Question 1

An activity that is performed for each unit of production is a(n):

Accepted Answer

A) Product-level activity. 
B) Facility-level activity. 
C) Unit-level activity. 
D) Performance-level activity. 
E) Batch-level activity. 
A) Product-level activity. 
B) Facility-level activity. 
C) Unit-level activity. 
D) Performance-level activity. 
E) Batch-level activity.

Question 2

Which of the following is a description of categorizing related customer costs into cost pools on the basis of cost drivers?

Accepted Answer

A) Customer revenue analysis. 
B) Customer cost analysis. 
C) Customer profitability analysis. 
D) Customer value assessment. 
E) Customer equity analysis. 
A) Customer revenue analysis. 
B) Customer cost analysis. 
C) Customer profitability analysis. 
D) Customer value assessment. 
E) Customer equity analysis.

Question 3

Castenet Company uses a volume-based costing system that applies overhead cost based on direct labor hours at $250 per direct labor hour.
The company is considering adopting an activity-based costing system with the following data:   The two jobs processed in the month of June had the following characteristics: $\begin{array}{lrr}&\text { Job A }&\text { Job B}\
\text { Direct materials costs } & \$ 10,000 & \$ 50,000 \
\text { Direct labor costs } & \$ 1,000 & \$ 10,000 \
\text { Number of direct labor hours } & 40 & 400 \
\text { Number of parts } & 500 & 2,000 \
\text { Number of turns } & 25,000 & 50,000 \
\text { Number of machine hours } & 140 & 1,000 \
\text { Number of units in each job (all tested) } & 15 & 200
\end{array}$ Required:
1.Compute the unit manufacturing cost of each job under the firm's current volume-based costing system.
2.Compute the unit manufacturing cost of each job under the activity-based costing system.
3.Compare the unit manufacturing cost for Jobs A and B computed in requirements 1 and 2.
(a) Why do the two cost systems differ in their total cost for each job?
(b) Why might these differences be important to the Company?

Accepted Answer

1.Per unit manufacturing costs under the

Question 4

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

Accepted Answer

A) $42.61. 
B) $45.99. 
C) $61.32. 
D) $66.73. 
E) $168.00. 
A) $42.61. 
B) $45.99. 
C) $61.32. 
D) $66.73. 
E) $168.00.

Question 5

Overhead costs are allocated to cost objects in an activity-based costing system in the following manner:

Accepted Answer

A) Overhead costs are traced to departments, then costs are traced to products. 
B) Overhead costs are traced to activities, then costs are traced to products. 
C) Overhead costs are traced to activities, then costs are traced to departments and then allocated to products. 
D) Overhead costs are traced from resources to cost objects. 
E) None of the above. 
A) Overhead costs are traced to departments, then costs are traced to products. 
B) Overhead costs are traced to activities, then costs are traced to products. 
C) Overhead costs are traced to activities, then costs are traced to departments and then allocated to products. 
D) Overhead costs are traced from resources to cost objects. 
E) None of the above.

Question 6

Important concepts in resource consumption accounting include all of the following except:

Accepted Answer

A) Variable costing. 
B) Resource interrelationships. 
C) Activity interrelationships. 
D) Detail level cost information. 
E) Treatment of idle capacity. 
A) Variable costing. 
B) Resource interrelationships. 
C) Activity interrelationships. 
D) Detail level cost information. 
E) Treatment of idle capacity.

Question 7

Which of the following cost pools are used to classify costs under activity-based costing?

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 8

The major limitation of volume-based costing systems is the use of volume-based:

Accepted Answer

A) Criteria. 
B) Standards. 
C) Rates. 
D) Variances. 
E) Restrictions. 
A) Criteria. 
B) Standards. 
C) Rates. 
D) Variances. 
E) Restrictions.

Question 9

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. Using activity-based costing, applied quality control 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 10

An activity that is performed to support the production of a new custom-order product is a(n):

Accepted Answer

A) Product-level activity. 
B) Facility-level activity. 
C) Unit-level activity. 
D) Customer-support activity. 
E) Batch-level activity. 
A) Product-level activity. 
B) Facility-level activity. 
C) Unit-level activity. 
D) Customer-support activity. 
E) Batch-level activity.

Question 11

The management of activities to improve the value received by the customer and the competitiveness of the organization is:

Accepted Answer

A) Cost driver analysis. 
B) Customer profitability analysis. 
C) Activity-based management. 
D) Performance measurement. 
E) Activity analysis. 
A) Cost driver analysis. 
B) Customer profitability analysis. 
C) Activity-based management. 
D) Performance measurement. 
E) Activity analysis.

Question 12

National Inc. manufactures two models of CMD that can be used as cell phones, MPX, and digital camcorders. 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 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 13

Processing sales returns and allowances is usually classified as 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 14

Customer Profitability Analysis Boston Depot sells office supplies to area corporations and organizations.Tom Delayne, founder and CEO, has been disappointed with the operating results and the profit margin for the last two years.Business forms are mostly a "commodity" business with low profit margins.To increase profit margins and gain competitive advantages, Delayne introduced "Desk-Top Delivery" service.The business seems to be as busy as ever.Yet, the operating income has been declining.To help identify the root cause of declining profits, he decided to analyze the profitability of two of the firm's major customers: Omega International (OI) and City of Albion (CA).
According to the customer profitability analysis that Boston Depot conducts regularly, Boston Depot has the same amount of total sales with both OI and CA.However, the firm earns a higher gross margin and gross margin ratio from CA than those from the sales to OI, as demonstrated here:
   Boston Depot adds a flat 17.5 percent to all sales for expenses incurred in such activities as handling customers' requests, pick-packing, order delivery, warehousing, and data entry.However, not all customers require the same level of services.Operation Manager, Jamie Steel, points out that CA has been a much heavier service user than OI.She shows the following data to support her belief:   Controller Rod Jay has been investigating ways to determine the costs of performing various activities.He summarized his findings:   Steel points out that activities cost money.Two customers who request different service activities most likely are not costing the firm the same.
Required:
1.Using activity-based costing, compute the charges per unit of service activities.
2.Using activity-based costing, compute the total distribution costs for each of the customers.
3.Is the City of Albion a more profitable customer?
4.Is Omega International a better customer for Boston Depot?

Accepted Answer

1.Service cost rate per unit of activity

Question 15

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 facility-level overhead is assigned to the current order for Men's Razors?

Accepted Answer

A) $403.00. 
B) $310.00. 
C) $708.50. 
D) $545.00. 
E) $936.00. 
A) $403.00. 
B) $310.00. 
C) $708.50. 
D) $545.00. 
E) $936.00.

Question 16

Activity-based costing (ABC) differs from other costing approaches in that it more accurately measures the cost of activities:

Accepted Answer

A) Not proportional to the volume of outputs produced. 
B) Directly proportional to the volume of outputs produced. 
C) Inversely proportional to the volume of outputs produced. 
D) That are non-value adding. 
E) At a significantly lower cost in time and money. 
A) Not proportional to the volume of outputs produced. 
B) Directly proportional to the volume of outputs produced. 
C) Inversely proportional to the volume of outputs produced. 
D) That are non-value adding. 
E) At a significantly lower cost in time and money.

Question 17

Which of the following is most likely to be the cost driver for the packaging and shipping activity?

Accepted Answer

A) Number of setups. 
B) Number of components. 
C) Number of orders. 
D) Hours of testing. 
E) Number of production runs. 
A) Number of setups. 
B) Number of components. 
C) Number of orders. 
D) Hours of testing. 
E) Number of production runs.

Question 18

Wang Company has established the following overhead cost pools and cost drivers for the month of May: What is the activity-based overhead rate per purchase order?

Accepted Answer

A) $615. 
B) $600. 
C) $575. 
D) $550. 
E) $500. 
A) $615. 
B) $600. 
C) $575. 
D) $550. 
E) $500.

Question 19

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year: If a volume-based costing system based on direct labor hours to assign overhead is used, the total overhead cost for 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 20

Which of the following activities is a facility-level activity?

Accepted Answer

A) Materials handling. 
B) Plant maintenance. 
C) Product inspection. 
D) Design engineering. 
E) Purchase orders. 
A) Materials handling. 
B) Plant maintenance. 
C) Product inspection. 
D) Design engineering. 
E) Purchase orders.

An activity that is performed for each unit of production is a(n):

Which of the following is a description of categorizing related customer costs into cost pools on the basis of cost drivers?

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

Overhead costs are allocated to cost objects in an activity-based costing system in the following manner:

Important concepts in resource consumption accounting include all of the following except:

Which of the following cost pools are used to classify costs under activity-based costing?

The major limitation of volume-based costing systems is the use of volume-based:

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

An activity that is performed to support the production of a new custom-order product is a(n):

The management of activities to improve the value received by the customer and the competitiveness of the organization is:

Processing sales returns and allowances is usually classified as a:

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 facility-level overhead is assigned to the current order for Men's Razors?

Activity-based costing (ABC) differs from other costing approaches in that it more accurately measures the cost of activities:

Which of the following is most likely to be the cost driver for the packaging and shipping activity?

Wang Company has established the following overhead cost pools and cost drivers for the month of May:What is the activity-based overhead rate per purchase order?

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:If a volume-based costing system based on direct labor hours to assign overhead is used, the total overhead cost for Product X will be:

Which of the following activities is a facility-level activity?

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

An activity that is performed for each unit of production is a(n):

Which of the following is a description of categorizing related customer costs into cost pools on the basis of cost drivers?

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

Overhead costs are allocated to cost objects in an activity-based costing system in the following manner:

Important concepts in resource consumption accounting include all of the following except:

Which of the following cost pools are used to classify costs under activity-based costing?

The major limitation of volume-based costing systems is the use of volume-based:

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

An activity that is performed to support the production of a new custom-order product is a(n):

The management of activities to improve the value received by the customer and the competitiveness of the organization is:

Processing sales returns and allowances is usually classified as a:

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 facility-level overhead is assigned to the current order for Men's Razors?

Activity-based costing (ABC) differs from other costing approaches in that it more accurately measures the cost of activities:

Which of the following is most likely to be the cost driver for the packaging and shipping activity?

Wang Company has established the following overhead cost pools and cost drivers for the month of May:What is the activity-based overhead rate per purchase order?

Orange, Inc. has identified the following cost drivers for its expected overhead costs for the year:If a volume-based costing system based on direct labor hours to assign overhead is used, the total overhead cost for Product X will be:

Which of the following activities is a facility-level activity?

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