Question 1

Batch-level activities and costs are incurred again each time a batch is produced.

Accepted Answer

A) True 
 B)False

Question 2

Production loss caused by downtime is an example of a(n)

Accepted Answer

A) internal failure cost. 
B) external failure cost. 
C) prevention cost. 
D) appraisal cost. 
A) internal failure cost. 
B) external failure cost. 
C) prevention cost. 
D) appraisal cost.

Question 3

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs of the department by the estimated total quantity of the department's cost allocation base.

Accepted Answer

A) True 
 B)False

Question 4

Carrol Company, which uses an activity-based costing system, produces travel trailers and boat trailers. The company allocates batch setup costs to the two products using the following basic data:   Total budgeted setup costs for the year are $158,400.
If the setup costs are allocated using number of setups, how much of the total setup costs would be allocated to boat trailers?

Accepted Answer

A) $98,560 
B) $59,840 
C) $158,400 
D) $419,294 
A) $98,560 
B) $59,840 
C) $158,400 
D) $419,294

Question 5

Lean thinking is a management strategy that includes maintaining large inventories.

Accepted Answer

A) True 
 B)False

Question 6

Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows:   What is the cost of assembling per phone?

Accepted Answer

A) $6.00 
B) $42.00 
C) $15.00 
D) $30.00 
A) $6.00 
B) $42.00 
C) $15.00 
D) $30.00

Question 7

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

Accepted Answer

A) True 
 B)False

Question 8

Quality-related costs generally fall into four different categories, which include all of the following except

Accepted Answer

A) prevention costs. 
B) appraisal costs. 
C) internal failure costs. 
D) transportation costs. 
A) prevention costs. 
B) appraisal costs. 
C) internal failure costs. 
D) transportation costs.

Question 9

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 .75 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 predetermined overhead allocation rate using the traditional costing system would be closest to

Accepted Answer

A) $40.30 per direct labor hour. 
B) $132.55 per direct labor hour. 
C) $54.22 per direct labor hour. 
D) $38.48 per direct labor hour. 
A) $40.30 per direct labor hour. 
B) $132.55 per direct labor hour. 
C) $54.22 per direct labor hour. 
D) $38.48 per direct labor hour.

Question 10

Wadsworth Industries manufactures small appliances and uses an activity-based costing system. Information from its system for the year for all products follows:   Wadsworth makes 775 of its stand mixers a year, which requires a total of 25 machine hours, 10 inspection hours, and 12 orders. The stand mixer requires $15.00 in direct materials per unit and $11.50 in direct labor per unit. The stand mixer sells for $120 per unit. What is the product margin in total for the stand mixer?

Accepted Answer

A) $91,979.50 
B) $26.50 
C) $20,537.50 
D) $71,468.50 
A) $91,979.50 
B) $26.50 
C) $20,537.50 
D) $71,468.50

Question 11

The benefits of adopting ABC/ABM are higher for companies in more competitive markets.

Accepted Answer

A) True 
 B)False

Question 12

The management strategy designed to eliminate waste is called a(n)

Accepted Answer

A) traditional thinking. 
B) lean thinking. 
C) activity-based costing. 
D) full costing. 
A) traditional thinking. 
B) lean thinking. 
C) activity-based costing. 
D) full costing.

Question 13

Which term below best describes the quality cost category for "lost profits from lost sales"?

Accepted Answer

A) Prevention costs 
B) Appraisal costs 
C) External failure costs 
D) Internal failure costs 
A) Prevention costs 
B) Appraisal costs 
C) External failure costs 
D) Internal failure costs

Question 14

Augustine Associates is a CPA firm that offers assurance and consulting services. The firm uses an activity-based costing system and has developed the following activity pool cost rates:   Cost and activity data related to two clients is as follows:   How much overhead cost would be allocated to Client 867 using the activity-based costing system?

Accepted Answer

A) $370 
B) $18,290 
C) $5,700 
D) $16,650 
A) $370 
B) $18,290 
C) $5,700 
D) $16,650

Question 15

Alexander Inc. uses activity-based costing. The company produces two products: Snaps and Pops. The expected annual production of Snaps is 1,500 units, while the expected annual production of Pops is 2,200 units. There are three activity cost pools: Assembly, Testing, and Packing. The estimated costs and activities for each of these three activity pools follows:   The overhead cost per unit of Pops would be closest to

Accepted Answer

A) $15.30. 
B) $5.32. 
C) $7.80. 
D) $31.00. 
A) $15.30. 
B) $5.32. 
C) $7.80. 
D) $31.00.

Question 16

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is

Accepted Answer

A) appraisal costs. 
B) value engineering. 
C) activity-based costing. 
D) prevention costs. 
A) appraisal costs. 
B) value engineering. 
C) activity-based costing. 
D) prevention costs.

Question 17

The Cosmo Corporation manufactures and assembles office chairs. Cosmo uses an activity-based costing system to allocate all manufacturing conversion costs. Each chair 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 cost of machining per chair?

Accepted Answer

A) $4.00 
B) $30.00 
C) $15.50 
D) $5.50 
A) $4.00 
B) $30.00 
C) $15.50 
D) $5.50

Question 18

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

Accepted Answer

A) types of activities used by the product . 
B) the extent to which the activities are used. 
C) both A and B. 
D) none of the above. 
A) types of activities used by the product . 
B) the extent to which the activities are used. 
C) both A and B. 
D) none of the above.

Question 19

Which term listed below describes costs incurred for rework when the company detects poor quality goods before delivery to the customer?

Accepted Answer

A) Lean production 
B) Value added activity 
C) Internal failure costs 
D) External failure costs 
A) Lean production 
B) Value added activity 
C) Internal failure costs 
D) External failure costs

Question 20

Lean companies typically cross-train employees to perform more than one task.

Accepted Answer

A) True 
 B)False

Batch-level activities and costs are incurred again each time a batch is produced.

Production loss caused by downtime is an example of a(n)

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs of the department by the estimated total quantity of the department's cost allocation base.

Lean thinking is a management strategy that includes maintaining large inventories.

Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows: What is the cost of assembling per phone?

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

Quality-related costs generally fall into four different categories, which include all of the following except

The benefits of adopting ABC/ABM are higher for companies in more competitive markets.

The management strategy designed to eliminate waste is called a(n)

Which term below best describes the quality cost category for "lost profits from lost sales"?

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

Which term listed below describes costs incurred for rework when the company detects poor quality goods before delivery to the customer?

Lean companies typically cross-train employees to perform more than one task.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

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

Batch-level activities and costs are incurred again each time a batch is produced.

Production loss caused by downtime is an example of a(n)

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs of the department by the estimated total quantity of the department's cost allocation base.

Lean thinking is a management strategy that includes maintaining large inventories.

Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows: What is the cost of assembling per phone?

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

Quality-related costs generally fall into four different categories, which include all of the following except

The benefits of adopting ABC/ABM are higher for companies in more competitive markets.

The management strategy designed to eliminate waste is called a(n)

Which term below best describes the quality cost category for "lost profits from lost sales"?

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

Which term listed below describes costs incurred for rework when the company detects poor quality goods before delivery to the customer?

Lean companies typically cross-train employees to perform more than one task.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters