Question 1

What are the three main guidelines that managers use when the refine their costing system?

Accepted Answer

The three main guidelines for refining a costing system include direct-cost tracing,indirect-cost pools,and cost-allocation bases.Managers us direct-cost tracing when they need to identify the direct costs.The result of direct-cost tracing leads to reduce the amount of indirect costs and minimize the extent to which costs have to be allocated,rather than traced.Managers expand the indirect-cost pool until each pool is more homogenous.All costs in a homogeneous cost pool have the same or similar cause-and-effect relationship with a single cost driver that is used as the cost-allocation base.Managers use the cost-allocation bases because they use the cost driver as the cost-allocation base for each homogenous indirect-cost pool.

Question 2

In the cause-and-effect relationship between allocation base and activity cost in indirect costing systems,the indirect costs of operating modeling machines ________ with molding machine-hours.

Accepted Answer

A) decrease 
B) increase 
C) simplify 
D) subtract 
E) deteriorate 
A) decrease 
B) increase 
C) simplify 
D) subtract 
E) deteriorate B

Question 3

What are some important considerations to managers that consider adopting the activity-based costing system?

Accepted Answer

Managers need to consider the costs and benefits associated with activity-based costing systems.They need to yield the most decision-making benefits when indirect costs are a high percentage of total costs or when products and services make diverse demands on the indirect resources.They also need to consider the level of difficulty that is associated with the measurements they need to implement and update the systems.

Question 4

Broad averaging lead to ________.

Accepted Answer

A) service product cost 
B) variable product costs 
C) accurate product costs 
D) accurate service costs 
E) inaccurate product costs 
A) service product cost 
B) variable product costs 
C) accurate product costs 
D) accurate service costs 
E) inaccurate product costs

Question 5

Why is it important for managers to allocate all costs of products or services?

Accepted Answer

It is important for managers t

Question 6

The manager at the Petersburg Organization reported $380,000 in distribution activity.The cost-allocation base is 52,000 cubic feet of material delivered to the New Jersey plant.
Required:
Compute the amount per cubic foot of product delivered.

Accepted Answer

A) $7.30 
B) $192.60 
C) $328,000 
D) $432,000 
E) $450,000 
A) $7.30 
B) $192.60 
C) $328,000 
D) $432,000 
E) $450,000

Question 7

The auditor at the Yarn Shoppe needs to determine whether it is beneficial to implement a simple costing system using a single indirect-cost pool,or an ABC system.Review and compare the following information:
   
Required:
The goal of the accountant is to trace more costs as direct costs,create a homogeneous cost pool,and to implement a cost-allocation base that has a cause-and-effect relationship with costs in the cost pool.Which system should the auditor at the Yarn Shoppe implement? Why?

Accepted Answer

The auditor at the Yarn Shoppe should im

Question 8

The main costs and limitations of activity-based systems are ________.

Accepted Answer

A) measurements necessary to implement it 
B) cost associated with the new technology 
C) employees and manpower to implement it 
D) time associated with implementing the system 
E) measurements of managerial opinions and time 
A) measurements necessary to implement it 
B) cost associated with the new technology 
C) employees and manpower to implement it 
D) time associated with implementing the system 
E) measurements of managerial opinions and time

Question 9

How do managers refine costing systems? What is their goal when they chose to refine costing systems?

Accepted Answer

Managers can refine costing systems by t

Question 10

It takes less work for a manager to compute the amount of costs in cost cross-subsidization since the manager considers indirect costs.

Accepted Answer

A) True 
 B)False

Question 11

In indirect cost pools,administrative costs are ________.

Accepted Answer

A) direct costs 
B) batch-level costs 
C) output unit-level costs 
D) product-sustaining costs 
E) facility-sustaining costs 
A) direct costs 
B) batch-level costs 
C) output unit-level costs 
D) product-sustaining costs 
E) facility-sustaining costs

Question 12

What should managerial accountants understand when prices of their products and services are determined by the market based on competition among companies in the marketplace?

Accepted Answer

When a manager is faced with prices that

Question 13

To compute the rate per unit of each cost-allocation base,managers ________.

Accepted Answer

A) add 
B) subtract 
C) multiply 
D) divide 
E) None of these are correct 
A) add 
B) subtract 
C) multiply 
D) divide 
E) None of these are correct

Question 14

Which of the following is not a level in the cost hierarchy?

Accepted Answer

A) Batch-level costs. 
B) Input-level unit costs. 
C) Output-unit level costs. 
D) Product-sustaining costs. 
E) Facility-sustaining costs. 
A) Batch-level costs. 
B) Input-level unit costs. 
C) Output-unit level costs. 
D) Product-sustaining costs. 
E) Facility-sustaining costs.

Question 15

Broad averaging often results to the undercosting or overcosting of products or services.

Accepted Answer

A) True 
 B)False

Question 16

Setup costs never depreciation and maintenance costs of setup equipment,wages of setup workers,and allocated salaries of design engineers,process engineers,and supervisors.

