Exam 7: Activity-Based Costing and Management

In an activity-based costing system, both organization-sustaining and facility-sustaining activities are assumed to be unaffected by the number of customers.

ABC systems differ from traditional systems in that ABC systems

MNK Corporation is a large public company that employs numerous accounts receivable clerks. Their jobs involve processing invoices and keeping the accounting records updated. Which of the following is the most likely cost driver for the accounts receivable activity cost pool?

Assume Tutors-R-Us allocates facility rent, custodial services, and utilities on the basis of square feet occupied and computer equipment depreciation on the basis of number of students. Advertising is not allocated. If students received 200 hours of mathematics tutoring in November 20x1, what will the total profit from mathematics tutoring be for the same period?

Similar to other costing systems that include allocation, ABC cost information may be misleading for decision making purposes. To combat this problem, costs within an activity can be classified as

Batch-level costs include

The cost of implementing an ABC system is likely to be lower if the number of times an activity is performed

The availability of activity costs is inversely related to the cost of implementing an ABC system.

The best allocation base choice for an ABC cost pool is a(n)

In an ABC system, a cost driver must be chosen for each

Unit-level costs in ABC

All organizations that use activity-based costing also use activity-based management.

Caring Change Medical Practice specializes in plastic surgery. Which of the following is least likely to be a committed cost in its operations?

Which of the following is not part of the process used to assign costs in an ABC system?

At least one cost driver is required for each ABC cost

Use the following information for the next 2 questions. Flowing Wells Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines. Budgeted inspection costs are $4,800. Additional information is as follows: -Costs assigned to an activity pool for teaching children to swim at the county park are $2,700 per month. Number of students is chosen as the cost driver. On average, 300 students take swim lessons monthly. What is the ABC allocation rate for this activity?

Use the following information for the next 2 questions. Flowing Wells Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines. Budgeted inspection costs are $4,800. Additional information is as follows: -Which of the following is the best cost driver for the activity "distributing products" if the final cost object is the product?

An allocation base is

Which costs are least likely to be allocated to units under ABC?

Operating efficiency improves with ABM through the use of ABC information to better manage