Question 1

Batch level costs occur once for each unit produced.

Accepted Answer

A) True 
 B)False

Question 2

Activity-based costing systems generally use volume-based cost drivers.

Accepted Answer

A) True 
 B)False

Question 3

What are the three classes of activities defined by activity-based management.What is customer response to each of these activities? What is management's reaction to each of these activities?

Accepted Answer

Value-added activities--increase the wor

Question 4

Houston National Bank
Houston National Bank had the following activities,traceable costs,and
Physical flow of driver units:
            Activities        Traceable Costs       Physical flow of Driver Units               Open new accounts       $50,000       1,000 accounts               Process deposits      36,000       400,000 deposits               Process withdrawals       15,000       200,000 withdrawals               Process loan applications      27,000       900 applications      
The above activities are used by the Memorial branch and the University branch:
                   Memorial       University                New accounts       200       400               Deposits       40,000       20,000               Withdrawals       15,000       18,000               Loan applications       100       160      
Refer to Houston National Bank.What is the cost per driver unit for new account activity?

Accepted Answer

A) $0.09 
B) $0.075 
C) $30.00 
D) $50.00 
A) $0.09 
B) $0.075 
C) $30.00 
D) $50.00

Question 5

In activity-based costing,how are cost drivers selected?

Accepted Answer

Cost drivers are selected based on their

Question 6

Lead time in a production process includes both value and non-value added time.

Accepted Answer

A) True 
 B)False

Question 7

In an activity-based costing system overhead costs are first recorded in activity center pools before being recorded in a general ledger

Accepted Answer

A) True 
 B)False

Question 8

Business value-added activities increase the value of a product without increasing production time.

Accepted Answer

A) True 
 B)False

Question 9

When non-value added time is greater,manufacturing cycle efficiency is lower.

Accepted Answer

A) True 
 B)False

Question 10

Discuss the characteristics of a company for which ABC would be appropriate.

Accepted Answer

Companies having the following character

Question 11

A company should strive to reduce all non-value added activities to a minimum.

Accepted Answer

A) True 
 B)False

Question 12

Holt Medical Corporation manufactures two models of a medical device: Model 101 and Model 102.
Below is the current year production data for the company:
                    Model 101       Model 102                Direct material in units       97,000       113,000               Direct labor hours       30,000       40,000               Machine hours       26,000       13,000               Number of setups       300       600               Number of devices produced       16,000       8,000       
The 210,000 units of material had a total cost of $1,365,000.Direct labor is $17 per hour.
The company has total overhead production costs of $1,850,000.
a.If Holt Medical Corporation applies factory overhead using direct labor hours,compute the total production cost and the unit cost for each model
b.If Holt Medical Corporation applies factory overhead using machine hours,compute the total production cost and the unit cost for each model.
c.Assume that Holt Medical Corporation has established the following activity centers,costs drivers,and costs to apply factory overhead.
             Cost Pool       Cost Driver      Cost        Volume               Equipment Maintenance       # of machine hours       $585,000       39,000               Production Setup       # of setups       $125,000       900               Material Handling       Units of Materials       $540,000       210,000               Transportation Costs       # of devices produced       $600,000       24,000       
Compute the total cost and the unit cost for each model.
d.Explain why the unit cost for each model is different across the three methods of overhead application.How can such information benefit an organization?

Accepted Answer

@#IMG-DLM& 
Compute the total cost and the unit co

Question 13

An objective of activity-based management is to

Accepted Answer

A) eliminate the majority of centralized activities in an organization. 
B) reduce or eliminate non-value-added activities incurred to make a product or provide a service. 
C) institute responsibility accounting systems in decentralized organizations. 
D) all of the above 
A) eliminate the majority of centralized activities in an organization. 
B) reduce or eliminate non-value-added activities incurred to make a product or provide a service. 
C) institute responsibility accounting systems in decentralized organizations. 
D) all of the above

Question 14

ABC has been criticized for a variety of reasons.Discuss these criticisms.

Accepted Answer

The first criticism of ABC is that it re

Question 15

Ultimate Vision Corporation
Ultimate Vision Corporation has two product lines: LCD televisions and projection televisions.The company has budgeted the following production and overhead costs for the upcoming year:
                           LCD TV’s       Projection TV’s              Units Produced               1,500       2,250               Direct labor hours per Unit              20       30               Material Moves per Product Line              15       20               Budgeted Materials Handling Cost       $75,000                             Total Machine Hours             10,000        16,000               Machine Maintenance Costs      $180,000                     
Refer to Ultimate Vision Corporation.If the company uses number of units produced to allocate factory overhead,the machine maintenance cost allocated to projection TVs would be:

Accepted Answer

A) $ 72,000 
B) $108,000 
C) $110,769 
D) $124,615 
A) $ 72,000 
B) $108,000 
C) $110,769 
D) $124,615

Question 16

Activity-based costing is appropriate for a company that has high overhead costs that are not proportional to unit volumes of individual products.

Accepted Answer

A) True 
 B)False

Question 17

Under activity-based costing,benchmarks for product cost should contain an allowance for

Accepted Answer

A) idle time. 
B) idle time and scrap materials. 
C) spoilage. 
D) None of the responses are correct. 
A) idle time. 
B) idle time and scrap materials. 
C) spoilage. 
D) None of the responses are correct.

Question 18

An activity that a customer is willing to pay for and increases the worth of a product is referred to as a _________________________ activity.

Accepted Answer

The answer of An activity that a customer is willing...

Question 19

A cost accumulation system should most likely be reevaluated when a company has

Accepted Answer

A) automated one or more production processes. 
B) introduced new products to its customers. 
C) had its industry deregulated. 
D) all of the above. 
A) automated one or more production processes. 
B) introduced new products to its customers. 
C) had its industry deregulated. 
D) all of the above.

Question 20

Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of manufacturing because they

Accepted Answer

A) build in allowances for non-value-adding activities. 
B) are based on historical information. 
C) don't reflect current costs. 
D) are ideal goals. 
A) build in allowances for non-value-adding activities. 
B) are based on historical information. 
C) don't reflect current costs. 
D) are ideal goals.

Batch level costs occur once for each unit produced.

Activity-based costing systems generally use volume-based cost drivers.

What are the three classes of activities defined by activity-based management.What is customer response to each of these activities? What is management's reaction to each of these activities?

In activity-based costing,how are cost drivers selected?

Lead time in a production process includes both value and non-value added time.

In an activity-based costing system overhead costs are first recorded in activity center pools before being recorded in a general ledger

Business value-added activities increase the value of a product without increasing production time.

When non-value added time is greater,manufacturing cycle efficiency is lower.

Discuss the characteristics of a company for which ABC would be appropriate.

A company should strive to reduce all non-value added activities to a minimum.

An objective of activity-based management is to

ABC has been criticized for a variety of reasons.Discuss these criticisms.

Activity-based costing is appropriate for a company that has high overhead costs that are not proportional to unit volumes of individual products.

Under activity-based costing,benchmarks for product cost should contain an allowance for

An activity that a customer is willing to pay for and increases the worth of a product is referred to as a _________________________ activity.

A cost accumulation system should most likely be reevaluated when a company has

Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of manufacturing because they

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Activities	Traceable Costs	Physical flow of Driver Units
Open new accounts	$50,000	1,000 accounts
Process deposits	36,000	400,000 deposits
Process withdrawals	15,000	200,000 withdrawals
Process loan applications	27,000	900 applications

	Memorial	University
New accounts	200	400
Deposits	40,000	20,000
Withdrawals	15,000	18,000
Loan applications	100	160

	Model 101	Model 102
Direct material in units	97,000	113,000
Direct labor hours	30,000	40,000
Machine hours	26,000	13,000
Number of setups	300	600
Number of devices produced	16,000	8,000

Cost Pool	Cost Driver	Cost	Volume
Equipment Maintenance	# of machine hours	$585,000	39,000
Production Setup	# of setups	$125,000	900
Material Handling	Units of Materials	$540,000	210,000
Transportation Costs	# of devices produced	$600,000	24,000

		LCD TV’s	Projection TV’s
Units Produced		1,500	2,250
Direct labor hours per Unit		20	30
Material Moves per Product Line		15	20
Budgeted Materials Handling Cost	$75,000
Total Machine Hours		10,000	16,000
Machine Maintenance Costs	$180,000

Exam 4: Activity-Based Management and Activity-Based Costing

Batch level costs occur once for each unit produced.

Activity-based costing systems generally use volume-based cost drivers.

What are the three classes of activities defined by activity-based management.What is customer response to each of these activities? What is management's reaction to each of these activities?

In activity-based costing,how are cost drivers selected?

Lead time in a production process includes both value and non-value added time.

In an activity-based costing system overhead costs are first recorded in activity center pools before being recorded in a general ledger

Business value-added activities increase the value of a product without increasing production time.

When non-value added time is greater,manufacturing cycle efficiency is lower.

Discuss the characteristics of a company for which ABC would be appropriate.

A company should strive to reduce all non-value added activities to a minimum.

An objective of activity-based management is to

ABC has been criticized for a variety of reasons.Discuss these criticisms.

Activity-based costing is appropriate for a company that has high overhead costs that are not proportional to unit volumes of individual products.

Under activity-based costing,benchmarks for product cost should contain an allowance for

An activity that a customer is willing to pay for and increases the worth of a product is referred to as a _________________________ activity.

A cost accumulation system should most likely be reevaluated when a company has

Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of manufacturing because they

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Job Order Costing

Process Costing

Standard Costing and Variance Analysis

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters