Question 1

Which of the following statement(s)regarding activity-based costing is (are)

Accepted Answer

A)  I and III 
B)  I and II 
C)  II and III 
D)  III only 
A)  I and III 
B)  I and II 
C)  II and III 
D)  III only

Question 2

Gaining personnel support and obtaining accurate data are two of the more challenging obstacles to the implementation of a successful activity basedactivity-based costing system.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is an upstream cost?

Accepted Answer

A)  Research and development costs 
B)  Shipping costs to ship completed goods 
C)  Sales commissions 
D)  Sales promotion and advertising costs 
A)  Research and development costs 
B)  Shipping costs to ship completed goods 
C)  Sales commissions 
D)  Sales promotion and advertising costs

Question 4

Direct labor hours is an appropriate cost driver when:

Accepted Answer

A)  production is labor intensive. 
B)  overhead costs increase. 
C)  production is automated. 
D)  all of these answers are correct. 
A)  production is labor intensive. 
B)  overhead costs increase. 
C)  production is automated. 
D)  all of these answers are correct.

Question 5

Traditionally,the most popular company-wide base for allocating overhead to products was:

Accepted Answer

A)  machine hours. 
B)  direct labor hours or costs. 
C)  number of units produced. 
D)  number of units sold. 
A)  machine hours. 
B)  direct labor hours or costs. 
C)  number of units produced. 
D)  number of units sold.

Question 6

The objective of target pricing is to establish a price that will maximize profits given existing costs.

Accepted Answer

A) True 
 B)False

Question 7

The voluntary costs of quality include:

Accepted Answer

A)  internal failure costs. 
B)  external failure costs. 
C)  appraisal costs. 
D)  All of these answers are correct. 
A)  internal failure costs. 
B)  external failure costs. 
C)  appraisal costs. 
D)  All of these answers are correct.

Question 8

Pro Tool Company expects to produce 24,000 total units during the current period.The costs and cost drivers associated with four activity cost pools are given below: $\begin{array}{c}
\begin{array}{|l|}
 \hline  \text {ACTIVITIES:}\
 \hline  \
\hline   \text {Cost}\
 \hline  \
 \hline  \text {Cost Driver}\
\hline   
\end{array}
\begin{array}{c|}
\hline  \text {UNIT}\
\hline  \text { LEVEL }\
\hline  \$ 50,000\
\hline  \
\hline  \text {4,000 labor hrs}\
\hline   
\end{array}
\begin{array}{c|}
\hline \text { BATCH}\
\hline \text { LEVEL }\
\hline  \$ 20,000\
\hline\
\hline \text { 100 set ups}\
\hline  
\end{array}
\begin{array}{c|}
 \hline  \text {PRODUCT}\
 \hline \text { LEVEL }\
 \hline\$ 10,000 \
 \hline\
 \hline \% \text { of use}\
 \hline
\end{array}
\begin{array}{c|}
 \hline  \text {FACILITY}\
 \hline  \text { LEVEL }\
 \hline  \$ 120,000\
 \hline\
 \hline24,000  \text {units}\ 
 \hline
\end{array}
\end{array}$
 Production of 1,000 units of an auto towing tool required 800 labor hours,12 setups,and consumed 30% of the product sustaining activities.How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?

Accepted Answer

A)  $18,400 
B)  $10,000 
C)  $100,000 
D)  $40,000 
A)  $18,400 
B)  $10,000 
C)  $100,000 
D)  $40,000

Question 9

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

Accepted Answer

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

Question 10

The amounts of voluntary costs and failure costs:

Accepted Answer

A)  are equal by definition. 
B)  tend to move in opposite directions (as one increases the other decreases). 
C)  tend to move in the same direction (as one increases the other increases). 
D)  None of these answers is correct. 
A)  are equal by definition. 
B)  tend to move in opposite directions (as one increases the other decreases). 
C)  tend to move in the same direction (as one increases the other increases). 
D)  None of these answers is correct.

Question 11

Hough Company manufactures a wide variety of products.A high proportion of its indirect costs are batch-level costs,such as acquiring materials,moving materials within the factory,and setting up machines.Hough uses direct labor hours to assign indirect costs to all of its products.How is this use of a traditional product costing system likely to affect the costs of Hough's high-volume and low-volume products?

Accepted Answer

A)  All of its products are undercosted. 
B)  Its low-volume products are overcosted. 
C)  All of its products are overcosted. 
D)  Its high-volume products are overcosted. 
A)  All of its products are undercosted. 
B)  Its low-volume products are overcosted. 
C)  All of its products are overcosted. 
D)  Its high-volume products are overcosted.

Question 12

What is the likely consequence of using a single overhead rate rather than activity-based costing?

Accepted Answer

Answers will vary
Feedback: A company-wi

Question 13

The objective of using the following graph is to:

Accepted Answer

A)  minimize quality. 
B)  maximize profit. 
C)  minimize total quality costs. 
D)  maximize total quality costs. 
A)  minimize quality. 
B)  maximize profit. 
C)  minimize total quality costs. 
D)  maximize total quality costs.

Which of the following statement(s)regarding activity-based costing is (are)

Gaining personnel support and obtaining accurate data are two of the more challenging obstacles to the implementation of a successful activity basedactivity-based costing system.

Which of the following is an upstream cost?

Direct labor hours is an appropriate cost driver when:

Traditionally,the most popular company-wide base for allocating overhead to products was:

The objective of target pricing is to establish a price that will maximize profits given existing costs.

The voluntary costs of quality include:

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

The amounts of voluntary costs and failure costs:

What is the likely consequence of using a single overhead rate rather than activity-based costing?

The objective of using the following graph is to:

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

Which of the following statement(s)regarding activity-based costing is (are)

Gaining personnel support and obtaining accurate data are two of the more challenging obstacles to the implementation of a successful activity basedactivity-based costing system.

Which of the following is an upstream cost?

Direct labor hours is an appropriate cost driver when:

Traditionally,the most popular company-wide base for allocating overhead to products was:

The objective of target pricing is to establish a price that will maximize profits given existing costs.

The voluntary costs of quality include:

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

The amounts of voluntary costs and failure costs:

What is the likely consequence of using a single overhead rate rather than activity-based costing?

The objective of using the following graph is to:

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