Accepted Answer

A) True 
 B)False

Question 17

ABC implementation often represents a significant change in the costing system and managers must make important choices about the level of detail to use in activity-based costing systems.

Accepted Answer

A) True 
 B)False

Question 18

In the cause-and-effect relationship between allocation base and activity cost,the distribution costs ________ with cubic feet of packages delivered.

Accepted Answer

A) decrease 
B) increase 
C) simplify 
D) subtract 
E) deteriorate 
A) decrease 
B) increase 
C) simplify 
D) subtract 
E) deteriorate

Question 19

Machine operations costs that are related to the activity of running the automated molding machines are output unit-level costs.

Accepted Answer

A) True 
 B)False

Question 20

The three main guidelines that managers use to refine costing systems are direct-cost tracing,indirect-cost pools,and cost-allocation bases.

Accepted Answer

A) True 
 B)False

What are the three main guidelines that managers use when the refine their costing system?

In the cause-and-effect relationship between allocation base and activity cost in indirect costing systems,the indirect costs of operating modeling machines ________ with molding machine-hours.

What are some important considerations to managers that consider adopting the activity-based costing system?

Broad averaging lead to ________.

Why is it important for managers to allocate all costs of products or services?

The manager at the Petersburg Organization reported $380,000 in distribution activity.The cost-allocation base is 52,000 cubic feet of material delivered to the New Jersey plant. Required: Compute the amount per cubic foot of product delivered.

The main costs and limitations of activity-based systems are ________.

How do managers refine costing systems? What is their goal when they chose to refine costing systems?

It takes less work for a manager to compute the amount of costs in cost cross-subsidization since the manager considers indirect costs.

In indirect cost pools,administrative costs are ________.

What should managerial accountants understand when prices of their products and services are determined by the market based on competition among companies in the marketplace?

To compute the rate per unit of each cost-allocation base,managers ________.

Which of the following is not a level in the cost hierarchy?

Broad averaging often results to the undercosting or overcosting of products or services.

Setup costs never depreciation and maintenance costs of setup equipment,wages of setup workers,and allocated salaries of design engineers,process engineers,and supervisors.

ABC implementation often represents a significant change in the costing system and managers must make important choices about the level of detail to use in activity-based costing systems.

In the cause-and-effect relationship between allocation base and activity cost,the distribution costs ________ with cubic feet of packages delivered.

Machine operations costs that are related to the activity of running the automated molding machines are output unit-level costs.

The three main guidelines that managers use to refine costing systems are direct-cost tracing,indirect-cost pools,and cost-allocation bases.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Pricing Decisions, customer Profitability, and Cost Management

Determining How Costs Behave

Decision Making and Relevant Information

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Transfer Pricing

Performance Measurement and Compensation

Filters

Exam 6: Activity-Based Costing and Activity-Based Management

What are the three main guidelines that managers use when the refine their costing system?

In the cause-and-effect relationship between allocation base and activity cost in indirect costing systems,the indirect costs of operating modeling machines ________ with molding machine-hours.

What are some important considerations to managers that consider adopting the activity-based costing system?

Broad averaging lead to ________.

Why is it important for managers to allocate all costs of products or services?

The manager at the Petersburg Organization reported $380,000 in distribution activity.The cost-allocation base is 52,000 cubic feet of material delivered to the New Jersey plant. Required: Compute the amount per cubic foot of product delivered.

The main costs and limitations of activity-based systems are ________.

How do managers refine costing systems? What is their goal when they chose to refine costing systems?

It takes less work for a manager to compute the amount of costs in cost cross-subsidization since the manager considers indirect costs.

In indirect cost pools,administrative costs are ________.

What should managerial accountants understand when prices of their products and services are determined by the market based on competition among companies in the marketplace?

To compute the rate per unit of each cost-allocation base,managers ________.

Which of the following is not a level in the cost hierarchy?

Broad averaging often results to the undercosting or overcosting of products or services.

Setup costs never depreciation and maintenance costs of setup equipment,wages of setup workers,and allocated salaries of design engineers,process engineers,and supervisors.

ABC implementation often represents a significant change in the costing system and managers must make important choices about the level of detail to use in activity-based costing systems.

In the cause-and-effect relationship between allocation base and activity cost,the distribution costs ________ with cubic feet of packages delivered.

Machine operations costs that are related to the activity of running the automated molding machines are output unit-level costs.

The three main guidelines that managers use to refine costing systems are direct-cost tracing,indirect-cost pools,and cost-allocation bases.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Process Costing and Cost Allocation

Pricing Decisions, customer Profitability, and Cost Management

Determining How Costs Behave

Decision Making and Relevant Information

Quality, inventory Management, and Time

Capital Investments

Master Budget and Responsibility Accounting

Flexible Budgets, cost Variances, and Management Control

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Transfer Pricing

Performance Measurement and Compensation

Filters