Question 1

List and discuss changes in business practices adopted in recent years by world-class companies.

Accepted Answer

Answers will vary
Feedback: Among the changes are increased automation,implementation of a quality management system,and use of activity-based management.Companies use robots and computer-controlled machines in producing products,in an effort to control costs and produce better,more uniform products.Through a quality management system,companies can calculate the quality costs associated with their products and services.They determine whether increased expenditure for prevention and appraisal costs would more than pay for itself through increased customer satisfaction and sales.Companies that use activity-based management identify activities that do not add value to their products and services.Non-value-added activities can be eliminated without reducing customer satisfaction,thus allowing the company to reduce its costs.

Question 2

Select from the list provided the term that best matches each of the following descriptions.

Accepted Answer

Answers will vary
Feedback:

Question 3

Which of the following statements regarding activity- based cost drivers is correct?

Accepted Answer

A)  Activity- based cost drivers are measures of activity that are directly associated with production. 
B)  Activity- based cost drivers are directly related to the volume of production. 
C)  Activity- based cost drivers improve the accuracy of direct cost allocations. 
D)  None of these answers is correct. 
A)  Activity- based cost drivers are measures of activity that are directly associated with production. 
B)  Activity- based cost drivers are directly related to the volume of production. 
C)  Activity- based cost drivers improve the accuracy of direct cost allocations. 
D)  None of these answers is correct. D

Question 4

Compared to a traditional two-stage cost allocation system,activity-based costing systems:

Accepted Answer

A)  use fewer cost centers. 
B)  use more cost drivers. 
C)  are less expensive to maintain. 
D)  All of these answers are correct. 
A)  use fewer cost centers. 
B)  use more cost drivers. 
C)  are less expensive to maintain. 
D)  All of these answers are correct.

Question 5

The concept of cost of quality is not applicable in service-type businesses such as accounting firms.

Accepted Answer

A) True 
 B)False

Question 6

Discuss how an increase in one or more quality cost(s)can decrease others.
Cost(s)
Agree.Change made.JMF

Accepted Answer

Answers will vary
Feedback: If a company

Question 7

What is the basic premise behind activity-based costing systems (ABC)? What is an activity? Describe how ABC systems work.

Accepted Answer

Answers will vary
Feedback: The basic pr

Question 8

Which of the following is an internal failure cost?

Accepted Answer

A)  Costs to rework defective units 
B)  Warranty replacement costs 
C)  Engineering and design costs 
D)  Depreciation on testing equipment 
A)  Costs to rework defective units 
B)  Warranty replacement costs 
C)  Engineering and design costs 
D)  Depreciation on testing equipment

Question 9

Downstream costs are not relevant to a product elimination decision.

Accepted Answer

A) True 
 B)False

Question 10

A product-level activity center would likely include all of the following costs except:

Accepted Answer

A)  engineering development costs. 
B)  legal fees to obtain and protect patents. 
C)  packaging design costs. 
D)  materials handling costs. 
A)  engineering development costs. 
B)  legal fees to obtain and protect patents. 
C)  packaging design costs. 
D)  materials handling costs.

Question 11

Activities that support specific products or product lines are known as:

Accepted Answer

A)  facility-level activities 
B)  unit-level activities 
C)  product-level activities 
D)  batch-level activities 
A)  facility-level activities 
B)  unit-level activities 
C)  product-level activities 
D)  batch-level activities

Question 12

Voluntary costs refer to internal and external failure costs.

Accepted Answer

A) True 
 B)False

Question 13

Managing quality costs to achieve the highest level of customer satisfaction is known as:

Accepted Answer

A)  activity basedactivity-based management. 
B)  total quality management. 
C)  strategic management. 
D)  quality costs. 
A)  activity basedactivity-based management. 
B)  total quality management. 
C)  strategic management. 
D)  quality costs.

Question 14

An increase in prevention costs may result in decreases in appraisal,internal failure,and external failure costs and a decrease in total quality costs.

Accepted Answer

A) True 
 B)False

Question 15

All of the following are internal failure costs except:

Accepted Answer

A)  inventory inspection costs. 
B)  rework costs. 
C)  downtime costs. 
D)  scrap costs. 
A)  inventory inspection costs. 
B)  rework costs. 
C)  downtime costs. 
D)  scrap costs.

Question 16

Which of the following would be classified as a batch- level activity?

