours.The company places raw materials orders 10 times per month, 2 times for raw materials for sweaters and the remainder for raw materials for jackets.How much of the order processing overhead should be allocated to jackets?

Accepted Answer

A) $90,000 
B) $120,000 
C) $110,770 
D) $144,000 
A) $90,000 
B) $120,000 
C) $110,770 
D) $144,000

Question 3

Activity-based costing has been found to be useful in each of the following service industries EXCEPT

Accepted Answer

A) banks. 
B) hospitals. 
C) telephone companies. 
D) ABC has been useful in any of these industries. 
A) banks. 
B) hospitals. 
C) telephone companies. 
D) ABC has been useful in any of these industries.

Question 4

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

Accepted Answer

A) True 
 B)False

Question 5

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 6

Current trends in manufacturing include less direct labour and more overhead.

Accepted Answer

A) True 
 B)False

Question 7

A non-value-added activity in a service enterprise is

Accepted Answer

A) taking appointments. 
B) travelling. 
C) advertising. 
D) all of these. 
A) taking appointments. 
B) travelling. 
C) advertising. 
D) all of these.

Question 8

Use the following information to answer questions 
Poodle Company manufactures two products, Mini A and Maxi B.Poodle's overhead costs consist of setting up machines, $800,000; machining, $2,000,000; and inspecting, $600,000.Information on the two products is: $$\begin{array} { l r r } 
& \text { Mini A } & \ \text { Maxi B }  \
\text { Direct labour hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$$
-Overhead applied to Maxi B using activity-based costing is

Accepted Answer

A) $1,280,000. 
B) $1,640,000. 
C) $1,664,000. 
D) $2,125,000. 
A) $1,280,000. 
B) $1,640,000. 
C) $1,664,000. 
D) $2,125,000.

Question 9

Low-volume products often require more special handling than high-volume products.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is typical of traditional costing systems?

Accepted Answer

A) Uses multiple cost drivers to allocate overhead. 
B) It is more complicated than Activity Based Costing systems. 
C) Is still the best way to allocate direct labour costs. 
D) Uses a single cost driver to allocate overhead. 
A) Uses multiple cost drivers to allocate overhead. 
B) It is more complicated than Activity Based Costing systems. 
C) Is still the best way to allocate direct labour costs. 
D) Uses a single cost driver to allocate overhead.

Question 11

A good cost driver should have a high correlation with

Accepted Answer

A) the actual number of units produced. 
B) the actual consumption of overhead costs. 
C) the actual number of products produced. 
D) the actual consumption of direct costs. 
A) the actual number of units produced. 
B) the actual consumption of overhead costs. 
C) the actual number of products produced. 
D) the actual consumption of direct costs.

Question 12

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

Accepted Answer

A) True 
 B)False

Question 13

Painting is a product-level activity.

Accepted Answer

A) True 
 B)False

Question 14

All of the following are examples of a value-added activity in a service company EXCEPT

Accepted Answer

A) delivering packages by a delivery service. 
B) ordering supplies. 
C) performing surgery. 
D) providing legal research for legal services. 
A) delivering packages by a delivery service. 
B) ordering supplies. 
C) performing surgery. 
D) providing legal research for legal services.

Question 15

What might be an impediment in changing from a traditionally-based costing system to an activity-based costing system?

Accepted Answer

A) Management may not be in favour of a change. 
B) Excessive costs may be incurred to assist in capturing costs. 
C) Some costs would still have to be allocated arbitrarily after the changeover. 
D) All of the above are impediments. 
A) Management may not be in favour of a change. 
B) Excessive costs may be incurred to assist in capturing costs. 
C) Some costs would still have to be allocated arbitrarily after the changeover. 
D) All of the above are impediments.

Question 16

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 17

In traditional costing systems, overhead is generally applied based on

Accepted Answer

A) direct labour for job-order costing, and machine hours for process-costing. 
B) direct material for job-order costing, and direct labour for process-costing. 
C) factory usage for both job-order costing and process-costing. 
D) units of production. 
A) direct labour for job-order costing, and machine hours for process-costing. 
B) direct material for job-order costing, and direct labour for process-costing. 
C) factory usage for both job-order costing and process-costing. 
D) units of production.

Question 18

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

Accepted Answer

A) True 
 B)False

Question 19

A company incurs $1,200,000 of overhead each year in three departments, Processing, Packaging, and Testing.The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of oil and 600,000 drums of sludge.The following data are available: $$\begin{array} { l c r } 
\text { Department } & \text { Expected use of Driver } & \text { Cost } \
\hline \text { Processing } & 800 & \$ 500,000 \
\text { Packaging } & 200,000 & 500,000 \
\text { Testing } & 2,000 & 200,000
\end{array}$$ Production information for oil is as follows: $$\begin{array} { l c } 
\text { Department } & \text { Expected use of Driver } \
\hline \text { Processing } & 300 \
\text { Packaging } & 120,000 \
\text { Testing } & 1,600
\end{array}$$ Calculate the amount of overhead assigned to oil.

Accepted Answer

A) $600,000 
B) $647,500 
C) $552,500 
D) $460,000 
A) $600,000 
B) $647,500 
C) $552,500 
D) $460,000

Question 20

All of the following statements are correct EXCEPT that

Accepted Answer

A) activity-based costing has been widely adopted in service industries. 
B) the objective of installing ABC in service firms is different than it is in a manufacturing firm. 
C) a larger proportion of overhead costs are company-wide costs in service industries. 
D) the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company. 
A) activity-based costing has been widely adopted in service industries. 
B) the objective of installing ABC in service firms is different than it is in a manufacturing firm. 
C) a larger proportion of overhead costs are company-wide costs in service industries. 
D) the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company.

Which of the following is an example of batch-level activity in a company marketing cell phones?

Activity-based costing has been found to be useful in each of the following service industries EXCEPT

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Current trends in manufacturing include less direct labour and more overhead.

A non-value-added activity in a service enterprise is

Low-volume products often require more special handling than high-volume products.

Which of the following is typical of traditional costing systems?

A good cost driver should have a high correlation with

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

Painting is a product-level activity.

All of the following are examples of a value-added activity in a service company EXCEPT

What might be an impediment in changing from a traditionally-based costing system to an activity-based costing system?

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

In traditional costing systems, overhead is generally applied based on

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

All of the following statements are correct EXCEPT that

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Decision-Making: Costvolumeprofit

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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Exam 5: Activity-Based Costing

Which of the following is an example of batch-level activity in a company marketing cell phones?

Activity-based costing has been found to be useful in each of the following service industries EXCEPT

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Current trends in manufacturing include less direct labour and more overhead.

A non-value-added activity in a service enterprise is

Low-volume products often require more special handling than high-volume products.

Which of the following is typical of traditional costing systems?

A good cost driver should have a high correlation with

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

Painting is a product-level activity.

All of the following are examples of a value-added activity in a service company EXCEPT

What might be an impediment in changing from a traditionally-based costing system to an activity-based costing system?

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

In traditional costing systems, overhead is generally applied based on

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

All of the following statements are correct EXCEPT that

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job-Order Cost Accounting

Process Cost Accounting

Decision-Making: Costvolumeprofit

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters