Question 1

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are

Accepted Answer

A)  prevention costs. 
B)  appraisal costs. 
C)  internal failure costs. 
D)  external failure costs. 
E)  a different category of quality-related costs. 
A)  prevention costs. 
B)  appraisal costs. 
C)  internal failure costs. 
D)  external failure costs. 
E)  a different category of quality-related costs.

Question 2

Last year, Stevita Inc. shipped 3,000,000 kilograms of goods to customers at a cost of $2,400,000. If an individual customer orders 20,000 kilograms and produces $400,000 of revenue (total revenue is $40 million), the amount of shipping cost assigned to the customer using activity-based costing would be

Accepted Answer

A)  $16,000. 
B)  $8,000. 
C)  $24,000. 
D)  $4,000. 
E)  $60,000. 
A)  $16,000. 
B)  $8,000. 
C)  $24,000. 
D)  $4,000. 
E)  $60,000.

Question 3

Activities necessary to remain in business are called valuable activities.

Accepted Answer

A) True 
 B)False

Question 4

Figure 7-3.
Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.
    
-Refer to Figure 7-3. Calculate the activity rate for inspecting components based on sampling hours.

Accepted Answer

A)  $78 per hour 
B)  $72 per hour 
C)  $77.25 per hour 
D)  $80 per hour 
E)  $76 per hour 
A)  $78 per hour 
B)  $72 per hour 
C)  $77.25 per hour 
D)  $80 per hour 
E)  $76 per hour

Question 5

Activity attributes are financial and nonfinancial information items that describe individual activities.

Accepted Answer

A) True 
 B)False

Question 6

Figure 7-3.
Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.
    
-Refer to Figure 7-3. Suppose that Hamilton loses $2,500,000 in sales per year because of its reputation for defective units attributable to failed components. Using warranty hours, assign the proportional cost of lost sales to Bello Company. Then determine what effect this would have on the cost per component.

Accepted Answer

A)  $20.00 per unit 
B)  $11.34 per unit 
C)  $55.00 per unit 
D)  $44.11 per unit 
A)  $20.00 per unit 
B)  $11.34 per unit 
C)  $55.00 per unit 
D)  $44.11 per unit

Question 7

Charlotte Company produces folding chairs. It takes the company 18,000 hours to produce 90,000 chairs.
Required:
A. What is the velocity in hours?
B. What is the cycle time in hours?

Accepted Answer

Velocity = 90,000 chairs/18,00

Question 8

Figure 7-3.
Hamilton Company manufactures engines. Hamilton produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Traynor Inc. and Bello Company. Both suppliers are reliable and rarely deliver late; however, Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95. Hamilton purchases 70% of its components from Bello, because of the lower price. The total annual demand is 75,000 units.
    
-Refer to Figure 7-3. Calculate the activity rate for warranty work based on warranty hours. Round to the nearest whole dollar.

Accepted Answer

A)  $268 per hour 
B)  $266 per hour 
C)  $264 per hour 
D)  $262 per hour 
E)  $287 per hour 
A)  $268 per hour 
B)  $266 per hour 
C)  $264 per hour 
D)  $262 per hour 
E)  $287 per hour

Question 9

Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is $225. Calculate the reduction in nonvalue-added cost per setup.

Accepted Answer

A)  $675 per setup 
B)  $225 per setup 
C)  $450 per setup 
D)  $800 per setup 
E)  $2,025 
A)  $675 per setup 
B)  $225 per setup 
C)  $450 per setup 
D)  $800 per setup 
E)  $2,025

Question 10

A factory produces 124,000 televisions per quarter. A total of 8,000 production hours are used within the factory per quarter. Compute the velocity in units per hour.

Accepted Answer

A)  16 units per hour 
B)  15 units per hour 
C)  15.5 units per hour 
D)  18 units per hour 
A)  16 units per hour 
B)  15 units per hour 
C)  15.5 units per hour 
D)  18 units per hour

Question 11

Figure 7-4.
Honeydew Company produces two products, a high end laptop computer under the label Bunsen Laptops, and an inexpensive desktop computer under the label Beaker Computers. The two products use two overhead activities, with the following costs:
   The controller has collected the expected annual prime costs for each product, the machine hours, the setup hours, and the expected production.
  
-Refer to Figure 7-4. Calculate Beaker's consumption ratio for setup hours.

Accepted Answer

A)  0.50 
B)  0.45 
C)  0.90 
D)  0.25 
E)  0.75 
A)  0.50 
B)  0.45 
C)  0.90 
D)  0.25 
E)  0.75

Question 12

Taylor Corporation produces two models of their leather brief cases: deluxe and standard. The four activities and four drivers are as follows:
   Required:
A. Calculate the consumption ratios for the four drivers.
B. Calculate the activity rates that would be used to assign costs to each product. Round your answer to two decimal places.
C. Calculate the unit cost assuming that 500 deluxe models were produced and 700 standard models were produced.

Accepted Answer

The answer of Taylor Corporation produces two models of their...

Question 13

____________________ are financial and nonfinancial information items that describe individual activities.

Accepted Answer

The answer of ____________________ are financial and nonfinancial information items...

Question 14

A costing system that first assigns costs to activities and then to products is

Accepted Answer

A)  activity-based costing. 
B)  job-order costing. 
C)  activity-based management. 
D)  volume based costing. 
E)  nonunit-level costing. 
A)  activity-based costing. 
B)  job-order costing. 
C)  activity-based management. 
D)  volume based costing. 
E)  nonunit-level costing.

Question 15

The Thompson Company uses activity-based costing to determine product cost. Three activities and their rates have been calculated as shown below.
   Thompson provided the following data from the job order cost sheet for Job #345

Accepted Answer

The answer of The Thompson Company uses activity-based costing to...

Question 16

Figure 7-7.
Armstrong Company produces a variety of bicycles. One of its plants produces two bicycles: a mountain model and a racing model. At the beginning of the year, the following data were prepared for this plant:
   In addition, the following information was provided so that overhead costs could be assigned to each product:
  
-Refer to Figure 7-7.

Accepted Answer

The answer of Figure 7-7.
Armstrong Company produces a variety of...

Question 17

____ activities are performed in response to poor quality.

Accepted Answer

A)  Failure 
B)  Environmental 
C)  Value-added 
D)  Control 
E)  Prevention 
A)  Failure 
B)  Environmental 
C)  Value-added 
D)  Control 
E)  Prevention

Question 18

A list of activities accompanied by information that describes each activity is an activity ____.

Accepted Answer

A)  manifesto 
B)  diary 
C)  journal 
D)  dictionary 
E)  note 
A)  manifesto 
B)  diary 
C)  journal 
D)  dictionary 
E)  note

Question 19

In an activity dictionary, types of resources consumed is an example of a(n)

Accepted Answer

A)  activity sharing. 
B)  quality. 
C)  activity attribute. 
D)  allocation. 
A)  activity sharing. 
B)  quality. 
C)  activity attribute. 
D)  allocation.

Question 20

Setups, material handling, and inspection are all possible examples of

Accepted Answer

A)  product diversity. 
B)  unit level overhead activities. 
C)  nonunit-level overhead activities. 
D)  sustainable development. 
E)  None of these. 
A)  product diversity. 
B)  unit level overhead activities. 
C)  nonunit-level overhead activities. 
D)  sustainable development. 
E)  None of these.

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are

Activities necessary to remain in business are called valuable activities.

Activity attributes are financial and nonfinancial information items that describe individual activities.

Charlotte Company produces folding chairs. It takes the company 18,000 hours to produce 90,000 chairs. Required: A. What is the velocity in hours? B. What is the cycle time in hours?

Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is $225. Calculate the reduction in nonvalue-added cost per setup.

A factory produces 124,000 televisions per quarter. A total of 8,000 production hours are used within the factory per quarter. Compute the velocity in units per hour.

____________________ are financial and nonfinancial information items that describe individual activities.

A costing system that first assigns costs to activities and then to products is

The Thompson Company uses activity-based costing to determine product cost. Three activities and their rates have been calculated as shown below. Thompson provided the following data from the job order cost sheet for Job #345

____ activities are performed in response to poor quality.

A list of activities accompanied by information that describes each activity is an activity ____.

In an activity dictionary, types of resources consumed is an example of a(n)

Setups, material handling, and inspection are all possible examples of

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Activity-Based Costing and Management

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are

Activities necessary to remain in business are called valuable activities.

Activity attributes are financial and nonfinancial information items that describe individual activities.

Charlotte Company produces folding chairs. It takes the company 18,000 hours to produce 90,000 chairs. Required: A. What is the velocity in hours? B. What is the cycle time in hours?

Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is $225. Calculate the reduction in nonvalue-added cost per setup.

A factory produces 124,000 televisions per quarter. A total of 8,000 production hours are used within the factory per quarter. Compute the velocity in units per hour.

____________________ are financial and nonfinancial information items that describe individual activities.

A costing system that first assigns costs to activities and then to products is

The Thompson Company uses activity-based costing to determine product cost. Three activities and their rates have been calculated as shown below. Thompson provided the following data from the job order cost sheet for Job #345

____ activities are performed in response to poor quality.

A list of activities accompanied by information that describes each activity is an activity ____.

In an activity dictionary, types of resources consumed is an example of a(n)

Setups, material handling, and inspection are all possible examples of

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters