Exam 4: Activity-Based Costing, Lean Operations, and the Costs of Quality

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. The following units were produced in December with the following information: Total manufacturing costs for Part 003 is

The first step in developing an ABC system is

Which of the following is an example of a cost item that should be classified as an external failure cost?

The cost to research and develop, design and market new models would be considered a product-level cost.

Which of the following is a lean strategy?

All of the following are considered to be part of the cost hierarchy often used to implement ABC, with the exception of

Using factory utilities would most likely be classified as a ________ cost.

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's external failure costs would most likely

Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of June: Each lawn chair consists of 8 parts; the total direct materials cost per lawn chair is $10.00. What is the total manufacturing cost per lawn chair?

When a company has established separate manufacturing overhead rates for each department, it is using:

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. The following units were produced in December with the following information: Total packaging fees for all three parts is:

External failure costs occur when the company detects and corrects poor-quality goods or services after delivery to customers.

Lean thinking involves carrying large amounts of inventory "just in case" something goes wrong.

Bohemian Manufacturing manufactures several different products and uses an activity-based costing system. Information from its system for the year for all products follows: The annual production and sales of one of its products, the Sizzler, are 1,500 units. The following data relate to the production and sales of Sizzlers in the most recent year: Required: 1. Calculate the activity cost pool rates for each of the three activity cost pools listed. 2. Calculate the average cost of one Sizzler.

Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2,200 units, while 1,500 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $149,115. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools: The cost pool activity rate for Engineering Costs would be closest to

Traditional costing systems are generally more accurate than ABC costing.

Duquesne Incorporated recently implemented an activity-based costing system. Total results from all products manufactured in the current year are: Activity cost pool Total cost Total activity Assembly $7,500 1,500 machine-hours Packaging $3,150 450 number of orders Quality control inspections $900 200 number of inspections Duquesne manufactures sprinkler heads for commercial applications. Annual production and sales of one of its heads, is 2,300. The following relates the the most recent year. Annual machine hours 1,000 Annual number of orders 125 Annual number of inspections 400 Direct materials cost per unit $15.00 Direct labor cost per unit $5.00 Required: 1. Calculate the activity cost pool rates for each of the three activity cost pools listed. 2. Calculate the average cost of one Sizzler.

The costs of adopting ABC may be lower for some companies than for others. This situation may occur

Garrett Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee table consists of 15 separate parts totaling $125 in direct materials, and requires 2.0 hours of machine time to produce. Additional information follows: What is the total manufacturing cost per chair?

Which term below best describes the quality cost category for "cost to re-inspect reworked blenders"?