Question 1

Management accountants use the cost hierarchy to first calculate the ________.

Accepted Answer

A)  labor costs of each product and then they compute material costs 
B)  overhead costs of each product and then they compute prime costs 
C)  factory costs of each product and then they compute labor costs 
D)  total costs of each product and then they compute per-unit costs 
A)  labor costs of each product and then they compute material costs 
B)  overhead costs of each product and then they compute prime costs 
C)  factory costs of each product and then they compute labor costs 
D)  total costs of each product and then they compute per-unit costs

Question 2

Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled:
 
Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

Accepted Answer

A)  $62,950 
B)  $54,151 
C)  $71,749 
D)  $36,929 
A)  $62,950 
B)  $54,151 
C)  $71,749 
D)  $36,929

Question 3

Even though there are no inventories for service companies, ABC systems are of great use for service companies. Explain why and how.

Accepted Answer

Service companies find great value from

Question 4

Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system?

Accepted Answer

A)  batch-level, output unit-level, product-sustaining level, and facility-sustaining level 
B)  batch-level, output unit-level, facility-sustaining levels, product-sustaining levels 
C)  output unit-level, batch-level, product-sustaining level, and facility-sustaining level 
D)  facility-sustaining level, output unit-level, batch-level, product-sustaining level 
A)  batch-level, output unit-level, product-sustaining level, and facility-sustaining level 
B)  batch-level, output unit-level, facility-sustaining levels, product-sustaining levels 
C)  output unit-level, batch-level, product-sustaining level, and facility-sustaining level 
D)  facility-sustaining level, output unit-level, batch-level, product-sustaining level

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, total overhead costs allocated to Sweatshirts will be ________.

Accepted Answer

A)  $47,460 
B)  $68,460 
C)  $201,480 
D)  None of these answers are correct. 
A)  $47,460 
B)  $68,460 
C)  $201,480 
D)  None of these answers are correct.

Question 6

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts, what would be the best allocation base for human resource adminstration costs?

Accepted Answer

A)  direct labor hours 
B)  electricity costs 
C)  number of parts purchased 
D)  machine hours 
A)  direct labor hours 
B)  electricity costs 
C)  number of parts purchased 
D)  machine hours

Question 7

How are cost drivers selected in activity-based costing systems?

Accepted Answer

First, indirect costs are divided into h

Question 8

At New England Goods Inc., product lines are charged for call center support costs based on sales revenue. Last year's summary of call center operations revealed the following:
   
New England Goods Inc. currently allocates call center support costs using a rate of 0.6% of sales revenue.
Required:
a.Compute the amount of call center support costs allocated to each product line under the current system.
b.Assume New England decides to use the average call length for information to assign last year's support costs. Does this allocation method seem more appropriate than percentage of sales? Why or why not?
c.Assume New England decides to use the numbers of calls for information and for warranties to assign last year's support costs of $65,000. Compute the amount of call center support costs assigned to each product line under this revised ABC system.
d.New England Goods assigns bonuses based on departmental profits. How might the Specialty Products manager try to obtain higher profits for next year if support costs are assigned based on the average call length for information?
e.Discuss the barriers for implementing ABC for this call center.

Accepted Answer

a.Call center support costs allocated to

Question 9

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.
 
If total rent expense of $71,550 is allocated on the basis of square footage, the amount allocated to the Small Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

Accepted Answer

A)  $51,900 
B)  $19,650 
C)  $35,775 
D)  $27,090 
A)  $51,900 
B)  $19,650 
C)  $35,775 
D)  $27,090

Question 10

The fundamental cost objects of ABC are ________.

Accepted Answer

A)  activities 
B)  cost drivers 
C)  products 
D)  services 
A)  activities 
B)  cost drivers 
C)  products 
D)  services

Question 11

Identification of a cost-allocation base is not a critical element when using a strategy that will refine a costing system.

Accepted Answer

A) True 
 B)False

Question 12

Dartmouth Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled:
 
Assume a traditional costing system applies the $39,240 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

Accepted Answer

A)  $13,190 
B)  $26,050 
C)  $25,343 
D)  $13,898 
A)  $13,190 
B)  $26,050 
C)  $25,343 
D)  $13,898

Question 13

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, supervision costs allocated to Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

Accepted Answer

A)  $52,920 
B)  $104,800 
C)  $123,480 
D)  None of these answers are correct. 
A)  $52,920 
B)  $104,800 
C)  $123,480 
D)  None of these answers are correct.

Question 14

A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.

Accepted Answer

A)  can be used to eliminate nonvalue-added activities 
B)  is easy to analyze and interpret 
C)  takes the choices and judgment challenges away from the managers 
D)  emphasizes how managers can achieve higher sales 
A)  can be used to eliminate nonvalue-added activities 
B)  is easy to analyze and interpret 
C)  takes the choices and judgment challenges away from the managers 
D)  emphasizes how managers can achieve higher sales

Question 15

In activity based costing systems, limiting cost-allocation bases to only units of output strengthens the cause-and-effect relationship between the cost-allocation base and the costs in a cost pool.

Accepted Answer

A) True 
 B)False

Question 16

Explain how a top-selling product may actually result in losses for the company.

Accepted Answer

If indirect costs are not properly alloc

Question 17

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.
 
If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.

Accepted Answer

A)  $107,300 
B)  $558,000 
C)  $522,000 
D)  $314,650 
A)  $107,300 
B)  $558,000 
C)  $522,000 
D)  $314,650

Question 18

It only makes sense to implement an ABC system when ________.

Accepted Answer

A)  a single product is produced in bulk 
B)  its benefits exceed its implementation costs 
C)  it traces more costs as direct costs 
D)  production process is labor-intensive 
A)  a single product is produced in bulk 
B)  its benefits exceed its implementation costs 
C)  it traces more costs as direct costs 
D)  production process is labor-intensive

Question 19

For each of the following activities identify an appropriate activity-cost driver.
a.machine maintenance
b.machine setup
c.quality control
d.material ordering
e.production scheduling
f.warehouse expense
g.engineering design

Accepted Answer

Any one of

Question 20

Which of the following statements is true of a peanut-butter costing system?

Accepted Answer

A)  A peanut-butter costing system typically has more-homogeneous indirect cost pools. 
B)  A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects. 
C)  A peanut-butter costing system assumes that all costs are variable. 
D)  In a peanut-butter costing system, costs of activities are used to assign costs to other cost objects such as products or services based on the activities the products or services consume. 
A)  A peanut-butter costing system typically has more-homogeneous indirect cost pools. 
B)  A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects. 
C)  A peanut-butter costing system assumes that all costs are variable. 
D)  In a peanut-butter costing system, costs of activities are used to assign costs to other cost objects such as products or services based on the activities the products or services consume.

Management accountants use the cost hierarchy to first calculate the ________.

Even though there are no inventories for service companies, ABC systems are of great use for service companies. Explain why and how.

Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system?

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts, what would be the best allocation base for human resource adminstration costs?

How are cost drivers selected in activity-based costing systems?

The fundamental cost objects of ABC are ________.

Identification of a cost-allocation base is not a critical element when using a strategy that will refine a costing system.

A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.

In activity based costing systems, limiting cost-allocation bases to only units of output strengthens the cause-and-effect relationship between the cost-allocation base and the costs in a cost pool.

Explain how a top-selling product may actually result in losses for the company.

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.

It only makes sense to implement an ABC system when ________.

For each of the following activities identify an appropriate activity-cost driver. a.machine maintenance b.machine setup c.quality control d.material ordering e.production scheduling f.warehouse expense g.engineering design

Which of the following statements is true of a peanut-butter costing system?

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

Management accountants use the cost hierarchy to first calculate the ________.

Even though there are no inventories for service companies, ABC systems are of great use for service companies. Explain why and how.

Which of the following ordering of the levels best depicts the cost hierarchy within an ABC system?

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts, what would be the best allocation base for human resource adminstration costs?

How are cost drivers selected in activity-based costing systems?

The fundamental cost objects of ABC are ________.

Identification of a cost-allocation base is not a critical element when using a strategy that will refine a costing system.

A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis ________.

In activity based costing systems, limiting cost-allocation bases to only units of output strengthens the cause-and-effect relationship between the cost-allocation base and the costs in a cost pool.

Explain how a top-selling product may actually result in losses for the company.

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. If total advertising expense of $629,300 is allocated on the basis of sales, the amount allocated to the Large Department would be ________.

It only makes sense to implement an ABC system when ________.

For each of the following activities identify an appropriate activity-cost driver. a.machine maintenance b.machine setup c.quality control d.material ordering e.production scheduling f.warehouse expense g.engineering design

Which of the following statements is true of a peanut-butter costing system?

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