Question 1

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

Accepted Answer

A) Activity cost pools. 
B) Multiple cost drivers. 
C) Reduction of non-value-adding costs. 
D) High direct labor costs relative to manufacturing overhead costs. 
E) Improved decision making and pricing. 
A) Activity cost pools. 
B) Multiple cost drivers. 
C) Reduction of non-value-adding costs. 
D) High direct labor costs relative to manufacturing overhead costs. 
E) Improved decision making and pricing.

Question 2

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 
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

Question 3

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

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Question 4

National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders.  
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows:  
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities:  
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 5

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 6

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 different products. 
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 different products.

Question 7

An adaptation of ABC costing that emphasizes resource consumption cost pools is:

Accepted Answer

A) Activity analysis. 
B) Multistage ABC. 
C) Time-Driven ABC. 
D) Resource Consumption Accounting. 
E) Customer profitability analysis. 
A) Activity analysis. 
B) Multistage ABC. 
C) Time-Driven ABC. 
D) Resource Consumption Accounting. 
E) Customer profitability analysis.

Question 8

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:  
A current product order has the following requirements:  
What is the total manufacturing overhead for the current product order if the firm assigns overhead costs based on machine 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 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. 
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.

Question 10

National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders.  
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows:  
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities:  
Using activity-based costing,applied quality control 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 11

Sheen Co.manufacturers laser printers.It has outlined the following overhead cost drivers:  
Sheen Co.has an order for 1,000 laser printers that has the following production requirements:  
Using activity-based costing,applied quality control factory overhead for the 1000 laser printer 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 12

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 13

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:  
In addition,Shaver expects to spend $514,368 for 8,037 direct labor-hours.Two current product orders had the following requirements:  
Using ABC,how much product-level overhead is assigned to the current order for Women'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 14

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:

Accepted Answer

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A recent order for sailboats used: @#IMG-DLM& 
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Question 15

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:  
A current product order has the following requirements:  
Using ABC,how much material handling overhead is assigned to the order?

Accepted Answer

A) $19,200. 
B) $8,000. 
C) $11,108. 
D) $9,960. 
E) $7,272. 
A) $19,200. 
B) $8,000. 
C) $11,108. 
D) $9,960. 
E) $7,272.

Question 16

National Inc.manufactures two models of CMD that can be used as cell phones,MPX,and digital camcorders.  
National uses a volume-based costing system to apply factory overhead based on direct labor dollars.The unit prime costs of each product were as follows:  
National's controller had been researching activity-based costing and decided to switch to it.A special study determined National's two products have the following budgeted activities:  
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 17

Diamond Cleats Co.manufactures cleats for baseball shoes.It has outlined the following overhead cost drivers:  
Diamond Cleats Co.has an order for cleats that has the following production requirements:  
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 18

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. 
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.

Question 19

The examination of the efficiency and value 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 20

Engineering change orders,equipment maintenance,and product development 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.

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

The Time Equation is used in ABC to:

Processing sales returns and allowances is usually classified as a:

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

An adaptation of ABC costing that emphasizes resource consumption cost pools is:

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

Sheen Co.manufacturers laser printers.It has outlined the following overhead cost drivers: Sheen Co.has an order for 1,000 laser printers that has the following production requirements: Using activity-based costing,applied quality control factory overhead for the 1000 laser printer order is:

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

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:

Service and not-for-profit organizations often:

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

Engineering change orders,equipment maintenance,and product development costs are examples of:

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

Profit Planning: Cost-Volume-Profit 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 and 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

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 5: Activity-Based Costing and Customer Profitability Analysis

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

The Time Equation is used in ABC to:

Processing sales returns and allowances is usually classified as a:

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

An adaptation of ABC costing that emphasizes resource consumption cost pools is:

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

Sheen Co.manufacturers laser printers.It has outlined the following overhead cost drivers: Sheen Co.has an order for 1,000 laser printers that has the following production requirements: Using activity-based costing,applied quality control factory overhead for the 1000 laser printer order is:

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

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:

Service and not-for-profit organizations often:

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

Engineering change orders,equipment maintenance,and product development costs are examples of:

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

Profit Planning: Cost-Volume-Profit 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 and 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

Management Compensation, Business Analysis, and Business Valuation

Filters