Question 1

Updates to a time-driven ABC system might be triggered by:

Accepted Answer

A) significant shifts in cost estimates. 
B) change in top management. 
C) new fiscal year. 
D) interviews and surveys. 
A) significant shifts in cost estimates. 
B) change in top management. 
C) new fiscal year. 
D) interviews and surveys. A

Question 2

Practical capacity is generally smaller than theoretical capacity.

Accepted Answer

A) True 
 B)False  True

Question 3

Updates to time-driven ABC models are triggered by events that require the estimates in the model to be modified,such as a significant change in costs of resources supplied.

Accepted Answer

A) True 
 B)False  True

Question 4

Brilliant Accents Company manufactures and sells three styles of kitchen faucets: brass,chrome,and white. Production takes 25,25,and 10 machine hours to manufacture 1,000-unit batches of brass,chrome,and white faucets,respectively. The following additional data apply:
   
a. Using the traditional cost system,determine the operating profit per unit for the brass style of faucet.
b. Determine the activity cost driver rate for setup overhead costs and inspection overhead costs.
c. Using the ABC system,for the brass style of faucet:
1.compute the estimated overhead costs per unit; and
2.compute the estimated operating profit per unit.
d. Explain the difference between the profits obtained from the traditional cost system and the ABC system.Which system provides a better estimate of profitability? Why?

Accepted Answer

a. Traditional cost system:
Operating pr

Question 5

Explain how activity-based costing systems can provide more accurate product costs than traditional cost systems.

Accepted Answer

A key reason for assigning overhead cost

Question 6

Product lines that produce different variations (models,styles,or colors)often require specialized activities that translate into lower overhead costs for each product line.

Accepted Answer

A) True 
 B)False

Question 7

Blitzer Enterprises has identified three cost pools and three corresponding cost drivers to allocate overhead costs. The following estimates are provided for the coming year: 
 
The accounting records show the Gergen Job consumed the following resources:
 
-If direct labor-hours are considered as the only overhead cost driver,what is the single cost driver rate for Blitzer Enterprises?

Accepted Answer

A) $0.60 per direct labor-hour 
B) $0.80 per direct labor-hour 
C) $1.20 per direct labor-hour 
D) $6.00 per direct labor-hour 
A) $0.60 per direct labor-hour 
B) $0.80 per direct labor-hour 
C) $1.20 per direct labor-hour 
D) $6.00 per direct labor-hour

Question 8

Assigning selling and distribution costs to product lines is becoming more important because of customer requests for customized services.

Accepted Answer

A) True 
 B)False

Question 9

Activity-based costing systems provide better product costs when they:

Accepted Answer

A) employ more activity cost drivers. 
B) employ fewer activity cost drivers. 
C) identify and cost more overhead cost differences among products. 
D) always yield more accurate product costs than traditional cost systems. 
A) employ more activity cost drivers. 
B) employ fewer activity cost drivers. 
C) identify and cost more overhead cost differences among products. 
D) always yield more accurate product costs than traditional cost systems.

Question 10

For service organizations that bill customers at a predetermined average cost rate,activity-based cost systems can help to:

Accepted Answer

A) clarify appropriate cost assignments for various service activities. 
B) identify the profitability of various service activities. 
C) clarify appropriate cost assignments and identify the profitability of various service activities. 
D) None of the above is correct. 
A) clarify appropriate cost assignments for various service activities. 
B) identify the profitability of various service activities. 
C) clarify appropriate cost assignments and identify the profitability of various service activities. 
D) None of the above is correct.

Question 11

Blitzer Enterprises has identified three cost pools and three corresponding cost drivers to allocate overhead costs. The following estimates are provided for the coming year: 
 
The accounting records show the Gergen Job consumed the following resources:
 
-Using direct labor-hours as the only overhead cost driver,what is the amount of overhead costs allocated to the Gergen Job?

Accepted Answer

A) $320 
B) $720 
C) $1,200 
D) $1,360 
A) $320 
B) $720 
C) $1,200 
D) $1,360

Question 12

Unit-level cost drivers in traditional cost systems distort product costs because they:

Accepted Answer

A) assume that all overhead activities affect all products. 
B) recognize specific activities that are required to produce a product. 
C) do not consistently record costs. 
D) fail to measure the correct amount of total costs for all products. 
A) assume that all overhead activities affect all products. 
B) recognize specific activities that are required to produce a product. 
C) do not consistently record costs. 
D) fail to measure the correct amount of total costs for all products.

Question 13

ABC systems seek an activity cost allocation driver that has a cause-and-effect relationship with costs in the cost pool.

Accepted Answer

A) True 
 B)False

Question 14

Even when the ABC project is initiated from the finance group,a multifunctional project team should be formed.

Accepted Answer

A) True 
 B)False

Question 15

Cost driver rates calculated using actual work performed include an allocation for the cost of resources used and for unused capacity.

Accepted Answer

A) True 
 B)False

Question 16

According to an ABC system,A8 is ________ under the traditional cost system.

Accepted Answer

A) undercosted 
B) overcosted 
C) fairly costed 
D) accurately costed 
A) undercosted 
B) overcosted 
C) fairly costed 
D) accurately costed

Question 17

For activity-based cost systems,activity costs are assigned to products in the proportion of the demand they place on activity resources.

Accepted Answer

A) True 
 B)False

Question 18

Units of production are most appropriate as an overhead cost assignment base when:

Accepted Answer

A) it is a service department. 
B) only one product is manufactured. 
C) direct labor costs are low. 
D) factories produce a complex and varied mix of products. 
A) it is a service department. 
B) only one product is manufactured. 
C) direct labor costs are low. 
D) factories produce a complex and varied mix of products.

Question 19

The goal of a properly constructed ABC system is to:

Accepted Answer

A) have the most accurate cost system. 
B) identify more indirect overhead costs. 
C) develop the best cost system for an economically reasonable cost. 
D) have separate allocation rates for each department. 
A) have the most accurate cost system. 
B) identify more indirect overhead costs. 
C) develop the best cost system for an economically reasonable cost. 
D) have separate allocation rates for each department.

Question 20

Blitzer Enterprises has identified three cost pools and three corresponding cost drivers to allocate overhead costs. The following estimates are provided for the coming year: 
 
The accounting records show the Gergen Job consumed the following resources:
 
-If Blitzer Enterprises uses the three activity cost pools to allocate overhead costs,what are the activity-cost driver rates for the supervision of direct labor,machine maintenance,and facility rent,respectively?

Accepted Answer

A) $1.20 per direct labor hour, $0.50 per machine hour, $3.60 per sq ft 
B) $2.50 per direct labor hour, $0.50 per machine hour, $1.00 per sq ft 
C) $0.80 per direct labor hour, $0.10 per machine hour, $2.40 per sq ft 
D) $0.60 per direct labor hour,$0.40 per machine hour,$2.60 per sq ft 
A) $1.20 per direct labor hour, $0.50 per machine hour, $3.60 per sq ft 
B) $2.50 per direct labor hour, $0.50 per machine hour, $1.00 per sq ft 
C) $0.80 per direct labor hour, $0.10 per machine hour, $2.40 per sq ft 
D) $0.60 per direct labor hour,$0.40 per machine hour,$2.60 per sq ft

Updates to a time-driven ABC system might be triggered by:

Practical capacity is generally smaller than theoretical capacity.

Updates to time-driven ABC models are triggered by events that require the estimates in the model to be modified,such as a significant change in costs of resources supplied.

Explain how activity-based costing systems can provide more accurate product costs than traditional cost systems.

Product lines that produce different variations (models,styles,or colors)often require specialized activities that translate into lower overhead costs for each product line.

Assigning selling and distribution costs to product lines is becoming more important because of customer requests for customized services.

Activity-based costing systems provide better product costs when they:

For service organizations that bill customers at a predetermined average cost rate,activity-based cost systems can help to:

Unit-level cost drivers in traditional cost systems distort product costs because they:

ABC systems seek an activity cost allocation driver that has a cause-and-effect relationship with costs in the cost pool.

Even when the ABC project is initiated from the finance group,a multifunctional project team should be formed.

Cost driver rates calculated using actual work performed include an allocation for the cost of resources used and for unused capacity.

According to an ABC system,A8 is ________ under the traditional cost system.

For activity-based cost systems,activity costs are assigned to products in the proportion of the demand they place on activity resources.

Units of production are most appropriate as an overhead cost assignment base when:

The goal of a properly constructed ABC system is to:

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Accumulating and Assigning Costs to Products

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Financial Control

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Exam 5: Activity-Based Cost Systems

Updates to a time-driven ABC system might be triggered by:

Practical capacity is generally smaller than theoretical capacity.

Updates to time-driven ABC models are triggered by events that require the estimates in the model to be modified,such as a significant change in costs of resources supplied.

Explain how activity-based costing systems can provide more accurate product costs than traditional cost systems.

Product lines that produce different variations (models,styles,or colors)often require specialized activities that translate into lower overhead costs for each product line.

Assigning selling and distribution costs to product lines is becoming more important because of customer requests for customized services.

Activity-based costing systems provide better product costs when they:

For service organizations that bill customers at a predetermined average cost rate,activity-based cost systems can help to:

Unit-level cost drivers in traditional cost systems distort product costs because they:

ABC systems seek an activity cost allocation driver that has a cause-and-effect relationship with costs in the cost pool.

Even when the ABC project is initiated from the finance group,a multifunctional project team should be formed.

Cost driver rates calculated using actual work performed include an allocation for the cost of resources used and for unused capacity.

According to an ABC system,A8 is ________ under the traditional cost system.

For activity-based cost systems,activity costs are assigned to products in the proportion of the demand they place on activity resources.

Units of production are most appropriate as an overhead cost assignment base when:

The goal of a properly constructed ABC system is to:

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Accumulating and Assigning Costs to Products

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Using Budgets for Planning and Coordination

Financial Control

Filters