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

One reason for assigning selling and distribution costs to products for analytical purposes is ________.

Which of the following statements is true of activity-based costing?

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. If total payroll processing costs of $34,560 are allocated on the basis of number of employees, the amount allocated to the Small Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

North Street 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 $37,960 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the deluxe model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

Quality-inspection costs is an example of batch-level costs.

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. If total payroll processing costs of $64,680 are allocated on the basis of number of employees, the amount allocated to the Large Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

Put the following ABC implementation steps in order ________. ACompute the allocation rates. BCompute the total cost of the products. CIdentify the products that are the cost objects. DSelect the cost allocation bases.

Answer the following questions using the information below: Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit. -Given this change in the cost ________.

Stark Corporation has two departments, Car Rental and Truck Rental. Central costs may be allocated to the two departments in various ways. If advertising expense of $140,000 is allocated on the basis of sales, the amount allocated to the Car Rental Department would be ________. (Do not round interim calculations. Round the final answer to the nearest whole dollar.)

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 total costs will be assigned to Department B?

Lavender Company is a logistics company and has recently implemented ABC system. Using activity-based information, it decides to reduce the bulkiness of the packages delivered, thereby reducing costs. This suggests that ABC system helps managers in ________ decisions.

Which of the following reasons explain why ABC concepts may be of great value to service companies?

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, overhead costs per unit for the Sweatshirts will be ________. (Do not round interim calculations. Round the final answer to the nearest cent)

Answer the following questions using the information below: Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit. -The total amount of indirect costs assigned to product SR6 using the traditional method is ________ the total amount assigned using ABC.

ABC systems attempt to trace more costs as indirect costs.

Advanced Technology Products produces 10 different fastners. Each time a type of fastener is produced, the equipment must be stopped and items such as filters and drill bits must be changed, oil must be added to the equipment and some parts need lubrication. This work must be done before the products can be produced, the costs related to this activity would be part of which cost pool?

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

Using activity-cost rates rather than department indirect-cost rates to allocate costs results in different product costs when ________.

Modern manufacturing practices have helped reduce overhead costs relative to direct costs as the reliance on support resources such as scheduling, design, and engineering has diminished.

High Traffic Products Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways. If advertising expense of $432,600 is allocated on the basis of sales, the cost per cost driver rate would be ________.