Question 1

As the number of activities in an ABC system increases, measurement error tends to

Accepted Answer

A)  Increase 
B)  Decrease 
C)  Stay the same 
D)  Focus more on top management 
A)  Increase 
B)  Decrease 
C)  Stay the same 
D)  Focus more on top management

Question 2

In an ABC system, flexible costs

Accepted Answer

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

Question 3

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

Accepted Answer

A)  Medical supplies 
B)  Office supplies 
C)  Hourly wages paid to bookkeeper 
D)  Facility rental 
A)  Medical supplies 
B)  Office supplies 
C)  Hourly wages paid to bookkeeper 
D)  Facility rental

Question 4

Costs assigned to an activity pool for vaccinating children at a well child clinic are $2,700 per month. Number of vaccinations is chosen as cost driver. On average, 300 vaccinations are given monthly. What is the ABC allocation rate for this activity?

Accepted Answer

A)  Not enough information given 
B)  $27.00 
C)  $9.00 
D)  $0.90 
A)  Not enough information given 
B)  $27.00 
C)  $9.00 
D)  $0.90

Question 5

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:  
-The number of students in each area is most likely to be a cost driver for

Accepted Answer

A)  Utility costs 
B)  Advertising costs 
C)  Cost for tutors 
D)  Price charged for tutoring 
A)  Utility costs 
B)  Advertising costs 
C)  Cost for tutors 
D)  Price charged for tutoring

Question 6

Value-added activities

Accepted Answer

A)  Increase revenues 
B)  Increase the worth of an organization's goods and services to customers 
C)  Increase the worth of an organization's goods and services to stockholders 
D)  Increase costs that are unrelated to customers 
A)  Increase revenues 
B)  Increase the worth of an organization's goods and services to customers 
C)  Increase the worth of an organization's goods and services to stockholders 
D)  Increase costs that are unrelated to customers

Question 7

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:  
-Under activity-based costing (ABC), the inspection cost assigned to one small pump would be

Accepted Answer

A)  $2.50 
B)  $5.00 
C)  $12.50 
D)  $10.00 
A)  $2.50 
B)  $5.00 
C)  $12.50 
D)  $10.00

Question 8

Managers can use ABM information to manage customer profitability. The most valuable groups of customers are those having the following characteristics

Accepted Answer

The answer of Managers can use ABM information to manage...

Question 9

Activity-based management relies on

Accepted Answer

A)  Accurate ABC information 
B)  Objective financial reporting 
C)  Outside consultants 
D)  Participative management techniques 
A)  Accurate ABC information 
B)  Objective financial reporting 
C)  Outside consultants 
D)  Participative management techniques

Question 10

Organizations interested in using activity-based management must first implement an activity-based costing system.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is true?

Accepted Answer

A)  Cost drivers are a special kind of allocation base 
B)  Allocation bases are a special kind of cost driver 
C)  Cost drivers and allocation bases are two names for the same thing 
D)  Allocation bases are seldom used in traditional costing systems 
A)  Cost drivers are a special kind of allocation base 
B)  Allocation bases are a special kind of cost driver 
C)  Cost drivers and allocation bases are two names for the same thing 
D)  Allocation bases are seldom used in traditional costing systems

Question 12

NRL Corporation's accounting information system reported warranty repair and product replacement costs totaling $12,000 in a recent accounting period. These costs are an example of which of the following quality costs?

Accepted Answer

A)  Period costs 
B)  Post-sales activity costs 
C)  Activity-based costs 
D)  Prevention activity costs 
A)  Period costs 
B)  Post-sales activity costs 
C)  Activity-based costs 
D)  Prevention activity costs

Question 13

ABC systems measure resource flows in an organization.

Accepted Answer

A) True 
 B)False

Question 14

Managers can use activity-based management to control environmental costs.

Accepted Answer

A) True 
 B)False

Question 15

In an ABC system, an activity is best defined as a

Accepted Answer

A)  Type of task performed in an organization 
B)  Collection of activities in a particular department 
C)  Collection of cost drivers associated with a particular cost pool 
D)  Group of cost pools associated with a particular department 
A)  Type of task performed in an organization 
B)  Collection of activities in a particular department 
C)  Collection of cost drivers associated with a particular cost pool 
D)  Group of cost pools associated with a particular department

Question 16

Regarding the use of ABC product cost information for short-term decision making, which of the following is likely to be true?

Accepted Answer

A)  Flexible costs should be excluded from the computation of product cost 
B)  Committed costs should be excluded from the computation of product cost 
C)  ABC product cost information should not be used for most short-term decisions 
D)  ABC product cost information cannot be used for decision making when there are constrained resources 
A)  Flexible costs should be excluded from the computation of product cost 
B)  Committed costs should be excluded from the computation of product cost 
C)  ABC product cost information should not be used for most short-term decisions 
D)  ABC product cost information cannot be used for decision making when there are constrained resources

Question 17

Which of the following do managers use in choosing activities and cost drivers to include in an ABC system?

Accepted Answer

A)  Linear programming 
B)  Simple regression 
C)  Judgment 
D)  Activity-based management 
A)  Linear programming 
B)  Simple regression 
C)  Judgment 
D)  Activity-based management

Question 18

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 could be a cost object for Tutors-R-Us? I. A student
II. A subject area
III. A cost pool

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III 
A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III

Question 19

The cost hierarchy for an ABC system includes I. Unit-level activities
II. Marketing activities
III. Product-sustaining activities
IV. Administrative activities

Accepted Answer

A)  I and III only 
B)  II and IV only 
C)  I and II only 
D)  III and IV only 
A)  I and III only 
B)  II and IV only 
C)  I and II only 
D)  III and IV only

Question 20

Activity-based costing information can be used to identify the relative cost of maintaining different customers. Managers can use that information, coupled with activity-based management techniques, to manage

Accepted Answer

A)  Customer quality 
B)  Customer profitability 
C)  Inventory levels 
D)  Staffing levels in the marketing department. 
A)  Customer quality 
B)  Customer profitability 
C)  Inventory levels 
D)  Staffing levels in the marketing department.

As the number of activities in an ABC system increases, measurement error tends to

In an ABC system, flexible costs

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

Costs assigned to an activity pool for vaccinating children at a well child clinic are $2,700 per month. Number of vaccinations is chosen as cost driver. On average, 300 vaccinations are given monthly. What is the ABC allocation rate for this activity?

Value-added activities

Managers can use ABM information to manage customer profitability. The most valuable groups of customers are those having the following characteristics

Activity-based management relies on

Organizations interested in using activity-based management must first implement an activity-based costing system.

Which of the following statements is true?

NRL Corporation's accounting information system reported warranty repair and product replacement costs totaling $12,000 in a recent accounting period. These costs are an example of which of the following quality costs?

ABC systems measure resource flows in an organization.

Managers can use activity-based management to control environmental costs.

In an ABC system, an activity is best defined as a

Regarding the use of ABC product cost information for short-term decision making, which of the following is likely to be true?

Which of the following do managers use in choosing activities and cost drivers to include in an ABC system?

The cost hierarchy for an ABC system includes I. Unit-level activities II. Marketing activities III. Product-sustaining activities IV. Administrative activities

Activity-based costing information can be used to identify the relative cost of maintaining different customers. Managers can use that information, coupled with activity-based management techniques, to manage

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

As the number of activities in an ABC system increases, measurement error tends to

In an ABC system, flexible costs

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

Costs assigned to an activity pool for vaccinating children at a well child clinic are $2,700 per month. Number of vaccinations is chosen as cost driver. On average, 300 vaccinations are given monthly. What is the ABC allocation rate for this activity?

Value-added activities

Managers can use ABM information to manage customer profitability. The most valuable groups of customers are those having the following characteristics

Activity-based management relies on

Organizations interested in using activity-based management must first implement an activity-based costing system.

Which of the following statements is true?

NRL Corporation's accounting information system reported warranty repair and product replacement costs totaling $12,000 in a recent accounting period. These costs are an example of which of the following quality costs?

ABC systems measure resource flows in an organization.

Managers can use activity-based management to control environmental costs.

In an ABC system, an activity is best defined as a

Regarding the use of ABC product cost information for short-term decision making, which of the following is likely to be true?

Which of the following do managers use in choosing activities and cost drivers to include in an ABC system?

The cost hierarchy for an ABC system includes I. Unit-level activities II. Marketing activities III. Product-sustaining activities IV. Administrative activities

Activity-based costing information can be used to identify the relative cost of maintaining different customers. Managers can use that information, coupled with activity-based management techniques, to manage

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