Exam 7: Activity-Based Costing and Management

The managers of HRY Corporation are analyzing some of their corporate costs to determine the costs of each department's use of administrative services. The accountant wants to allocate the costs of payroll processing using an activity-based costing system. The most appropriate cost driver for the payroll processing cost pool is the

Activities performed to insure defect-free production are called

To provide better decision making information about products, ABC systems can be set up with separate activity pools and cost rates for I. Different levels of the ABC cost hierarchy II. Committed and flexible costs within each cost pool III. Different customers based on profitability levels

A cost driver is

In an ABC system costs are first assigned to cost pools, then always to units of product.

Product inspections are an example of

Use the following information for the next 4 questions. Iowa Industries has two divisions, North and South. You are given the following information about the costs of 5 activities that occur at corporate headquarters: -How much of the accounts payable cost will be allocated to North Division?

The costs of designing and implementing an ABC system include employee time and training.

How can ABC information be used to manage constrained resources?

Activity-based management and activity-based costing are two ways of describing the same thing.

Product advertising for a new product is an example of a customer-sustaining cost in an ABC system.

Which of the following is performed first in setting up an ABC system?

When implementing an ABC system, the accounting information system may require modifications to

Phuong is a customer of PVL Corporation. She consistently orders low-margin products, but requires costly services from PVL. In employing ABM techniques to manage customer profitability, PVL's staff should

One of the uncertainties associated with ABC and ABM systems is employee response to design and implementation.

Le Pavilion could define its cost objects as I. Customers only II. Departments only III. Number of employees

Use the following information for the next 4 questions. Iowa Industries has two divisions, North and South. You are given the following information about the costs of 5 activities that occur at corporate headquarters: -How much of the total activity costs will be allocated to South Division?

Administrative salaries are an example of an organization-sustaining cost in an ABC system.

Which of the following activities involves managing a plant, area, or location within an organization?

Unlike activity-based costing, traditional costing systems never use multiple cost pools for overhead allocation.