Exam 7: Activity-Based Costing and Management

Consider the following information on activities:

_________________________ is a system-wide, integrated approach that focuses management's attention on activities with the objective of improving customer value and profit achieved by providing this value.

One of the three major dimensions of measuring activity performance is quality.

Figure 7-2. Steller Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors purchase the same product. The customer activities and costs for the previous quarter are found below: -Refer to Figure 7-2. Calculate the activity rate for selling goods.

Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is

Match each item with the correct statement below. a. activity analysis b. value-added costs c. velocity d. activity inputs e. activity output measure f. activity output -Result or product of an activity.

Scrap and retesting are examples of ____ failure costs.

Which of the following is not one of the three conditions necessary to be classified as a discretionary activity?

Environmental costs which the firm is not financially responsible are called ____ costs.

___________________ are performed each time a unit is produced.

When products consume overhead activities in systematically different proportion due to such things as product size, product complexity, setup time and size of batches this is known as _________________.

A company takes 8,000 hours to produce 24,000 units of a product. What is the velocity?

The moving activity has an expected cost of $160,000. Expected direct labor hours are 40,000, and the expected number of moves is 80,000. The best activity rate for moving is

Activity-based management attempts to

Figure 7-1. The receiving department of Owen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows: -Refer to Figure 7-1. Calculate the cost for inspection.

____ is present whenever products have different consumption ratios for different overhead activities.

The ___________________ is calculated by taking the amount of the activity driver per product and dividing it by total driver quantity.

___________________ are incurred to prevent poor quality in the products and services being produced.

Randy Company produces candy sticks (hooked and straight). Both products pass through two producing departments. The hooked sticks's production is much more labor-intensive than the straight sticks. The straight stick is also more popular. The following data have been gathered for the two products: Randy has decided to use activity-based costing and has developed two types of activities, machine related (based on machine hours), and other overhead (based on packing orders). Machine-related costs equal $160,000. Other overhead costs equal $240,000.

The Tilman Corporation has seen a significant increase in the amount spent on such items as warranty and recall repairs. They would like to be able to reduce these costs and have asked you, the cost accountant, for some advice. What would be your recommendation?