Accepted Answer

A)  Depreciation on production equipment 
B)  Inspection of a product,where each unit must be individually inspected 
C)  Changing machine configuration before starting a production run 
D)  Sales commissions 
A)  Depreciation on production equipment 
B)  Inspection of a product,where each unit must be individually inspected 
C)  Changing machine configuration before starting a production run 
D)  Sales commissions

Question 17

The insurance cost for a large factory would be considered a:

Accepted Answer

A)  unit-level cost. 
B)  batch-level cost. 
C)  product-level cost. 
D)  facility-level cost. 
A)  unit-level cost. 
B)  batch-level cost. 
C)  product-level cost. 
D)  facility-level cost.

Question 18

In the below graph,which shows the relationship among components of quality cost,Line "C" depicts:

Accepted Answer

A)  failure costs. 
B)  internal quality cost. 
C)  voluntary quality failure costs. 
D)  prevention costs. 
A)  failure costs. 
B)  internal quality cost. 
C)  voluntary quality failure costs. 
D)  prevention costs.

Question 19

The successful implementation of an activity-based costing system depends on employees' attitudes and cooperation.

Accepted Answer

A) True 
 B)False

Question 20

An activity center:

Accepted Answer

A)  is an organizational structure where companies are organized into related activities and the overhead costs associated with performing these activities are combined into cost pools. 
B)  combines overhead costs into cost pools. 
C)  is an organizational structure associated with minimal record-keeping tasks. 
D)  None of these answers is correct. 
A)  is an organizational structure where companies are organized into related activities and the overhead costs associated with performing these activities are combined into cost pools. 
B)  combines overhead costs into cost pools. 
C)  is an organizational structure associated with minimal record-keeping tasks. 
D)  None of these answers is correct.

List and discuss changes in business practices adopted in recent years by world-class companies.

Select from the list provided the term that best matches each of the following descriptions.

Which of the following statements regarding activity- based cost drivers is correct?

Compared to a traditional two-stage cost allocation system,activity-based costing systems:

The concept of cost of quality is not applicable in service-type businesses such as accounting firms.

Discuss how an increase in one or more quality cost(s)can decrease others. Cost(s) Agree.Change made.JMF

What is the basic premise behind activity-based costing systems (ABC)? What is an activity? Describe how ABC systems work.

Which of the following is an internal failure cost?

Downstream costs are not relevant to a product elimination decision.

A product-level activity center would likely include all of the following costs except:

Activities that support specific products or product lines are known as:

Voluntary costs refer to internal and external failure costs.

Managing quality costs to achieve the highest level of customer satisfaction is known as:

An increase in prevention costs may result in decreases in appraisal,internal failure,and external failure costs and a decrease in total quality costs.

All of the following are internal failure costs except:

Which of the following would be classified as a batch- level activity?

The insurance cost for a large factory would be considered a:

In the below graph,which shows the relationship among components of quality cost,Line "C" depicts:

The successful implementation of an activity-based costing system depends on employees' attitudes and cooperation.

An activity center:

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 5: Cost Management in an Automated Business Environment: ABC, ABM, and TQM

List and discuss changes in business practices adopted in recent years by world-class companies.

Select from the list provided the term that best matches each of the following descriptions.

Which of the following statements regarding activity- based cost drivers is correct?

Compared to a traditional two-stage cost allocation system,activity-based costing systems:

The concept of cost of quality is not applicable in service-type businesses such as accounting firms.

Discuss how an increase in one or more quality cost(s)can decrease others. Cost(s) Agree.Change made.JMF

What is the basic premise behind activity-based costing systems (ABC)? What is an activity? Describe how ABC systems work.

Which of the following is an internal failure cost?

Downstream costs are not relevant to a product elimination decision.

A product-level activity center would likely include all of the following costs except:

Activities that support specific products or product lines are known as:

Voluntary costs refer to internal and external failure costs.

Managing quality costs to achieve the highest level of customer satisfaction is known as:

An increase in prevention costs may result in decreases in appraisal,internal failure,and external failure costs and a decrease in total quality costs.

All of the following are internal failure costs except:

Which of the following would be classified as a batch- level activity?

The insurance cost for a large factory would be considered a:

In the below graph,which shows the relationship among components of quality cost,Line "C" depicts:

The successful implementation of an activity-based costing system depends on employees' attitudes and cooperation.

An activity center:

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters