Question 1

Service and not-for-profit organizations often:

Accepted Answer

A) Have ABC systems which are similar to those of manufacturing firms. 
B) Do not have changeable outputs. 
C) Are unable to benefit from ABC costing. 
D) Do not have ABC systems which are similar to those of manufacturing firms. 
E) None of the above answers is correct. 
A) Have ABC systems which are similar to those of manufacturing firms. 
B) Do not have changeable outputs. 
C) Are unable to benefit from ABC costing. 
D) Do not have ABC systems which are similar to those of manufacturing firms. 
E) None of the above answers is correct.

Question 2

A firm has many products, some produced in an automated production process and some produced in a manual production process.Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

Accepted Answer

A) Overstate overhead of the product. 
B) Understate overhead of the product. 
C) Overapply overhead to the period. 
D) Underapply overhead to the period. 
E) Have no effect on overhead of the product. 
A) Overstate overhead of the product. 
B) Understate overhead of the product. 
C) Overapply overhead to the period. 
D) Underapply overhead to the period. 
E) Have no effect on overhead of the product.

Question 3

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

Accepted Answer

A) $8,745. 
B) $10,312. 
C) $10,489. 
D) $9,912. 
E) $8,456. 
A) $8,745. 
B) $10,312. 
C) $10,489. 
D) $9,912. 
E) $8,456.

Question 4

Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system: Using ABC, how much product-level overhead is assigned to the current order for Men's Razors?

Accepted Answer

A) $218.00. 
B) $250.70. 
C) $331.20. 
D) $284.00. 
E) $288.00. 
A) $218.00. 
B) $250.70. 
C) $331.20. 
D) $284.00. 
E) $288.00.

Question 5

In an organization that makes furniture, which of the following is a high value-added activity?

Accepted Answer

A) Using direct materials in production. 
B) Inspecting production. 
C) Storing finished goods inventory. 
D) Moving work-in-process inventory between work stations. 
E) Reworking the product to repair defects. 
A) Using direct materials in production. 
B) Inspecting production. 
C) Storing finished goods inventory. 
D) Moving work-in-process inventory between work stations. 
E) Reworking the product to repair defects.

Question 6

A company using a volume-based overhead assignment (allocation) method will tend to:

Accepted Answer

A) Overstate the cost of low volume products. 
B) Understate the cost of low volume products. 
C) Understate the cost of high volume products. 
D) Understate the cost of all products. 
E) Either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved. 
A) Overstate the cost of low volume products. 
B) Understate the cost of low volume products. 
C) Understate the cost of high volume products. 
D) Understate the cost of all products. 
E) Either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved.

Question 7

Altima Company uses an overhead costing system based on direct labor hours for its two products X and Y.The company is considering adopting an activity-based costing system, and collects the following information for the month of October.   Required:
(1) Compute the unit manufacturing cost of each product under a volume-based costing system based on direct labor hours.
(2) Compute the unit manufacturing cost of each product under the activity-based costing system.

Accepted Answer

@#IMG-DLM& 2. @#IMG-DLM& Note that the direct labo

Question 8

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 High F model per unit is (rounded to the nearest cent):

Accepted Answer

A) $6.13. 
B) $11.86. 
C) $16.28. 
D) $32.46. 
E) $66.73. 
A) $6.13. 
B) $11.86. 
C) $16.28. 
D) $32.46. 
E) $66.73.

Question 9

Which one of the following is not a recommendation for a successful implementation of ABC/M?

Accepted Answer

A) Obtain support of management and personnel. 
B) Complete an activity analysis. 
C) Start with a relatively simple system. 
D) Use ABC/M on a job that will succeed. 
E) All of the above are features of successful ABC/M implementations. 
A) Obtain support of management and personnel. 
B) Complete an activity analysis. 
C) Start with a relatively simple system. 
D) Use ABC/M on a job that will succeed. 
E) All of the above are features of successful ABC/M implementations.

Question 10

The general sales manager's salary 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 11

Certo Health Products was formed two years ago to produce and distribute a newly-patented protein supplement. Two variations of the original supplement have since been developed and introduced for general sale. The three products are processed in essentially the same way, but Ann Marshall, the owner of Certo, anticipates that a half-dozen new products will be developed for sale in the next two years. These products will not be variations of the patented supplement, and will require a different production process other than the one currently used. Ann has asked you to review the current use of a single volume-based rate and explain the arguments for using departmental rates with activity-based drivers.

