Question 1

ABC is generally more costly to implement than traditional costing.

Accepted Answer

A) True 
 B)False

Question 2

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:

Accepted Answer

A)  machine hours. 
B)  number of setups. 
C)  number of purchase orders. 
D)  number of inspection tests. 
A)  machine hours. 
B)  number of setups. 
C)  number of purchase orders. 
D)  number of inspection tests.

Question 3

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $$\begin{array} { l c c } 
 & \text { Regular } & \text { Supreme } \
\text { Direct labor hours }& 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using activity-based costing is

Accepted Answer

A)  $1,290,000. 
B)  $1,800,000. 
C)  $2,700,000. 
D)  $3,210,000. 
A)  $1,290,000. 
B)  $1,800,000. 
C)  $2,700,000. 
D)  $3,210,000.

Question 4

Which of the following factors would suggest a switch to activity-based costing?

Accepted Answer

A)  Product lines similar in volume and manufacturing complexity. 
B)  Overhead costs constitute a significant portion of total costs. 
C)  The manufacturing process has been stable. 
D)  Production managers use data provided by the existing system. 
A)  Product lines similar in volume and manufacturing complexity. 
B)  Overhead costs constitute a significant portion of total costs. 
C)  The manufacturing process has been stable. 
D)  Production managers use data provided by the existing system.

Question 5

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 6

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 7

A well-designed activity-based costing system starts with

Accepted Answer

A)  identifying the activity-cost pools. 
B)  computing the activity-based overhead rate. 
C)  assigning overhead costs to products. 
D)  analyzing the activities performed to manufacture a product. 
A)  identifying the activity-cost pools. 
B)  computing the activity-based overhead rate. 
C)  assigning overhead costs to products. 
D)  analyzing the activities performed to manufacture a product.

Question 8

Quality control is less important in just-in-time than in traditional manufacturing philosophies.

Accepted Answer

A) True 
 B)False

Question 9

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $$\begin{array} { l c c } 
 & \text { Regular } & \text { Supreme } \
\text { Direct labor hours }& 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using traditional costing using direct labor hours is

Accepted Answer

A)  $1,290,000. 
B)  $1,800,000. 
C)  $2,700,000. 
D)  $3,210,000. 
A)  $1,290,000. 
B)  $1,800,000. 
C)  $2,700,000. 
D)  $3,210,000.

Question 10

The presence of any of the following factors would suggest a switch to ABC except when

Accepted Answer

A)  product lines differ greatly in volume. 
B)  overhead costs constitute a minor portion of total costs. 
C)  the manufacturing process has changed significantly. 
D)  production managers are ignoring data provided by the existing system. 
A)  product lines differ greatly in volume. 
B)  overhead costs constitute a minor portion of total costs. 
C)  the manufacturing process has changed significantly. 
D)  production managers are ignoring data provided by the existing system.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Each of the following is a limitation of activity-based costing except that

Accepted Answer

A)  it can be expensive to use. 
B)  it decreases control over overhead costs 
C)  it is complex and can be difficult to understand 
D)  some arbitrary allocations continue. 
A)  it can be expensive to use. 
B)  it decreases control over overhead costs 
C)  it is complex and can be difficult to understand 
D)  some arbitrary allocations continue.

Question 13

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 14

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

Accepted Answer

A) True 
 B)False

Question 15

An activity that has a direct cause-effect relationship with the resources consumed is a(n)

Accepted Answer

A)  cost driver. 
B)  overhead rate. 
C)  cost pool. 
D)  product activity. 
A)  cost driver. 
B)  overhead rate. 
C)  cost pool. 
D)  product activity.

Question 16

Ben Gordon, Inc. manufactures 2 products, wheels and seats. The company has estimated its overhead in the assembling department to be $660,000. The company produces 300,000 wheels and 600,000 seats each year. Each wheel uses 2 parts, and each seat uses 3 parts. How much of the assembly overhead should be allocated to wheels?

Accepted Answer

A)  $165,000. 
B)  $220,000. 
C)  $264,000 
D)  $282,856. 
A)  $165,000. 
B)  $220,000. 
C)  $264,000 
D)  $282,856.

Question 17

Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: $\begin{array}{lrr}&\text { Board } 12&\text { Case } 165\
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$ Overhead applied to Board 12 using traditional costing using direct labor hours is

Accepted Answer

A)  $3,600,000. 
B)  $4,608,000. 
C)  $5,010,000. 
D)  $5,760,000. 
A)  $3,600,000. 
B)  $4,608,000. 
C)  $5,010,000. 
D)  $5,760,000.

Question 18

ABC usually results in less appropriate management decisions.

Accepted Answer

A) True 
 B)False

Question 19

Which account is used in just-in-time processing?

Accepted Answer

A)  Raw Materials Inventory 
B)  Work-in-Process Inventory 
C)  Merchandise Inventory 
D)  Raw and In-Process Inventory 
A)  Raw Materials Inventory 
B)  Work-in-Process Inventory 
C)  Merchandise Inventory 
D)  Raw and In-Process Inventory

Question 20

Which of the following statements is false?

Accepted Answer

A)  ABC can weaken control over overhead costs. 
B)  Under ABC, companies can trace many overhead costs directly to activities. 
C)  ABC allows some indirect costs to be identified as direct costs. 
D)  managers become more aware of their responsibility to control the activities that generate costs. 
A)  ABC can weaken control over overhead costs. 
B)  Under ABC, companies can trace many overhead costs directly to activities. 
C)  ABC allows some indirect costs to be identified as direct costs. 
D)  managers become more aware of their responsibility to control the activities that generate costs.

ABC is generally more costly to implement than traditional costing.

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:

Which of the following factors would suggest a switch to activity-based costing?

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

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

A well-designed activity-based costing system starts with

Quality control is less important in just-in-time than in traditional manufacturing philosophies.

The presence of any of the following factors would suggest a switch to ABC except when

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

Each of the following is a limitation of activity-based costing except that

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

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

An activity that has a direct cause-effect relationship with the resources consumed is a(n)

ABC usually results in less appropriate management decisions.

Which account is used in just-in-time processing?

Which of the following statements is false?

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 4: Activity-Based Costing

ABC is generally more costly to implement than traditional costing.

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:

Which of the following factors would suggest a switch to activity-based costing?

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

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

A well-designed activity-based costing system starts with

Quality control is less important in just-in-time than in traditional manufacturing philosophies.

The presence of any of the following factors would suggest a switch to ABC except when

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

Each of the following is a limitation of activity-based costing except that

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

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

An activity that has a direct cause-effect relationship with the resources consumed is a(n)

ABC usually results in less appropriate management decisions.

Which account is used in just-in-time processing?

Which of the following statements is false?

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters