Question 1

Successful activity-based costing (ABC) implementation depends upon the firm:

Accepted Answer

A) Having support of consultants with needed expertise. 
B) Having a thorough activity analysis. 
C) Starting with a relatively simple system. 
D) Having well-trained managers. 
E) Having adequate computer resources. 
A) Having support of consultants with needed expertise. 
B) Having a thorough activity analysis. 
C) Starting with a relatively simple system. 
D) Having well-trained managers. 
E) Having adequate computer resources.

Question 2

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead: Using ABC, the materials handling overhead cost assigned to Job #971 is:

Accepted Answer

A) $2,300. 
B) $990. 
C) $6,500. 
D) $690. 
E) $1,020. 
A) $2,300. 
B) $990. 
C) $6,500. 
D) $690. 
E) $1,020.

Question 3

In the context of ABC, cross-subsidization refers to:

Accepted Answer

A) Production departments subsidizing each other. 
B) Costing inaccuracies which affect the relative profitability of products. 
C) Cross-selling products lines, which affect customer profitability. 
D) Efforts to increased coordination among department heads. 
E) None of the above. 
A) Production departments subsidizing each other. 
B) Costing inaccuracies which affect the relative profitability of products. 
C) Cross-selling products lines, which affect customer profitability. 
D) Efforts to increased coordination among department heads. 
E) None of the above.

Question 4

Freight charges based on number of units shipped to customers is a:

Accepted Answer

A) Customer unit-level cost. 
B) Customer batch-level cost. 
C) Customer-sustaining cost. 
D) Distribution-channel cost. 
E) Sales-level cost. 
A) Customer unit-level cost. 
B) Customer batch-level cost. 
C) Customer-sustaining cost. 
D) Distribution-channel cost. 
E) Sales-level cost.

Question 5

The controller for Ocean Sailboats Inc., a company which uses an automated process to make sailboats, established the following overhead cost pools and cost drivers:   A recent order for sailboats used: Machine setups $\quad 50$ setups
Quality inspections $\quad 305$ inspections
Machine hours $\quad 2,024$ machine hours Required:
1.What is the overhead rate per machine hour if the number of machine hours is used as a single cost driver under traditional costing system?
2.Utilizing traditional costing, how much overhead is assigned to the order based on machine hours as a single cost driver?
3.Utilizing ABC, how much total overhead is assigned to the order?

Accepted Answer

1. @#IMG-DLM& @#IMG-DLM& 2.2,024 machine

Question 6

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers: What is the total overhead cost per unit of the laser printers order using activity-based costing (rounded to the nearest cent)?

Accepted Answer

A) $39.55. 
B) $40.05. 
C) $42.25. 
D) $50.65. 
E) $58.30. 
A) $39.55. 
B) $40.05. 
C) $42.25. 
D) $50.65. 
E) $58.30.

Question 7

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead: Using ABC, overhead cost assigned to Job #971 for inspections is:

Accepted Answer

A) $2,300. 
B) $990. 
C) $6,500. 
D) $690. 
E) $1,020. 
A) $2,300. 
B) $990. 
C) $6,500. 
D) $690. 
E) $1,020.

Question 8

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: If the activity-based cost drivers are used to allocate overhead cost, the total overhead cost of Product X will be:

Accepted Answer

A) $1,500. 
B) $1,560. 
C) $2,000. 
D) $2,400. 
E) $2,560. 
A) $1,500. 
B) $1,560. 
C) $2,000. 
D) $2,400. 
E) $2,560.

Question 9

Effective implementation of activity-based costing (ABC) requires:

Accepted Answer

A) Normally the assistance of a consultant. 
B) A sophisticated and expensive computer system. 
C) Support of top management and key employees. 
D) Capturing properly the complexity of the data. 
E) ABC has no significant implementation issues. 
A) Normally the assistance of a consultant. 
B) A sophisticated and expensive computer system. 
C) Support of top management and key employees. 
D) Capturing properly the complexity of the data. 
E) ABC has no significant implementation issues.

Question 10

Which of the following would likely be the most appropriate cost driver to allocate machine set-up costs to products?

Accepted Answer

A) Machine hours. 
B) Direct labor hours. 
C) Number of production runs. 
D) Number of products. 
E) Number of purchase orders. 
A) Machine hours. 
B) Direct labor hours. 
C) Number of production runs. 
D) Number of products. 
E) Number of purchase orders.

Question 11

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

Accepted Answer

A) $0. 
B) $920. 
C) $4,120. 
D) $6,300. 
E) $6,420. 
A) $0. 
B) $920. 
C) $4,120. 
D) $6,300. 
E) $6,420.

Question 12

Customer profitability analysis:

Accepted Answer

A) Always shows that the company with the highest total sales generates the highest net customer profit. 
B) Always shows that the company with the lowest total sales generates the lowest net customer profit. 
C) Produces the same results as a Pareto analysis. 
D) Helps identify actions that affect customer profitability. 
E) None of the above answers is correct. 
A) Always shows that the company with the highest total sales generates the highest net customer profit. 
B) Always shows that the company with the lowest total sales generates the lowest net customer profit. 
C) Produces the same results as a Pareto analysis. 
D) Helps identify actions that affect customer profitability. 
E) None of the above answers is correct.

Question 13

asternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities: $\begin{array}{lrr} 
& \text { Alpha } & \text { Zeta } \
\text { Units produced } & 250 & 20,000 \
\text { Batch size (units) } & 10 & 500 \
\text { Total direct labor hours } & 1,000 & 39,000 \
\text { Cost per setup } & \$ 2,000 & \$ 2,000
\end{array}$Assume the cost per setup remains at $2,000 but that the batch size for product Alpha is changed from 10 to 25 units per batch.Using activity-based and a volume-based overhead costing that uses direct labor-hours to assign overhead, the amount of setup cost applied to each unit of product Alpha would be (rounded to the nearest cent):

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) None of the above answers is correct 
A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) None of the above answers is correct

Question 14

Two students in a cost accounting class were arguing about the need to gather good unit cost information for manufacturing. One student, Travis, maintained that a firm producing and selling large quantities of relatively few products would have no need for an ABC system, since an ABC system is usually more expensive to implement than a volume-based system. Alicia countered that even firms with high-volume homogeneous products could benefit from a cost management technique like activity-based costing (ABC).
Required:
Choose sides in this discussion and present justifications for your choice.

Accepted Answer

ABC is most useful in firms making a wid

Question 15

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs: What is Nerrod's total customer batch-level cost applicable to Ninto?

Accepted Answer

A) $800. 
B) $920. 
C) $2,300. 
D) $2,420. 
E) $6,300. 
A) $800. 
B) $920. 
C) $2,300. 
D) $2,420. 
E) $6,300.

Question 16

General corporate sales expenditures are:

Accepted Answer

A) Customer unit-level costs. 
B) Customer batch-level costs. 
C) Customer-sustaining costs. 
D) Distribution-channel costs. 
E) Sales-sustaining costs. 
A) Customer unit-level costs. 
B) Customer batch-level costs. 
C) Customer-sustaining costs. 
D) Distribution-channel costs. 
E) Sales-sustaining costs.

Question 17

Cost to process monthly statements is an example of a:

Accepted Answer

A) Customer unit-level cost. 
B) Customer batch-level cost. 
C) Customer-sustaining cost. 
D) Distribution-channel cost. 
E) Sales-level cost. 
A) Customer unit-level cost. 
B) Customer batch-level cost. 
C) Customer-sustaining cost. 
D) Distribution-channel cost. 
E) Sales-level cost.

Question 18

Using a volume-based overhead rate based on machine hours to assign manufacturing overhead to a product line that uses relatively few machine hours is likely to:

Accepted Answer

A) Overapply overhead to the product line. 
B) Underapply overhead to the product line. 
C) Understate direct labor costs. 
D) Overstate direct labor costs. 
E) Either over- or under-apply overhead to the product line depending on many other factors. 
A) Overapply overhead to the product line. 
B) Underapply overhead to the product line. 
C) Understate direct labor costs. 
D) Overstate direct labor costs. 
E) Either over- or under-apply overhead to the product line depending on many other factors.

Question 19

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

Accepted Answer

A) $6.13. 
B) $11.86. 
C) $16.28. 
D) $32.36. 
E) $66.73. 
A) $6.13. 
B) $11.86. 
C) $16.28. 
D) $32.36. 
E) $66.73.

Question 20

Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year.The company currently uses direct labor-hours to assign overhead cost to products.The pre-determined overhead rate is: $\frac{\text { Manufacturing overhead cost}}{\text {Direct labor hours }}=\$ 20 / \mathrm{DLH}$   Suppose, however, that factory overhead costs are actually caused by the five activities listed below:   Also suppose the following transaction data has been collected:   Required:
Using the activity-based costing method to calculate unit costs of Deluxe and Regular products, and compare them with the current direct labor hours-based costing system.

Accepted Answer

Overhead rates for each of the five acti

Successful activity-based costing (ABC) implementation depends upon the firm:

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:Using ABC, the materials handling overhead cost assigned to Job #971 is:

In the context of ABC, cross-subsidization refers to:

Freight charges based on number of units shipped to customers is a:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:What is the total overhead cost per unit of the laser printers order using activity-based costing (rounded to the nearest cent)?

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:Using ABC, overhead cost assigned to Job #971 for inspections is:

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:If the activity-based cost drivers are used to allocate overhead cost, the total overhead cost of Product X will be:

Effective implementation of activity-based costing (ABC) requires:

Which of the following would likely be the most appropriate cost driver to allocate machine set-up costs to products?

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

Customer profitability analysis:

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:What is Nerrod's total customer batch-level cost applicable to Ninto?

General corporate sales expenditures are:

Cost to process monthly statements is an example of a:

Using a volume-based overhead rate based on machine hours to assign manufacturing overhead to a product line that uses relatively few machine hours is likely to:

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

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

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Exam 5: Activity-Based Costing and Customer Profitability Analysis

Successful activity-based costing (ABC) implementation depends upon the firm:

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:Using ABC, the materials handling overhead cost assigned to Job #971 is:

In the context of ABC, cross-subsidization refers to:

Freight charges based on number of units shipped to customers is a:

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers:What is the total overhead cost per unit of the laser printers order using activity-based costing (rounded to the nearest cent)?

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:Using ABC, overhead cost assigned to Job #971 for inspections is:

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:If the activity-based cost drivers are used to allocate overhead cost, the total overhead cost of Product X will be:

Effective implementation of activity-based costing (ABC) requires:

Which of the following would likely be the most appropriate cost driver to allocate machine set-up costs to products?

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

Customer profitability analysis:

Nerrod Company sells its products at $500 per unit, net 30. The firm's gross margin ratio is 40 percent. The firm has estimated the following operating costs:What is Nerrod's total customer batch-level cost applicable to Ninto?

General corporate sales expenditures are:

Cost to process monthly statements is an example of a:

Using a volume-based overhead rate based on machine hours to assign manufacturing overhead to a product line that uses relatively few machine hours is likely to:

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

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