Question 1

Purchase order, set-up, and inspection costs are examples of:

Accepted Answer

A) Unit-level costs. 
B) Batch-level costs. 
C) Product-level costs. 
D) Facility-level costs. 
E) Department-level costs. 
A) Unit-level costs. 
B) Batch-level costs. 
C) Product-level costs. 
D) Facility-level costs. 
E) Department-level costs.

Question 2

Which one of the following is not a unit-level cost driver?

Accepted Answer

A) Direct labor hours. 
B) Direct material dollars. 
C) Machine hours. 
D) Production orders. 
E) None of the above. 
A) Direct labor hours. 
B) Direct material dollars. 
C) Machine hours. 
D) Production orders. 
E) None of the above.

Question 3

Diamond Cleats Co. manufactures cleats for baseball shoes. It has outlined the following overhead cost drivers: Using activity-based costing, applied materials handling factory overhead for the baseball cleat order is:

Accepted Answer

A) $338. 
B) $584. 
C) $192. 
D) $353. 
E) $686. 
A) $338. 
B) $584. 
C) $192. 
D) $353. 
E) $686.

Question 4

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers: Using activity-based costing, applied miscellaneous factory overhead for the 1,000 laser printers order based on direct labor hours is:

Accepted Answer

A) $7,800. 
B) $10,000. 
C) $10,500. 
D) $150. 
E) $21,600. 
A) $7,800. 
B) $10,000. 
C) $10,500. 
D) $150. 
E) $21,600.

Question 5

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. Using activity-based costing, applied engineering and design factory overhead for the Great P model per unit is (rounded to the nearest cent):

Accepted Answer

A) $4.60. 
B) $9.45. 
C) $13.44. 
D) $15.12. 
E) $42.61. 
A) $4.60. 
B) $9.45. 
C) $13.44. 
D) $15.12. 
E) $42.61.

Question 6

Which of the following is not considered a benefit of activity-based costing?

Accepted Answer

A) Decreased production activity levels. 
B) Improved product pricing decisions. 
C) A better understanding of manufacturing overhead. 
D) More accurate unit cost information. 
E) Improved strategic decisions. 
A) Decreased production activity levels. 
B) Improved product pricing decisions. 
C) A better understanding of manufacturing overhead. 
D) More accurate unit cost information. 
E) Improved strategic decisions.

Question 7

A measure of frequency and intensity of demands placed on activities by cost objects is:

Accepted Answer

A) Quantity driver. 
B) Resource consumption cost driver. 
C) Not a cost driver. 
D) Activity consumption cost driver. 
E) Consumption cost driver. 
A) Quantity driver. 
B) Resource consumption cost driver. 
C) Not a cost driver. 
D) Activity consumption cost driver. 
E) Consumption cost driver.

Question 8

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers: Using activity-based costing, applied materials handling factory overhead for the 1,000 laser printers order is:

Accepted Answer

A) $7,800. 
B) $10,000. 
C) $10,500. 
D) $150. 
E) $21,600. 
A) $7,800. 
B) $10,000. 
C) $10,500. 
D) $150. 
E) $21,600.

Question 9

Costs at the unit-level of activity should be allocated to products using cost drivers that are:

Accepted Answer

A) Customer-oriented. 
B) Design-related. 
C) Volume-related. 
D) Product-related. 
E) Order-related. 
A) Customer-oriented. 
B) Design-related. 
C) Volume-related. 
D) Product-related. 
E) Order-related.

Question 10

All of the following are low-value-added activities except:

Accepted Answer

A) Processing. 
B) Reworking. 
C) Moving. 
D) Inspection. 
E) Warranty service. 
A) Processing. 
B) Reworking. 
C) Moving. 
D) Inspection. 
E) Warranty service.

Question 11

The examination of the efficiency of each of a firm's activities is:

Accepted Answer

A) Activity analysis. 
B) Pareto analysis. 
C) Activity-based management. 
D) Performance measurement. 
E) Attribute-based management. 
A) Activity analysis. 
B) Pareto analysis. 
C) Activity-based management. 
D) Performance measurement. 
E) Attribute-based management.

