Question 1

Activity-based costing increases the accuracy of cost measurement by using arbitrary cost allocation bases for overhead.

Accepted Answer

A) True 
 B)False

Question 2

Use the following information for the next 6 questions.
Tutors-R-Us provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 20x1, the firm's information system produced the following data:  
-Which of the following is the most logical allocation base for facility rent if the relevant cost object is a subject area (product line)?

Accepted Answer

A)  Number of tutors 
B)  Direct costs 
C)  Percentage of square feet occupied 
D)  Direct labor hours 
A)  Number of tutors 
B)  Direct costs 
C)  Percentage of square feet occupied 
D)  Direct labor hours

Question 3

Which of the following is not a benefit of an ABC system?

Accepted Answer

A)  Helping managers focus on measurement at the activity level 
B)  Increasing profits 
C)  Improving accuracy in cost measurement 
D)  Motivating employees to find ways to improve performance 
A)  Helping managers focus on measurement at the activity level 
B)  Increasing profits 
C)  Improving accuracy in cost measurement 
D)  Motivating employees to find ways to improve performance

Question 4

Use the following information for the next 4 questions.
Quick Start Engines has two departments, Assembly and Testing. You are given the following information about the costs of 5 activities that occur at the manufacturing plant monthly:   (continued on the next page)
The above activities are used by the two departments as follows:  
-How much of the janitorial costs will be allocated to Testing?

Accepted Answer

A)  $25,000 
B)  $75,000 
C)  $100,000 
D)  $50,000 
A)  $25,000 
B)  $75,000 
C)  $100,000 
D)  $50,000

Question 5

Use the following information for the next 4 questions.
Quick Start Engines has two departments, Assembly and Testing. You are given the following information about the costs of 5 activities that occur at the manufacturing plant monthly:   (continued on the next page)
The above activities are used by the two departments as follows:  
-What is the ABC allocation rate for supervision of direct labor?

Accepted Answer

A)  $3,500 per employee 
B)  $1,500 per employee 
C)  $0.50 per part 
D)  $50 per hour spent in supervision 
A)  $3,500 per employee 
B)  $1,500 per employee 
C)  $0.50 per part 
D)  $50 per hour spent in supervision

Question 6

In traditional costing, the cost allocation base used for overhead is most likely a

Accepted Answer

A)  Unit-level cost driver 
B)  Batch-level cost driver 
C)  Customer-sustaining cost level driver 
D)  Facility-sustaining cost level driver 
A)  Unit-level cost driver 
B)  Batch-level cost driver 
C)  Customer-sustaining cost level driver 
D)  Facility-sustaining cost level driver

Question 7

Ideally, activity costs in an ABC system are allocated to cost objects using a driver that explains changes in activity costs.

Accepted Answer

A) True 
 B)False

Question 8

ABC systems are similar to traditional costing systems in the way they

Accepted Answer

A)  Allocate direct costs to cost objects 
B)  Define cost allocation bases 
C)  Trace direct costs to cost objects 
D)  Trace indirect costs to activities 
A)  Allocate direct costs to cost objects 
B)  Define cost allocation bases 
C)  Trace direct costs to cost objects 
D)  Trace indirect costs to activities

Question 9

Use the following information for the next 4 questions.
Quick Start Engines has two departments, Assembly and Testing. You are given the following information about the costs of 5 activities that occur at the manufacturing plant monthly:   (continued on the next page)
The above activities are used by the two departments as follows:  
-How much of the material handling cost will be allocated to Assembly?

Accepted Answer

A)  $75,000 
B)  $25,000 
C)  $66,667 
D)  $33,333 
A)  $75,000 
B)  $25,000 
C)  $66,667 
D)  $33,333

Question 10

Non-medical personnel costs would be most appropriately allocated using

Accepted Answer

A)  Number of blood drives organized 
B)  Number of blood donors 
C)  Hours available for blood donations 
D)  Dollar value of blood donated 
A)  Number of blood drives organized 
B)  Number of blood donors 
C)  Hours available for blood donations 
D)  Dollar value of blood donated

Question 11

Which method(s) do traditional accounting systems use to assign the following costs to cost objects (departments or units)?

Accepted Answer

The answer of Which method(s) do traditional accounting systems use...

Question 12

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 human resource cost will be allocated to South Division?

Accepted Answer

A)  $28,571 
B)  $150,000 
C)  $85,714 
D)  $114,286 
A)  $28,571 
B)  $150,000 
C)  $85,714 
D)  $114,286

Question 13

(CMA) Cost drivers are

Accepted Answer

A)  Activities that cause costs to increase as the activity increases 
B)  Accounting techniques used to control costs 
C)  Accounting measurements used to evaluate whether or not performance is proceeding according to plan 
D)  A mechanical basis, such as machine hours, computer time, size of equipment, or square feet of factory, used to assign costs to activities 
A)  Activities that cause costs to increase as the activity increases 
B)  Accounting techniques used to control costs 
C)  Accounting measurements used to evaluate whether or not performance is proceeding according to plan 
D)  A mechanical basis, such as machine hours, computer time, size of equipment, or square feet of factory, used to assign costs to activities

Question 14

Generally speaking, activity-based costing traces direct costs more accurately than traditional costing.

Accepted Answer

A) True 
 B)False

Question 15

Compared to a traditional costing system, an activity-based costing system usually involves

Accepted Answer

A)  Fewer cost pools 
B)  More cost pools 
C)  The same number of cost pools 
D)  Bigger cost pools 
A)  Fewer cost pools 
B)  More cost pools 
C)  The same number of cost pools 
D)  Bigger cost pools

Question 16

Use the following information for the next 4 questions.
Quick Start Engines has two departments, Assembly and Testing. You are given the following information about the costs of 5 activities that occur at the manufacturing plant monthly:   (continued on the next page)
The above activities are used by the two departments as follows:  
-How much of the total activity costs will be allocated to Assembly?

Accepted Answer

A)  $300,000 
B)  $275,000 
C)  $380,000 
D)  $350,000 
A)  $300,000 
B)  $275,000 
C)  $380,000 
D)  $350,000

Question 17

In an ABC system, committed costs

Accepted Answer

A)  Vary with capacity levels 
B)  Vary with activity levels 
C)  Should not be included in ABC cost pools 
D)  Are related to capacity 
A)  Vary with capacity levels 
B)  Vary with activity levels 
C)  Should not be included in ABC cost pools 
D)  Are related to capacity

Question 18

When applying ABC concepts to the determination of product costs, the first step is to identify activities.

Accepted Answer

A) True 
 B)False

Question 19

ABC systems allow managers to focus on measurement at the activity level.

Accepted Answer

A) True 
 B)False

Question 20

Ideally, activity costs are allocated to cost objects using a ___ that explains changes in activity ___.

Accepted Answer

A)  Pool, Cost 
B)  Pool, Driver 
C)  Driver, Cost 
D)  Driver, Pools 
A)  Pool, Cost 
B)  Pool, Driver 
C)  Driver, Cost 
D)  Driver, Pools

Activity-based costing increases the accuracy of cost measurement by using arbitrary cost allocation bases for overhead.

Which of the following is not a benefit of an ABC system?

In traditional costing, the cost allocation base used for overhead is most likely a

Ideally, activity costs in an ABC system are allocated to cost objects using a driver that explains changes in activity costs.

ABC systems are similar to traditional costing systems in the way they

Non-medical personnel costs would be most appropriately allocated using

Which method(s) do traditional accounting systems use to assign the following costs to cost objects (departments or units)?

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 human resource cost will be allocated to South Division?

(CMA) Cost drivers are

Generally speaking, activity-based costing traces direct costs more accurately than traditional costing.

Compared to a traditional costing system, an activity-based costing system usually involves

In an ABC system, committed costs

When applying ABC concepts to the determination of product costs, the first step is to identify activities.

ABC systems allow managers to focus on measurement at the activity level.

Ideally, activity costs are allocated to cost objects using a _ that explains changes in activity _.

The Role of Accounting Information in Management Decision Making

The Cost Function

Cost-Volume-Profit Analysis

Relevant Costs for Nonroutine Operating Decision

Job Costing

Process Costing

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Standard Costs and Variance Analysis

Strategic Investment Decisions

Joint Management of Revenues and Costs

Measuring and Assigning Costs for Income Statements

Performance Evaluation and Compensation

Strategic Performance Measurement

Sustainability Accounting

Filters

Exam 7: Activity-Based Costing and Management

Activity-based costing increases the accuracy of cost measurement by using arbitrary cost allocation bases for overhead.

Which of the following is not a benefit of an ABC system?

In traditional costing, the cost allocation base used for overhead is most likely a

Ideally, activity costs in an ABC system are allocated to cost objects using a driver that explains changes in activity costs.

ABC systems are similar to traditional costing systems in the way they

Non-medical personnel costs would be most appropriately allocated using

Which method(s) do traditional accounting systems use to assign the following costs to cost objects (departments or units)?

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 human resource cost will be allocated to South Division?

(CMA) Cost drivers are

Generally speaking, activity-based costing traces direct costs more accurately than traditional costing.

Compared to a traditional costing system, an activity-based costing system usually involves

In an ABC system, committed costs

When applying ABC concepts to the determination of product costs, the first step is to identify activities.

ABC systems allow managers to focus on measurement at the activity level.

Ideally, activity costs are allocated to cost objects using a ___ that explains changes in activity ___.

The Role of Accounting Information in Management Decision Making

The Cost Function

Cost-Volume-Profit Analysis

Relevant Costs for Nonroutine Operating Decision

Job Costing

Process Costing

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Standard Costs and Variance Analysis

Strategic Investment Decisions

Joint Management of Revenues and Costs

Measuring and Assigning Costs for Income Statements

Performance Evaluation and Compensation

Strategic Performance Measurement

Sustainability Accounting

Filters

Ideally, activity costs are allocated to cost objects using a _ that explains changes in activity _.