Accepted Answer

A single volume-based rate is appropriat

Question 12

Invoicing cost 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 13

The Time Equation is used in ABC to:

Accepted Answer

A) Track the implementation of the ABC system. 
B) Assess the amount of time required for each activity, in determining the application rate. 
C) Incorporate complexities in the application of ABC. 
D) Plan for the implementation of an ABC system. 
E) None of the above. 
A) Track the implementation of the ABC system. 
B) Assess the amount of time required for each activity, in determining the application rate. 
C) Incorporate complexities in the application of ABC. 
D) Plan for the implementation of an ABC system. 
E) None of the above.

Question 14

Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below is cost driver information used in the product-costing system: Using ABC, how much other overhead is assigned to the order?

Accepted Answer

A) $8,000. 
B) $9,960. 
C) $11,108. 
D) $19,200. 
E) $45,992. 
A) $8,000. 
B) $9,960. 
C) $11,108. 
D) $19,200. 
E) $45,992.

Question 15

Which of the following has the weakest linkage between activity and cost driver?

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 16

Blackwelder Co.manufactures a variety of electric razors used by both men and women.The company's plant is partially automated.The company uses an activity-based cost system.Listed below is cost driver information used in the product-costing system:   Two current product orders had the following requirements:   Required:
1.Using ABC costing, how much overhead is assigned to the order for men's razors?
2.Using ABC costing, how much overhead is assigned to the order for women's razors?

Accepted Answer

1.$12,082.

Question 17

Sheen Co. manufacturers laser printers. It has outlined the following overhead cost drivers: Using activity-based costing, applied machine repetition 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 18

Everlast Co. manufactures a variety of drill bits. The company's plant is partially automated. The budget for the year includes $432,000 payroll for 4,800 direct labor-hours. Listed below is cost driver information used in the product-costing system: What is the total manufacturing overhead for the current product order if the firm uses a plantwide rate based on direct labor-hours?

Accepted Answer

A) $9,960. 
B) $30,240. 
C) $43,741. 
D) $44,268. 
E) $109,352. 
A) $9,960. 
B) $30,240. 
C) $43,741. 
D) $44,268. 
E) $109,352.

Question 19

Customer Profitability Analysis Spring Company collected the following data pertaining to its activities with selected customers.
   Spring Company mails monthly statements on or before the first day of each month.HS pays all of its account payables within the payment discount periods.Adventix does not take the early payment discounts.In fact, the company pays half of its accounts on the date that these accounts are due and pays the remainder at the end of the following month.Baldwin also does not take advantage of discounts for early payments.However, it pays its accounts on the specified due date.Cost of goods sold is sixty percent of gross sales price.Joan Lieberman, the controller of Spring Company, has estimated that the cost of working capital is approximately 2 percent per month.
Lieberman also gathered the following cost data: $\begin{array}{ll}
\hline \text { Activity } & \text { Cost Driver and Rate } \
\text { Order taking } & \$ 50 \text { per order } \
\text { Order processing } & \$ 75 \text { per order } \
\text { Delivery } & \$ 300 \text { per delivery } \
\text { Expedited orders } & \$ 500 \text { per order } \
\text { Restocking } & \$ 10 \text { per unit plus } \$ 200 \text { per return } \
\text { Sales visits } & \$ 800 \text { per visit } \
\hline
\end{array}$ Required:
Prepare and interpret a customer profitability analysis for Spring Company.How does it help Spring Company become more competitive and profitable?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& There are many possible ways to inter

Question 20

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 machine setup 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.

Service and not-for-profit organizations often:

A firm has many products, some produced in an automated production process and some produced in a manual production process.Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

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

Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system:Using ABC, how much product-level overhead is assigned to the current order for Men's Razors?

In an organization that makes furniture, which of the following is a high value-added activity?

A company using a volume-based overhead assignment (allocation) method will tend to:

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 High F model per unit is (rounded to the nearest cent):

Which one of the following is not a recommendation for a successful implementation of ABC/M?

The general sales manager's salary is an example of a:

Invoicing cost is an example of a:

The Time Equation is used in ABC to:

Which of the following has the weakest linkage between activity and cost driver?

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

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 machine setup is:

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

Service and not-for-profit organizations often:

A firm has many products, some produced in an automated production process and some produced in a manual production process.Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

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

Shaver Co. manufactures a variety of electric razors for men and women. The company's plant is partially automated. Listed below is cost driver information used in the product-costing system:Using ABC, how much product-level overhead is assigned to the current order for Men's Razors?

In an organization that makes furniture, which of the following is a high value-added activity?

A company using a volume-based overhead assignment (allocation) method will tend to:

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 High F model per unit is (rounded to the nearest cent):

Which one of the following is not a recommendation for a successful implementation of ABC/M?

The general sales manager's salary is an example of a:

Invoicing cost is an example of a:

The Time Equation is used in ABC to:

Which of the following has the weakest linkage between activity and cost driver?

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

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 machine setup is:

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