Question 12

Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities:$\begin{array}{lrr} 
& \text { Alpha } & \text { Zeta } \
\text { Units produced } & 250 & 20,000 \
\text { Batch size (units) } & 10 & 500 \
\text { Total direct labor hours } & 1,000 & 39,000 \
\text { Cost per setup } & \$ 2,000 & \$ 2,000
\end{array}$With a volume-based costing system that applies overhead based on direct labor hours, the setup cost portion of overhead for each unit is (rounded to the nearest cent):

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) Option E 
A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) Option E

Question 13

Which of the following would likely be the most appropriate cost driver of electric power used by machines?

Accepted Answer

A) Number of units. 
B) Machine size. 
C) Number of machine hours. 
D) Number of production runs. 
E) Purchase cost of machines. 
A) Number of units. 
B) Machine size. 
C) Number of machine hours. 
D) Number of production runs. 
E) Purchase cost of machines.

Question 14

Multistage ABC is used when:

Accepted Answer

A) There are many departments in the organization. 
B) Management wants a higher level of accuracy from the ABC calculations. 
C) There are complex relationships among the activities. 
D) To simplify the ABC calculations. 
E) There is no such thing as Multistage ABC. 
A) There are many departments in the organization. 
B) Management wants a higher level of accuracy from the ABC calculations. 
C) There are complex relationships among the activities. 
D) To simplify the ABC calculations. 
E) There is no such thing as Multistage ABC.

Question 15

Plant overhead for ABC Corp in $150 million per year, a portion of which (20%) is attributable to inspection costs which are charged to products on the basis the number of parts in the products. The plant produces 500,000 units per year, and on the average, each product has 20 parts.
Required:
What is the average inspection cost in a product? What is the inspection cost for a product with 50 parts?

Accepted Answer

$150 million × 0.2 = $30 milli

Question 16

In performing activity analysis during the design of an activity-based costing system (ABC), the management accountant studies:

Accepted Answer

A) The cost drivers and managers in the plant. 
B) The advice of operation-level managers. 
C) The resources, activities and cost drivers in the operation. 
D) The cost allocation methods applicable to the firm 
E) The implementation problems for an ABC system. 
A) The cost drivers and managers in the plant. 
B) The advice of operation-level managers. 
C) The resources, activities and cost drivers in the operation. 
D) The cost allocation methods applicable to the firm 
E) The implementation problems for an ABC system.

Question 17

Cost Pools and Cost Drivers Based on a recent study of its manufacturing operations Johnston Manufacturing Corporation has identified six resource consumption cost drivers.These cost drivers and their budgeted activity levels for the coming year are:   The firm has budgeted the following costs for the year: $\begin{array}{lr}
\hline\text { Engineering design } & \$ 600,000 \
\text { Depreciation-building } & 50,000 \
\text { Depreciation-machine } & 40,000 \
\text { Electrical power (for factory building) } & 6,000 \
\text { Electrical power (for machining) } & 30,000 \
\text { Insurance } & 20,000 \
\text { Property taxes } & 15,000 \
\text { Machine maintenance-labor } & 11,000\
\text { Machine maintenance-materials } & 9,000 \
\text { Natural gas (for heating) } & 8,000 \
\text { Inspection of finished goods } & 7,000 \
\text { Setup wages } & 20,000 \
\text { Receiving } & 10,000 \
\text { Inspection of direct materials on receiving } & 3,000 \
\text { Purchasing } & 20,000 \
\text { Custodial labor } & 51,000
\end{array}$ With the exception of the factory space cost pool, which uses machine-hours as the activity consumption cost driver, other cost pools have identical resource and activity consumption cost drivers.
Required:
1.Identify the most appropriate activity cost pool for each of the cost items and cost driver for each activity cost pool you identified.
2.Johnston has received a request to quote the price for 4,000 units of a new product.The production will require 100 engineering-hours and 4,250 machine-hours.What is the manufacturing overhead per unit the firm should use in determining the price?

Accepted Answer

1. @#IMG-DLM& Note: However, the problem indicated

Question 18

Which of the following is a batch-level cost driver?

