Exam 7: Activity-Based Costing and Management

Accurate ___________________ allow managers to make better pricing decisions, customer-mix decisions, and other customer-related decisions that improve profitability.

One of the questions answered by activity analysis should be "What activities are done?"

Match each item with the correct statement below. a. cycle time b. direct tracing c. activity sharing d. driver tracing e. value-added activities f. activity selection -Involves choosing among different sets of activities that are caused by competing strategies.

Figure 7-5. Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows: -Refer to Figure 7-5. Calculate a consumption ratio for setups on the digital cameras.

MATCHING Match each item with the correct statement below. a. activity drivers b. activity-based costing system c. consumption ratio d. unit-level activities e. activity attributes f. resource drivers -System that emphasizes direct tracing and driver tracing.

Activity analysis is the effort expended to identify those factors that are the root causes of activity costs.

A company has two inspectors, each earning a salary of $75,000. One inspector works exclusively on inspecting parts received from outside suppliers, while the other spends 30% of her time inspecting parts and 70% of her time inspecting final products. How much labor cost should be assigned to the activity, inspecting parts?

Lorimer Company had sales of $2,500,000 for last year. Data on quality-related costs for last year are as follows:

Which of the following is a value-added activity?

Complying with the filing requirements of the IRS is an example of a

Activities necessary to remain in business are known as _____________________.

Which of the following is not a possible source of customer diversity?

Consider the following two activities: (1) performing warranty work, cost: $60,000. The warranty cost of the most efficient competitor is $10,000. (2) Purchasing components, cost: $100,000 (5,000 purchase orders). A study reveals that the most efficient level would use 2,500 purchase orders and entail a cost of $55,000. What is the total nonvalue-added cost?

____ activities are unnecessary activities.

The value-added standard is the waste-free component of the value-added activity.

Interviews and surveys are used to identify

____ is the length of time required to produce one product; ____ is the number of units that can be produced in a given period of time.

A defective product is one that does conform to specifications.

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 -Costs necessary to perform value-added activities with perfect efficiency.

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 total customer cost for the non-JIT distributor.