Question 1

In performing activity analysis during the design of an activity-based costing system (ABC),the management accountant studies:

Accepted Answer

A) The cost drivers and managers in the plant. 
B) The advice of operation-level mangers. 
C) The resources,activities and cost drivers in the operation. 
D) The cost allocation methods applicable to the firm. 
E) The implementation problems for an ABC system. 
A) The cost drivers and managers in the plant. 
B) The advice of operation-level mangers. 
C) The resources,activities and cost drivers in the operation. 
D) The cost allocation methods applicable to the firm. 
E) The implementation problems for an ABC system.

Question 2

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 3

In an activity-based costing system,overhead costs are divided into separate:

Accepted Answer

A) Cost objects. 
B) Activity cost pools. 
C) Resource consumption and activity consumption cost pools. 
D) Product-line cost pools. 
E) Plantwide or departmental cost pools. 
A) Cost objects. 
B) Activity cost pools. 
C) Resource consumption and activity consumption cost pools. 
D) Product-line cost pools. 
E) Plantwide or departmental cost pools.

Question 4

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:  
Nerrod Company has gathered the following data pertaining to activities it performed for two of its customers:  
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 5

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 6

Which of the following activity cost pools would most likely be allocated based on the number of production runs?

Accepted Answer

A) Machinery set-up costs. 
B) Raw materials warehousing costs. 
C) Factory heating costs. 
D) Factory janitorial costs. 
E) Indirect labor costs. 
A) Machinery set-up costs. 
B) Raw materials warehousing costs. 
C) Factory heating costs. 
D) Factory janitorial costs. 
E) Indirect labor costs.

Question 7

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 quality control factory overhead for the baseball cleat order is:

Accepted Answer

A) $28,450. 
B) $30,220. 
C) $24,375. 
D) $21,150. 
E) $19,600. 
A) $28,450. 
B) $30,220. 
C) $24,375. 
D) $21,150. 
E) $19,600.

Question 8

Cost Pools and Cost Drivers Based on a recent study of its manufacturing operations Johnston Manufacturing Corporation has identified six resource consumption cost drivers.These cost drivers and their budgeted activity levels for the coming year are:

Accepted Answer

@#IMG-DLM& 
The firm has budgeted the following co

Question 9

Costs at the unit-level of activity should be allocated to products using cost drivers that are:

Accepted Answer

A) Customer-oriented. 
B) Design-related. 
C) Volume-related. 
D) Product-related. 
E) Order-related. 
A) Customer-oriented. 
B) Design-related. 
C) Volume-related. 
D) Product-related. 
E) Order-related.

Question 10

Zeta Company is preparing its annual profit plan.As part of its analysis of the profitability of individual products,the controller estimates the amount of manufacturing overhead that should be assigned to the individual product lines from the information given below.  
Budgeted material-handling costs are $50,000.
Under a costing system that allocates manufacturing overhead on the basis of direct labor hours,the material-handling cost per wall mirror is:

Accepted Answer

A) $0. 
B) $500. 
C) $1,000. 
D) $2,000. 
E) $5,000. 
A) $0. 
B) $500. 
C) $1,000. 
D) $2,000. 
E) $5,000.

Question 11

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 12

Which of the following is a batch-level cost driver?

Accepted Answer

A) Output units. 
B) Number of engineering change orders. 
C) Number of materials handling transactions. 
D) Square feet of plant area occupied. 
E) Number of employees. 
A) Output units. 
B) Number of engineering change orders. 
C) Number of materials handling transactions. 
D) Square feet of plant area occupied. 
E) Number of employees.

Question 13

Which of the following is not considered a benefit of activity-based costing?

Accepted Answer

A) Decreased production activity levels. 
B) Improved product pricing decisions. 
C) A better understanding of manufacturing overhead. 
D) More accurate unit cost information. 
E) Improved strategic decisions. 
A) Decreased production activity levels. 
B) Improved product pricing decisions. 
C) A better understanding of manufacturing overhead. 
D) More accurate unit cost information. 
E) Improved strategic decisions.

Question 14

Johnson Associates is a catering firm in Tucson,Arizona,with revenue of $4 million.The business began ten years ago as a one-owner bakery,but has dramatically changed in size and function during the past five years.The four partners foresee the business doubling in sales revenue within two years,and expect the firm to expand into other services including flowers,furnishings,decorations,and music.Johnson Associates employs six full-time and ten part-time employees.The four partners also work full-time,each partner managing a separate business function.The firm currently uses a volume-based costing system installed seven years ago and modified three years later.
Required:
(1)With just the above information,comment on Johnson Associates changing and future costing system needs.
(2)Is Johnson Associates a probable candidate for an activity-based costing system (ABC)? Why or why not?

Accepted Answer

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Question 15

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

Accepted Answer

A) Productions department 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 
A) Productions department 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

Question 16

Wang Company has established the following overhead cost pools and cost drivers for the month of May:  
The following information pertains to the actual consumption of activity resources for two sample jobs completed during May.  
Using ABC,what is the overhead cost per unit produced for Job M2?

Accepted Answer

A) $39. 
B) $25. 
C) $20. 
D) $12. 
E) $10. 
A) $39. 
B) $25. 
C) $20. 
D) $12. 
E) $10.

Question 17

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 the firm's volume-based costing,applied factory overhead per unit for the High F model is (rounded to the nearest cent):

Accepted Answer

A) $61.32. 
B) $65.43. 
C) $43.42. 
D) $45.99. 
E) $54.04. 
A) $61.32. 
B) $65.43. 
C) $43.42. 
D) $45.99. 
E) $54.04.

Question 18

A measure of the quantity of resources consumed by an activity is:

Accepted Answer

A) Quantity driver. 
B) Resource consumption cost driver. 
C) Not a cost driver. 
D) Activity consumption cost driver. 
E) Consumption cost driver. 
A) Quantity driver. 
B) Resource consumption cost driver. 
C) Not a cost driver. 
D) Activity consumption cost driver. 
E) Consumption cost driver.

Question 19

Wings Co.budgeted $555,600 manufacturing direct wages,2,315 direct labor hours,and had the following manufacturing overhead:  
Requirements for Job #971 which manufactured 4 units of product:  
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 20

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 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.

In performing activity analysis during the design of an activity-based costing system (ABC),the management accountant studies:

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

In an activity-based costing system,overhead costs are divided into separate:

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:

Which of the following activity cost pools would most likely be allocated based on the number of production runs?

Cost Pools and Cost Drivers Based on a recent study of its manufacturing operations Johnston Manufacturing Corporation has identified six resource consumption cost drivers.These cost drivers and their budgeted activity levels for the coming year are:

Costs at the unit-level of activity should be allocated to products using cost drivers that are:

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

Which of the following is a batch-level cost driver?

Which of the following is not considered a benefit of activity-based costing?

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

Wang Company has established the following overhead cost pools and cost drivers for the month of May: The following information pertains to the actual consumption of activity resources for two sample jobs completed during May. Using ABC,what is the overhead cost per unit produced for Job M2?

A measure of the quantity of resources consumed by an activity is:

Wings Co.budgeted $555,600 manufacturing direct wages,2,315 direct labor hours,and had the following manufacturing overhead: Requirements for Job #971 which manufactured 4 units of product: Using ABC,overhead cost assigned to Job #971 for inspections 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

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

In performing activity analysis during the design of an activity-based costing system (ABC),the management accountant studies:

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

In an activity-based costing system,overhead costs are divided into separate:

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:

Which of the following activity cost pools would most likely be allocated based on the number of production runs?

Cost Pools and Cost Drivers Based on a recent study of its manufacturing operations Johnston Manufacturing Corporation has identified six resource consumption cost drivers.These cost drivers and their budgeted activity levels for the coming year are:

Costs at the unit-level of activity should be allocated to products using cost drivers that are:

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

Which of the following is a batch-level cost driver?

Which of the following is not considered a benefit of activity-based costing?

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

Wang Company has established the following overhead cost pools and cost drivers for the month of May: The following information pertains to the actual consumption of activity resources for two sample jobs completed during May. Using ABC,what is the overhead cost per unit produced for Job M2?

A measure of the quantity of resources consumed by an activity is:

Wings Co.budgeted $555,600 manufacturing direct wages,2,315 direct labor hours,and had the following manufacturing overhead: Requirements for Job #971 which manufactured 4 units of product: Using ABC,overhead cost assigned to Job #971 for inspections 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

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