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

Playtime Electronics produces two kinds of electronic toys,Wizards and Gizmos.During the current period,8,000 Wizards and 16,000 Gizmos were produced and sold,generating revenues of $500,000 and $2,000,000,respectively.Unit production costs for the two toys are $50 for Wizards and $70 for Gizmos.In calculating the cost of goods sold,Playtime uses activity basedactivity-based costing to allocate its overhead costs.However,upstream costs of $240,000 are allocated equally to the two products. Required: 1)Compute the total net profit for each product and for the firm as a whole. 2)Would you advise eliminating either toy? Why or why not?

The term "quality" refers to the degree to which products or services exceed customer expectations.

Which of the following is an appraisal cost?

Which of the following statements is

All of the following are hierarchical categories in which a firm's overhead support costs can be classified except:

Bennett Company pays its salespeople a sales commission on each sale they make.This commission is an example of an upstream cost.

Discuss how automation has affected the selection of cost drivers employed in product costing systems.

Implementation of an activity-based costing system requires a company to generate more detailed accounting information than would be required by a traditional product cost system.

All of the following are prevention costs except:

Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.

Depreciation on a manufacturing facility is an example of a(n):

Which of the following costs would be most fairly allocated using a volume- based cost driver?

All of the following are downstream costs except:

Which activity is likely to be involved in the acquisition of raw materials?

Which of the following allocation bases for automation costs would be an improvement over direct labor hours?

Unit-level activity costs follow a fixed cost behavior pattern (i.e. ,such costs vary on a per unit basis but are constant in total).

Sanford Tools produces a variety of scissors and other cutting ins

Franklin Manufacturing manufactures two models of windows,bay windows and casement windows.Franklin uses an activity basedactivity-based costing system.The following information about the activities used to producet the company's products has been provided. Produce Agree.Change made.JMF Category Estimated Cost Cost Driver Bay Windows Casement Unit-level \ 125,000 Labor hours 750 500 Batch-level \ 75,000 Inspections 30 20 Product-level \ 35,000 Storage Space 3500 sq feet 2100 sq feet Facility-level \ 165,000 Machine hours 9,000 6,000 The amount of product-level cost that should be allocated to the casement windows equals:

Morris Company allocates overhead on the basis of direct labor hours.It allocates overhead costs of $12,800 to two different jobs as follows: Job 1: (10 hours)= $6,400;Job 2: (10 hours)= $6,400 The production process for Job 2 was then automated.Now Job 2 requires only two hours of direct labor but four hours of mechanical processing.As a result,total overhead increases to $17,000.With the change in the production process for Job 2,the amount of overhead assigned to:

Which of the following is an activity-based cost driver?