Question 1

Which of the following tasks is not normally associated with an activity-based costing system?

Accepted Answer

A) Calculation of pool rates. 
B) Identification of cost pools. 
C) Preparation of allocation matrices. 
D) Identification of cost drivers. 
E) Assignment of cost to products. 
A) Calculation of pool rates. 
B) Identification of cost pools. 
C) Preparation of allocation matrices. 
D) Identification of cost drivers. 
E) Assignment of cost to products.

Question 2

When determining customer profitability,activity-based costing can be used to analyze:

Accepted Answer

A) orders processed. 
B) sales visits. 
C) special packaging and handling. 
D) billing and collections. 
E) All of thesE. 
A) orders processed. 
B) sales visits. 
C) special packaging and handling. 
D) billing and collections. 
E) All of thesE.

Question 3

Assume that HiTech is using a volume-based costing system,and the preceding overhead costs are applied to all products on the basis of direct labor hours.The overhead cost that would be assigned to the Standard product line is closest to:

Accepted Answer

A) $456,471. 
B) $646,471. 
C) $961,176. 
D) $1,141,176. 
E) An amount other than those listed abovE. 
A) $456,471. 
B) $646,471. 
C) $961,176. 
D) $1,141,176. 
E) An amount other than those listed abovE.

Question 4

Generally speaking,companies prefer doing business with customers who order small quantities rather than large quantities.

Accepted Answer

A) True 
 B)False

Question 5

Koski manufactures products J and K,applying overhead on the basis of labor hours.J,a low-volume product,requires a variety of complex manufacturing procedures.K,on the other hand,is both a high-volume product and relatively simplistic in nature.What would an activity-based costing system likely disclose about products J and K as a result of Koski's current accounting procedures?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 6

In an activity-based costing system,direct materials used would typically be classified as a unit-level cost.

Accepted Answer

A) True 
 B)False

Question 7

Consider the following factors:
I.The degree of correlation between consumption of an activity and consumption of a particular cost driver.
II.The likelihood that a particular cost driver will induce a desired behavioral effect.
III.The likelihood that a particular cost driver will cause an increase in the cost of measurement.
Which of these factors should be considered in the selection of a cost driver?

Accepted Answer

A) I only. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I,II,and III. 
A) I only. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I,II,and III.

Question 8

Which of the following statements regarding quality is (are)true for a company that has implemented a JIT system?
I.JIT requires quality production facilities,methods,and employees.
II.JIT requires the acquisition of quality raw materials.
III.JIT requires that long-term contracts be negotiated with quality suppliers.

Accepted Answer

A) II only. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I,II,and III. 
A) II only. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I,II,and III.

Question 9

What is HiTech's pool rate for the packaging activity?

Accepted Answer

A) $4.86 per machine hour. 
B) $5.00 per labor hour. 
C) $10.00 per unit. 
D) $100.00 per order shippeD. 
E) A rate other than those listed abovE. 
A) $4.86 per machine hour. 
B) $5.00 per labor hour. 
C) $10.00 per unit. 
D) $100.00 per order shippeD. 
E) A rate other than those listed abovE.

Question 10

The cost of wages and salaries and other overhead that would be charged to each bouquet made is:

Accepted Answer

A) $7.15. 
B) $8.75. 
C) $12.50. 
D) $13.75. 
E) some other amount. 
A) $7.15. 
B) $8.75. 
C) $12.50. 
D) $13.75. 
E) some other amount.

Question 11

The adoption of a 24-7 customer service help line is an example of a:

Accepted Answer

A) business-value-added activity. 
B) customer-value-added activity. 
C) nonvalue-added activity. 
D) batch-related activity. 
E) product-sustaining activity. 
A) business-value-added activity. 
B) customer-value-added activity. 
C) nonvalue-added activity. 
D) batch-related activity. 
E) product-sustaining activity.

Question 12

Which of the following choices correctly depicts the proper classification of direct materials used and management salaries?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 13

Bravo Manufacturing is a relatively new customer of Haxton Enterprises.In the short period that the two companies have done business with each other,Haxton has found Bravo to be,in management's words,"an expensive proposition." Numerous sales visits are typically required to "close a deal," with selling prices and discounts offered being among the most attractive in the industry.Complicating matters,Bravo is slow to settle its account,orders in small quantities,and often has numerous specialized shipping and handling needs.
A recent customer profitability analysis has painted a very negative picture of Bravo Manufacturing,and Haxton's managers are questioning whether an on-going relationship with the firm is warranted.
Required:
A.Briefly explain why the customer profitability analysis painted a negative picture of Bravo Manufacturing.
A.Profit is a function of two basic factors-revenues and expenses-and Haxton is being squeezed on both elements.Prices are low,discounts are high,and order sizes are small.Furthermore,the costs of working with Bravo are high,courtesy of numerous sales calls being required to produce a sale,a slow-paying customer,and specialized handling and shipping needs.
B.Haxton should attempt to work with Bravo in a cost-cutting drive,explaining that favorable terms can only be extended for a short period of time.Acceleration of amounts due,increases in order size,and reductions in sales visits and specialized handling and shipping needs are possible topics for discussion/improvement.If Haxton is unsuccessful in its efforts,price hikes and/or elimination of discounts may be in order.
B.What actions are available to Haxton Enterprises to improve Bravo profitability?

Accepted Answer

A.Profit is a function of two basic fact

Question 14

When a company adopts a just-in-time inventory system,it would expect:

Accepted Answer

A) higher inventories and fewer units purchased on a given order. 
B) higher inventories and more units purchased on a given order. 
C) lower inventories and fewer units purchased on a given order. 
D) lower inventories and more units purchased on a given order. 
E) lower inventories and less frequent purchases. 
A) higher inventories and fewer units purchased on a given order. 
B) higher inventories and more units purchased on a given order. 
C) lower inventories and fewer units purchased on a given order. 
D) lower inventories and more units purchased on a given order. 
E) lower inventories and less frequent purchases.

Question 15

Under an activity-based costing system,what is the per-unit overhead cost of Deluxe?

Accepted Answer

A) $272. 
B) $282. 
C) $320. 
D) $440. 
E) An amount other than those listed abovE. 
A) $272. 
B) $282. 
C) $320. 
D) $440. 
E) An amount other than those listed abovE.

Question 16

Assume that HiTech is using a volume-based costing system,and the preceding overhead costs are applied to all products on the basis of direct labor hours.The overhead cost that would be assigned to the Deluxe product line is closest to:

Accepted Answer

A) $456,471. 
B) $646,471. 
C) $961,176. 
D) $1,141,176. 
E) An amount other than those listed abovE. 
A) $456,471. 
B) $646,471. 
C) $961,176. 
D) $1,141,176. 
E) An amount other than those listed abovE.

Question 17

Management of Laredo Enterprises recently decided to adopt a just-in-time inventory policy to curb steadily rising costs and free-up cash for purposes of investment.The company anticipates that inventory will decrease by $4,450,000,with the released funds to be invested at a 10% return for the firm.Additional data follow.
1.Reduced inventories should produce savings in insurance and property taxes of $46,000.
2.Reduced raw-material inventory levels and accompanying stockouts will cost Laredo $85,000.
3.Laredo will lease 80% of an existing warehouse to another firm for $2.50 per square foot.The warehouse has 40,000 square feet.
4.Four employees who currently earn $35,000 each will be directly affected by the just-in-time adoption decision.Three employees will be transferred to other positions with Laredo;one will be terminated.
5.A shift in suppliers is expected to result in the purchase and use of more expensive raw materials.However,these materials should give rise to fewer warranty and repair problems after Laredo's finished product is sold,resulting in a net savings for the company of $38,000.
6.Because of the need to handle an increased number of small shipments from suppliers,Laredo will remodel production and receiving-dock facilities at a cost of $750,000.The construction costs will be depreciated over a 10-year life.
Required:
A.
   
*Note: The cost of the three transferred employees is excluded because Laredo will continue to have these individuals on the payroll. 
A.Compute the annual financial impact of Laredo's decision to adopt a just-in-time inventory system.
B.How would the number and size of incoming supplier shipments under a traditional purchasing system compare to the number and size of shipments under a just-in-time system? Explain any differences.
B.Under a traditional purchasing system,goods are purchased in large quantities,and then placed in inventory until useD.In contrast,with JIT,costly inventories are avoided by having the materials arrive "just in time" to be issued to production.Materials are therefore purchased only when needed,which often translates into numerous small acquisitions throughout the perioD.

Accepted Answer

A. @#IMG-DLM& 
*Note:The cost of the three transfe

Question 18

Which of the following statements regarding the pull method is (are)true?
I.Goods are produced in each manufacturing stage only as they are needed at the next stage.
II.The pull method greatly reduces work-in-process inventory.
III.The pull method reduces waiting time and the associated non-value-added cost.

Accepted Answer

A) II only. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I,II,and III. 
A) II only. 
B) I and II. 
C) I and III. 
D) II and III. 
E) I,II,and III.

Question 19

Hudson,Inc. ,is considering a change from a traditional purchasing system to a just-in-time purchasing system.What has probably happened to Hudson's cost per purchase order and inventory unit storage cost to prompt the company to consider such a change?

Accepted Answer

A) Purchase-order cost is increasing and unit storage cost is increasing. 
B) Purchase-order cost is increasing and unit storage cost is decreasing. 
C) Purchase-order cost is decreasing and unit storage cost is increasing. 
D) Purchase-order cost is decreasing and unit storage cost is decreasing. 
E) Both of these costs are relatively stable in amount. 
A) Purchase-order cost is increasing and unit storage cost is increasing. 
B) Purchase-order cost is increasing and unit storage cost is decreasing. 
C) Purchase-order cost is decreasing and unit storage cost is increasing. 
D) Purchase-order cost is decreasing and unit storage cost is decreasing. 
E) Both of these costs are relatively stable in amount.

Question 20

Harvest Corporation recently abandoned its traditional production and inventory system in favor of a just-in-time system.The company typically ordered 700 units of raw material at a time and purchased units that scored a 7 on a 10-point quality scale,with 10 being very close to perfection.All other things being equal,which of the following choices denotes a likely scenario under the just-in-time system?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Which of the following tasks is not normally associated with an activity-based costing system?

When determining customer profitability,activity-based costing can be used to analyze:

Assume that HiTech is using a volume-based costing system,and the preceding overhead costs are applied to all products on the basis of direct labor hours.The overhead cost that would be assigned to the Standard product line is closest to:

Generally speaking,companies prefer doing business with customers who order small quantities rather than large quantities.

In an activity-based costing system,direct materials used would typically be classified as a unit-level cost.

What is HiTech's pool rate for the packaging activity?

The cost of wages and salaries and other overhead that would be charged to each bouquet made is:

The adoption of a 24-7 customer service help line is an example of a:

Which of the following choices correctly depicts the proper classification of direct materials used and management salaries?

When a company adopts a just-in-time inventory system,it would expect:

Under an activity-based costing system,what is the per-unit overhead cost of Deluxe?

Assume that HiTech is using a volume-based costing system,and the preceding overhead costs are applied to all products on the basis of direct labor hours.The overhead cost that would be assigned to the Deluxe product line is closest to:

Hudson,Inc. ,is considering a change from a traditional purchasing system to a just-in-time purchasing system.What has probably happened to Hudson's cost per purchase order and inventory unit storage cost to prompt the company to consider such a change?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 5: Activity-Based Costing and Management

Which of the following tasks is not normally associated with an activity-based costing system?

When determining customer profitability,activity-based costing can be used to analyze:

Assume that HiTech is using a volume-based costing system,and the preceding overhead costs are applied to all products on the basis of direct labor hours.The overhead cost that would be assigned to the Standard product line is closest to:

Generally speaking,companies prefer doing business with customers who order small quantities rather than large quantities.

In an activity-based costing system,direct materials used would typically be classified as a unit-level cost.

What is HiTech's pool rate for the packaging activity?

The cost of wages and salaries and other overhead that would be charged to each bouquet made is:

The adoption of a 24-7 customer service help line is an example of a:

Which of the following choices correctly depicts the proper classification of direct materials used and management salaries?

When a company adopts a just-in-time inventory system,it would expect:

Under an activity-based costing system,what is the per-unit overhead cost of Deluxe?

Assume that HiTech is using a volume-based costing system,and the preceding overhead costs are applied to all products on the basis of direct labor hours.The overhead cost that would be assigned to the Deluxe product line is closest to:

Hudson,Inc. ,is considering a change from a traditional purchasing system to a just-in-time purchasing system.What has probably happened to Hudson's cost per purchase order and inventory unit storage cost to prompt the company to consider such a change?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters