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

Examples of product-sustaining costs at companies such as Volvo,Samsung,or General Electric are product research and develop costs,costs of making engineering changes,and marketing costs to launch new products.

Which of the following is not a sign of when an activity-based costing system would likely provide the manager with the most benefits?

Costing-system refinements require more data gathering and more analysis,and improvements in information technology have drastically reduced the costs to gather,validate,store,and analyze vast quantities of data.

The Monroe Company manufactures a special saddle.The budgeted indirect total cost associated with the production of the saddle is $100,000.The budgeted number of saddles is 55,000.What is the budgeted indirect cost allocation rate?

ABC systems help managers evaluate the effect of current product and process designs on activities and costs and to identify new designs to reduce costs.

Mug King reported the following information: Required: Compute the number of batches for small and large mugs,the total setup-hours,and the total setup-hours for both mugs.

What are the strategic consequences of product undercosting and overcosting?

Companies deduct facility-sustaining costs as a separate lump-sum amount from operating income rather

When comparing the strategic and operational benefits of activity-based costing systems,what should managers understand about information technology?

In indirect cost pools,distribution costs are ________.

What should a managerial accountant consider if all or most of the indirect costs are identified as output unit-level costs?

Rachel and Joey went to dinner and incurred the following costs: Required: Compute the average cost of dinner.If they each pay the average cost of dinner,calculate the amount of Rachel's cross-subsidization to Joey.

What is the benefit to managers that use activity-based costing systems help manufacturing and distribution personnel?

Product-cost cross-subsidization means that if a company undercosts one of its products,it will overcost at least one of its other products.

The Ready Corporation reported the following information: Compute the budgeted indirect cost rate for each activity.

What are the benefits to managers that use activity-based costing systems to make design decisions?

Which of the following are costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced?

The costing system that broadly averages or spreads the cost of resources uniformly to cost objects when individual products or services use those resources in nonuniform ways is ________.

The manager at the Atlantic Organization reported $225,000 in Administration Activity.The manager reported that the cost-allocation base was 32,000 in direct manufacturing-labor hours. Required: Compute the direct manufacturing labor-hours.

Which of the following are costs of activities performed on each individual unit of a product or service?