Question 1

ABC systems help managers to ________.

Accepted Answer

A)  value ending inventory more accurately 
B)  identify new designs to reduce costs 
C)  evaluate direct material costs more efficiently 
D)  improve the inventory turnaround time 
A)  value ending inventory more accurately 
B)  identify new designs to reduce costs 
C)  evaluate direct material costs more efficiently 
D)  improve the inventory turnaround time

Question 2

ABC reveals opportunities to reduce costs on nonvalue added activities.

Accepted Answer

A) True 
 B)False

Question 3

Columbus Company provides the following ABC costing information:
 
The above activities used by their three departments are:
 
How much of the total cost will be assigned to the Plowing Department?

Accepted Answer

A)  $564,000 
B)  $311,600 
C)  $188,000 
D)  $173,600 
A)  $564,000 
B)  $311,600 
C)  $188,000 
D)  $173,600

Question 4

Answer the following questions using the information below:
Eagle Eye Company produces two types of lenses-L7 and L9.
 
What is the total costs assigned to L9 (b) under single indirect-cost pool system?

Accepted Answer

A)  $46,000 
B)  $64,000 
C)  $32,500 
D)  $45,500 
A)  $46,000 
B)  $64,000 
C)  $32,500 
D)  $45,500

Question 5

Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:
 
Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:

Under the revised ABC system, the activity-cost driver rate for the supervision activity is ________.

Accepted Answer

A)  $1.70 
B)  $2.70 
C)  $2.16 
D)  $1.2 
A)  $1.70 
B)  $2.70 
C)  $2.16 
D)  $1.2

Question 6

When allocating the total indirect cost pool to cost pools such as setup costs including depreciation and maintenance costs of setup equipment, wages of setup employees, and allocation of supervisors is called a second-stage allocation.

Accepted Answer

A) True 
 B)False

Question 7

Canton Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:
 
Expected direct costs amounts to $942,000 for the period. Support cost requirements of both products are substantially different from one another. Canton uses an ABC costing system.
The setups activity-cost driver rate is ________.

Accepted Answer

A)  $6.10 per setup 
B)  $5.80 per setup 
C)  $4.15 per setup 
D)  $15.50 per setup 
A)  $6.10 per setup 
B)  $5.80 per setup 
C)  $4.15 per setup 
D)  $15.50 per setup

Question 8

For a business that offers customers a store where product can be purchased and picked up or a delivery service that can ship the product directly to the customer, which of the following would most likely be the best cost allocation base for distribution costs?

Accepted Answer

A)  number of customer service phone calls and emails per period 
B)  number of pounds of product shipped or delivered 
C)  Electricity costs for the period 
D)  Number of products sold 
A)  number of customer service phone calls and emails per period 
B)  number of pounds of product shipped or delivered 
C)  Electricity costs for the period 
D)  Number of products sold

Question 9

Department costing systems always properly recognize how resources are used by products as they require the creation of multiple indirect cost pools.

Accepted Answer

A) True 
 B)False

Question 10

Recognizing ABC information is not always perfect because ________.

Accepted Answer

A)  it mostly uses far too many indirect cost pools than what is actually required 
B)  it balances the need for better information against the costs of creating a complex system 
C)  it lacks the simplicity that traditional systems used to have to allocate overhead costs 
D)  it never measures how the resources of an organization are used 
A)  it mostly uses far too many indirect cost pools than what is actually required 
B)  it balances the need for better information against the costs of creating a complex system 
C)  it lacks the simplicity that traditional systems used to have to allocate overhead costs 
D)  it never measures how the resources of an organization are used

Question 11

If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.

Accepted Answer

A) True 
 B)False

Question 12

ABC system are likely to provide the most benefits to a company with significant amounts of indirect costs that are allocated using just one or two costs pools and products that make diverse demands on resources.

Accepted Answer

A) True 
 B)False

Question 13

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:
 
Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the standard model?

Accepted Answer

A)  $81,200 
B)  $81,900 
C)  $61,200 
D)  $101,200 
A)  $81,200 
B)  $81,900 
C)  $61,200 
D)  $101,200

Question 14

Canton's Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:
 
Expected direct costs amounts to $928,000 for the period. Support cost requirements of both products are substantially different from one another. Canton's uses an ABC costing system.
The inspections activity-cost driver rate is ________.

Accepted Answer

A)  $0.44 
B)  $5.70 
C)  $6.20 
D)  $13.08 
A)  $0.44 
B)  $5.70 
C)  $6.20 
D)  $13.08

Question 15

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

Accepted Answer

A key reason for assigning indirect cost

Question 16

Extreme Manufacturing Company provides the following ABC costing information:
 
The above activities are used by Departments A and B as follows:
 
How much of the account billing cost will be assigned to Department B?

Accepted Answer

A)  $220,000 
B)  $110,000 
C)  $24,750 
D)  $33,000 
A)  $220,000 
B)  $110,000 
C)  $24,750 
D)  $33,000

Question 17

The risk of peanut-butter costing rises when broad averages are used across multiple products without managers considering the true amounts of resources consumed in the making of each product.

Accepted Answer

A) True 
 B)False

Question 18

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

Accepted Answer

A)  Marketing strategy and material price level 
B)  Availability of reliable data and measures 
C)  Product price level 
D)  Market share of a product 
A)  Marketing strategy and material price level 
B)  Availability of reliable data and measures 
C)  Product price level 
D)  Market share of a product

Question 19

ABC systems create ________.

Accepted Answer

A)  one large cost pool 
B)  homogeneous activity-related cost pools 
C)  activity-cost pools with a broad focus 
D)  activity-cost pools containing many direct costs 
A)  one large cost pool 
B)  homogeneous activity-related cost pools 
C)  activity-cost pools with a broad focus 
D)  activity-cost pools containing many direct costs

Question 20

Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:
 
Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead costs assigned to the deluxe model?

Accepted Answer

A)  $59,450 
B)  $83,800 
C)  $56,800 
D)  $62,100 
A)  $59,450 
B)  $83,800 
C)  $56,800 
D)  $62,100

ABC systems help managers to ________.

ABC reveals opportunities to reduce costs on nonvalue added activities.

Columbus Company provides the following ABC costing information: The above activities used by their three departments are: How much of the total cost will be assigned to the Plowing Department?

Answer the following questions using the information below: Eagle Eye Company produces two types of lenses-L7 and L9. What is the total costs assigned to L9 (b) under single indirect-cost pool system?

When allocating the total indirect cost pool to cost pools such as setup costs including depreciation and maintenance costs of setup equipment, wages of setup employees, and allocation of supervisors is called a second-stage allocation.

For a business that offers customers a store where product can be purchased and picked up or a delivery service that can ship the product directly to the customer, which of the following would most likely be the best cost allocation base for distribution costs?

Department costing systems always properly recognize how resources are used by products as they require the creation of multiple indirect cost pools.

Recognizing ABC information is not always perfect because ________.

If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.

ABC system are likely to provide the most benefits to a company with significant amounts of indirect costs that are allocated using just one or two costs pools and products that make diverse demands on resources.

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

Extreme Manufacturing Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of the account billing cost will be assigned to Department B?

The risk of peanut-butter costing rises when broad averages are used across multiple products without managers considering the true amounts of resources consumed in the making of each product.

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

ABC systems create ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 5: Activity-Based Costing and Activity-Based Management

ABC systems help managers to ________.

ABC reveals opportunities to reduce costs on nonvalue added activities.

Columbus Company provides the following ABC costing information: The above activities used by their three departments are: How much of the total cost will be assigned to the Plowing Department?

Answer the following questions using the information below: Eagle Eye Company produces two types of lenses-L7 and L9. What is the total costs assigned to L9 (b) under single indirect-cost pool system?

When allocating the total indirect cost pool to cost pools such as setup costs including depreciation and maintenance costs of setup equipment, wages of setup employees, and allocation of supervisors is called a second-stage allocation.

For a business that offers customers a store where product can be purchased and picked up or a delivery service that can ship the product directly to the customer, which of the following would most likely be the best cost allocation base for distribution costs?

Department costing systems always properly recognize how resources are used by products as they require the creation of multiple indirect cost pools.

Recognizing ABC information is not always perfect because ________.

If companies increase market share in a given product line because their reported costs are less than their actual costs, they will become more profitable in the long run.

ABC system are likely to provide the most benefits to a company with significant amounts of indirect costs that are allocated using just one or two costs pools and products that make diverse demands on resources.

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

Extreme Manufacturing Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of the account billing cost will be assigned to Department B?

The risk of peanut-butter costing rises when broad averages are used across multiple products without managers considering the true amounts of resources consumed in the making of each product.

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

ABC systems create ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters