Question 1

Which of the following is the proper sequence of events in an activity-based costing system?

Accepted Answer

A) Identiﬁcation of cost drivers, identiﬁcation of cost pools, calculation of pool rates, assignment of cost to products. 
B) Identiﬁcation of cost pools, identiﬁcation of cost drivers, calculation of pool rates, assignment of cost to products. 
C) Assignment of cost to products, identiﬁcation of cost pools, identiﬁcation of cost drivers, calculation of pool rates. 
D) Calculation of pool rates, identiﬁcation of cost drivers, identiﬁcation of cost pools, assignment of cost to products. 
E) None of the answers is correct. 
A) Identiﬁcation of cost drivers, identiﬁcation of cost pools, calculation of pool rates, assignment of cost to products. 
B) Identiﬁcation of cost pools, identiﬁcation of cost drivers, calculation of pool rates, assignment of cost to products. 
C) Assignment of cost to products, identiﬁcation of cost pools, identiﬁcation of cost drivers, calculation of pool rates. 
D) Calculation of pool rates, identiﬁcation of cost drivers, identiﬁcation of cost pools, assignment of cost to products. 
E) None of the answers is correct. B

Question 2

Germaine Lotions and Mystic Oils uses a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 14.5% of direct labor cost.This month's direct labor costs for the Mystic Oil line is $27,500.Germaine would like to distribute quality control costs in a more equitable manner and is considering the change to activity-based costing.The monthly data shown in the chart below have been gathered for Mystic Oils. Required: (1) Calculate the monthly quality control cost assigned to Mystic Oils using traditional costing. (2) Calculate the monthly quality control cost assigned to Mystic Oils using activity-based costing (ABC).

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Question 2

Correct Answer:

Verified

(1) Traditional costing: $27,500 × 14.5% = $3,987.50
(2) ABC: (12 × $11.50) + (17,500 × $0.14) + (25 × $77) = $4,513

Accepted Answer

(1) Traditional costing: $27,500 × 14.5% = $3,987.50
(2) ABC: (12 × $11.50) + (17,500 × $0.14) + (25 × $77) = $4,513

Question 3

Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe.The company, which uses activity-based costing, has identiﬁed ﬁve activities (and related cost drivers).Each activity, its budgeted cost, and related cost driver is identiﬁed below.   The following information pertains to the three product lines for next year:   What is Barnett's pool rate for the automated machinery activity?

Accepted Answer

A) $24.00 per machine hour. 
B) $24.50 per labor hour. 
C) $49.42 per unit. 
D) $50.00 per machine hour. 
E) None of the answers is correct. 
A) $24.00 per machine hour. 
B) $24.50 per labor hour. 
C) $49.42 per unit. 
D) $50.00 per machine hour. 
E) None of the answers is correct. A

Question 4

Forrest Company manufactures sophisticated industrial drill bits and saw blades used in heavy construction projects.The company is now preparing its annual proﬁt plan.As part of its analysis of the proﬁtability of individual products, the controller estimates the amount of overhead that should be allocated to the individual product lines from the following information.   The total budgeted material-handling cost is $75,000. Required: 1.Under a costing system that allocates overhead on the basis of direct-labor hours, the material-handling costs allocated to one lens would be what amount? 2.Answer the same question as in requirement 1, but for mirrors. 3.Under activity-based costing (ABC), the material-handling costs allocated to one lens would be what amount? The cost driver for the material-handling activity is the number of material moves. 4.Answer the same question as in requirement 3, but for mirrors.

Accepted Answer

1.Material-handling cost per speaker:
$7

Question 5

The salaries of a manufacturing plant's management are said to arise from:

Accepted Answer

A) unit-level activities. 
B) batch-level activities. 
C) product-sustaining activities. 
D) facility-level activities. 
E) direct-cost activities. 
A) unit-level activities. 
B) batch-level activities. 
C) product-sustaining activities. 
D) facility-level activities. 
E) direct-cost activities.

Question 6

Customer proﬁtability analysis is tied closely to:

Accepted Answer

A) just-in-time systems. 
B) activity-based costing. 
C) job costing. 
D) process costing. 
E) operation costing. 
A) just-in-time systems. 
B) activity-based costing. 
C) job costing. 
D) process costing. 
E) operation costing.

Question 7

Which of the following cost drivers would best be associated with the activity of physician time in a medical clinic?

Accepted Answer

A) Number of new patient visits. 
B) Number of continuing patient visits. 
C) Physician minutes with a patient. 
D) Number of line items on the clinic's bill. 
E) The number of accreditations held by the clinic. 
A) Number of new patient visits. 
B) Number of continuing patient visits. 
C) Physician minutes with a patient. 
D) Number of line items on the clinic's bill. 
E) The number of accreditations held by the clinic.

Question 8

The following tasks are associated with an activity-based costing system: 1- Assignment of cost to products 2- Calculation of pool rates 3- Identiﬁcation of cost drivers 4- Identiﬁcation of cost pools Which of the following choices correctly expresses the proper order of the preceding tasks?

Accepted Answer

A) 1, 2, 3, 4. 
B) 2, 4, 1, 3. 
C) 3, 4, 2, 1. 
D) 4, 2, 1, 3. 
E) 4, 3, 2, 1. 
A) 1, 2, 3, 4. 
B) 2, 4, 1, 3. 
C) 3, 4, 2, 1. 
D) 4, 2, 1, 3. 
E) 4, 3, 2, 1.

Question 9

Which of the following statements is (are) true about non-value-added activities? I.Non-value-added activities are often unnecessary and dispensable. II.Non-value-added activities may be necessary but are being performed in an ineﬃcient and improvable manner. III.Non-value-added activities can be eliminated without deterioration of product quality, performance, or perceived value.

Accepted Answer

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

Question 10

Rocket Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe.The company, which uses activity-based costing, has identiﬁed ﬁve activities (and related cost drivers).Each activity, its budgeted cost, and related cost driver is identiﬁed below.   Assume that Rocket is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Deluxe product line is closest to:

Accepted Answer

A) $456,471. 
B) $646,471. 
C) $961,176. 
D) $1,141,176. 
E) None of the answers is correct. 
A) $456,471. 
B) $646,471. 
C) $961,176. 
D) $1,141,176. 
E) None of the answers is correct.

Question 11

One of the important factors when selecting appropriate cost drivers is the ability to overcost related services.

Accepted Answer

A) True 
 B)False

Question 12

Colonial Company manufactures decorative wall clocks and uses activity-based costing.Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce.Additional information is as follows:   What is the cost of assembling per clock?

Accepted Answer

A) $7.00. 
B) $7.50. 
C) $35.00. 
D) $70.00. 
E) $87.50. 
A) $7.00. 
B) $7.50. 
C) $35.00. 
D) $70.00. 
E) $87.50.

Question 13

Which of the following is least likely to be classiﬁed as a facility-level activity in an activity-based costing system?

Accepted Answer

A) Plant maintenance. 
B) Property taxes. 
C) Machine processing cost. 
D) Plant depreciation. 
E) Plant management salaries. 
A) Plant maintenance. 
B) Property taxes. 
C) Machine processing cost. 
D) Plant depreciation. 
E) Plant management salaries.

Question 14

Colonial Company manufactures decorative wall clocks and uses activity-based costing.Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce.Additional information is as follows:   What is the number of ﬁnished clocks?

Accepted Answer

A) 20. 
B) 100. 
C) 200. 
D) 250. 
E) Cannot be determined from the information given. 
A) 20. 
B) 100. 
C) 200. 
D) 250. 
E) Cannot be determined from the information given.

Question 15

Which of the following is least likely to be classiﬁed as a batch-level activity in an activity-based costing system?

Accepted Answer

A) Shipping. 
B) Receiving and inspection. 
C) Production setup. 
D) Property taxes. 
E) Quality assurance. 
A) Shipping. 
B) Receiving and inspection. 
C) Production setup. 
D) Property taxes. 
E) Quality assurance.

Question 16

Miami Production manufactures products X and Y, applying overhead on the basis of labor hours.X is a high-volume product and relatively simplistic in nature. Y is both a low-volume product and requires a variety of complex manufacturing procedures.What would an activity-based costing system likely disclose about products X and Y as a result of Miami's current accounting procedures?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 17

Generally speaking, companies prefer doing business with customers who:

Accepted Answer

A) order small quantities rather than large quantities. 
B) often change their orders. 
C) require special packaging or handling. 
D) request normal delivery times. 
E) need specialized engineering design changes. 
A) order small quantities rather than large quantities. 
B) often change their orders. 
C) require special packaging or handling. 
D) request normal delivery times. 
E) need specialized engineering design changes.

Question 18

International Gems sells ﬁne jewelry and has implemented activity-based costing.Costs in the shipping department have been divided into three cost pools. The ﬁrst cost pool contains costs that are related to packaging and shipping.International has determined that the number of boxes shipped is an appropriate cost driver for these costs.The second cost pool is made up of costs related to the ﬁnal inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected.The ﬁnal cost pool is used for general operations of the department and the cost driver is the number of orders.Information about the activities is summarized below:   During the period, the Southern sales oﬃce generated 240 orders for a total of 3,560 items, which were shipped in 1,200 boxes.What amount of shipping department costs should be allocated to these sales?

Accepted Answer

A) $9,480 
B) $5,040 
C) $14,200 
D) $18,328 
E) None of the answer choices is correct. 
A) $9,480 
B) $5,040 
C) $14,200 
D) $18,328 
E) None of the answer choices is correct.

Question 19

Deﬁne the term "cost driver" and discuss the factors that are important in the selection of appropriate cost drivers.

Accepted Answer

A cost driver is an event or activity th

Question 20

Which of the following can have a negative impact on a particular sale's proﬁtability?

Accepted Answer

A) Number of required sales contacts (phone calls, visits, etc.). 
B) Special shipping instructions. 
C) Accounts receivable collection time. 
D) Purchase-order changes. 
E) All of the answers are correct. 
A) Number of required sales contacts (phone calls, visits, etc.). 
B) Special shipping instructions. 
C) Accounts receivable collection time. 
D) Purchase-order changes. 
E) All of the answers are correct.

Which of the following is the proper sequence of events in an activity-based costing system?

The salaries of a manufacturing plant's management are said to arise from:

Customer proﬁtability analysis is tied closely to:

Which of the following cost drivers would best be associated with the activity of physician time in a medical clinic?

The following tasks are associated with an activity-based costing system: 1- Assignment of cost to products 2- Calculation of pool rates 3- Identiﬁcation of cost drivers 4- Identiﬁcation of cost pools Which of the following choices correctly expresses the proper order of the preceding tasks?

One of the important factors when selecting appropriate cost drivers is the ability to overcost related services.

Colonial Company manufactures decorative wall clocks and uses activity-based costing.Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce.Additional information is as follows: What is the cost of assembling per clock?

Which of the following is least likely to be classiﬁed as a facility-level activity in an activity-based costing system?

Colonial Company manufactures decorative wall clocks and uses activity-based costing.Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce.Additional information is as follows: What is the number of ﬁnished clocks?

Which of the following is least likely to be classiﬁed as a batch-level activity in an activity-based costing system?

Generally speaking, companies prefer doing business with customers who:

Deﬁne the term "cost driver" and discuss the factors that are important in the selection of appropriate cost drivers.

Which of the following can have a negative impact on a particular sale's proﬁtability?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Inventory Management and Economic Order Quantity (EOQ) Analysis

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Exam 5: Activity-Based Costing and Management

Which of the following is the proper sequence of events in an activity-based costing system?

The salaries of a manufacturing plant's management are said to arise from:

Customer proﬁtability analysis is tied closely to:

Which of the following cost drivers would best be associated with the activity of physician time in a medical clinic?

The following tasks are associated with an activity-based costing system: 1- Assignment of cost to products 2- Calculation of pool rates 3- Identiﬁcation of cost drivers 4- Identiﬁcation of cost pools Which of the following choices correctly expresses the proper order of the preceding tasks?

One of the important factors when selecting appropriate cost drivers is the ability to overcost related services.

Colonial Company manufactures decorative wall clocks and uses activity-based costing.Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce.Additional information is as follows: What is the cost of assembling per clock?

Which of the following is least likely to be classiﬁed as a facility-level activity in an activity-based costing system?

Colonial Company manufactures decorative wall clocks and uses activity-based costing.Each clock consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce.Additional information is as follows: What is the number of ﬁnished clocks?

Which of the following is least likely to be classiﬁed as a batch-level activity in an activity-based costing system?

Generally speaking, companies prefer doing business with customers who:

Deﬁne the term "cost driver" and discuss the factors that are important in the selection of appropriate cost drivers.

Which of the following can have a negative impact on a particular sale's proﬁtability?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Inventory Management and Economic Order Quantity (EOQ) Analysis

Filters