Accepted Answer

A) Output units. 
B) Number of engineering change orders. 
C) Number of materials handling transactions. 
D) Square feet of plant area occupied. 
E) Number of employees. 
A) Output units. 
B) Number of engineering change orders. 
C) Number of materials handling transactions. 
D) Square feet of plant area occupied. 
E) Number of employees.

Question 19

Johnson Associates is a catering firm in Tucson, Arizona, with revenue of $4 million. The business began ten years ago as a one-owner bakery, but has dramatically changed in size and function during the past five years. The four partners foresee the business doubling in sales revenue within two years, and expect the firm to expand into other services including flowers, furnishings, decorations, and music. Johnson Associates employs six full-time and ten part-time employees. The four partners also work full-time, each partner managing a separate business function. The firm currently uses a volume-based costing system installed seven years ago and modified three years later.
Required:
(1) With just the above information, comment on Johnson Associates changing and future costing system needs.
(2) Is Johnson Associates a probable candidate for an activity-based costing system (ABC)? Why or why not?

Accepted Answer

(1) Johnson Associates has experienced r

Question 20

The use of activity-based costing is most appropriate for:

Accepted Answer

A) Firms that manufacture multiple product lines. 
B) Firms that have very low manufacturing overhead costs relative to other costs of production. 
C) Firms with high levels of production activity. 
D) Firms that are labor intensive. 
E) Firms that manufacture a small number of product lines. 
A) Firms that manufacture multiple product lines. 
B) Firms that have very low manufacturing overhead costs relative to other costs of production. 
C) Firms with high levels of production activity. 
D) Firms that are labor intensive. 
E) Firms that manufacture a small number of product lines.

Purchase order, set-up, and inspection costs are examples of:

Which one of the following is not a unit-level cost driver?

Diamond Cleats Co. manufactures cleats for baseball shoes. It has outlined the following overhead cost drivers:Using activity-based costing, applied materials handling factory overhead for the baseball cleat order is:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied miscellaneous factory overhead for the 1,000 laser printers order based on direct labor hours is:

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.Using activity-based costing, applied engineering and design factory overhead for the Great P model per unit is (rounded to the nearest cent):

Which of the following is not considered a benefit of activity-based costing?

A measure of frequency and intensity of demands placed on activities by cost objects is:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied materials handling factory overhead for the 1,000 laser printers order is:

Costs at the unit-level of activity should be allocated to products using cost drivers that are:

All of the following are low-value-added activities except:

The examination of the efficiency of each of a firm's activities is:

Which of the following would likely be the most appropriate cost driver of electric power used by machines?

Multistage ABC is used when:

In performing activity analysis during the design of an activity-based costing system (ABC), the management accountant studies:

Which of the following is a batch-level cost driver?

The use of activity-based costing is most appropriate for:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 5: Activity-Based Costing and Customer Profitability Analysis

Purchase order, set-up, and inspection costs are examples of:

Which one of the following is not a unit-level cost driver?

Diamond Cleats Co. manufactures cleats for baseball shoes. It has outlined the following overhead cost drivers:Using activity-based costing, applied materials handling factory overhead for the baseball cleat order is:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied miscellaneous factory overhead for the 1,000 laser printers order based on direct labor hours is:

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders.Using activity-based costing, applied engineering and design factory overhead for the Great P model per unit is (rounded to the nearest cent):

Which of the following is not considered a benefit of activity-based costing?

A measure of frequency and intensity of demands placed on activities by cost objects is:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:Using activity-based costing, applied materials handling factory overhead for the 1,000 laser printers order is:

Costs at the unit-level of activity should be allocated to products using cost drivers that are:

All of the following are low-value-added activities except:

The examination of the efficiency of each of a firm's activities is:

Which of the following would likely be the most appropriate cost driver of electric power used by machines?

Multistage ABC is used when:

In performing activity analysis during the design of an activity-based costing system (ABC), the management accountant studies:

Which of the following is a batch-level cost driver?

The use of activity-based costing is most appropriate for:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters