Exam 7: Activity-Based Costing and Management

Environmental costs are associated with the creation, detection, remediation, and prevention of environmental degradation.

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 processing sales orders.

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

The consumption ratio is the amount of each activity consumed by a product.

Field trials and quality engineering are examples of ____.

Which is defined as a category of quality-related costs?

The process of choosing among different sets of activities caused by competing strategies refers to

____ can help a company become more competitive by providing more accurate cost data.

____ is concerned with doing the activity right the first time it is performed.

Tracing ________________ costs to suppliers can enable managers to choose the true low-cost supplier.

Activity drivers can be classified as either ____ or ____.

Assume that the accounts payable department of a company has 10 clerks; each one is paid $25,000 per year ($250,000 total clerical salaries). Six of the clerks spend the following percentages of time on the three activities: 20% of their time 30% of their time matching invoices, receiving documents, and billing statement 50% of their time correcting errors in the various documents One clerk, the head clerk, spends 50% of her time on administrative duties, and the remainder on error correction. The remaining three clerks spend 30% of their time on processing payments and the remaining 70% of their time on matching documents. Long distance telephone costs of $1,700 are directly traced to the activity "correcting errors." on processing payments

A product currently requires 5 moves. By changing the plant layout, the number of moves can be reduced to 1. The cost per move is $30. Calculate the reduction in nonvalue-added cost of the moving activity.

A company will sometimes use a ____________________ which identifies the amount of labor consumed by each activity.

A company spends $12,000 a year for inspecting, $41,000 for purchasing, and $22,000 for reworking products. A good estimate of nonvalue-added costs would be:

Zero defects means that most products conform to specifications.

Activity drivers should be classified as either unit-level or nonunit-level.

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. Using an activity rate for receiving based on receiving orders, assign receiving costs to the 35mm camera.

Unit-level activities are performed each time a unit is produced.

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 -Resources consumed by the activity in producing its output.