Question 1

Lorimer Company had sales of $2,500,000 for last year. Data on quality-related costs for last year are as follows:

Accepted Answer

The answer of Lorimer Company had sales of $2,500,000 for...

Question 2

An activity-based costing system first assigns costs to activities and then to cost objects.

Accepted Answer

A) True 
 B)False

Question 3

Figure 7-5.Rizzo Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:
  
-Refer to Figure 7-5. Calculate the total overhead assigned to the 35mm cameras using only machine hours to calculate a plantwide rate.

Accepted Answer

A)  $132,000 
B)  $72,000 
C)  $60,000 
D)  $75,000 
E)  $66,000 
A)  $132,000 
B)  $72,000 
C)  $60,000 
D)  $75,000 
E)  $66,000

Question 4

Inspection time for a plant is 10,000 hours per year. The cost of inspection consists of salaries of four inspectors, totaling $60,000. Inspection also used supplies costing $3 per inspection hour. The company has a close to zero defect state and has eliminated the need for any inspection activity. Calculate the nonvalue-added cost of inspection per year.

Accepted Answer

A)  $30,000 
B)  $60,000 
C)  $90,000 
D)  $120,000 
A)  $30,000 
B)  $60,000 
C)  $90,000 
D)  $120,000

Question 5

A work distribution matrix is derived from an interview or a written survey.

Accepted Answer

A) True 
 B)False

Question 6

A manual process takes 18 minutes of direct labor time and 6 pounds of material to produce a product. Automating the process requires 12 minutes of machine time and 5 pounds of material. The cost per labor hour is $9, the cost per machine hour is $7, and the cost per pound of materials is $11. Find the nonvalue-added cost for the above situation.

Accepted Answer

A)  $2.40 per unit 
B)  $9.00 per unit 
C)  $12.30 per unit 
D)  $1.70 per unit 
A)  $2.40 per unit 
B)  $9.00 per unit 
C)  $12.30 per unit 
D)  $1.70 per unit

Question 7

The identification and elimination of activities that fail to add value refers to

Accepted Answer

A)  external failures. 
B)  activity reduction. 
C)  internal failures. 
D)  activity elimination. 
A)  external failures. 
B)  activity reduction. 
C)  internal failures. 
D)  activity elimination.

Question 8

Figure 7-2.Steller Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors purchase the same product. The customer activities and costs for the previous quarter are found below:
  
-Refer to Figure 7-2. Calculate the activity rate for servicing goods.

Accepted Answer

A)  $1,089 per service call 
B)  $750.10 per service call 
C)  $675.50 per service call 
D)  $1,000 per service call 
E)  $711.54 per service call 
A)  $1,089 per service call 
B)  $750.10 per service call 
C)  $675.50 per service call 
D)  $1,000 per service call 
E)  $711.54 per service call

Question 9

____ focuses on the relationship of activity inputs to activity outputs.

Accepted Answer

A)  Activity output measure 
B)  Efficiency 
C)  Velocity 
D)  Activity drivers 
E)  None of these. 
A)  Activity output measure 
B)  Efficiency 
C)  Velocity 
D)  Activity drivers 
E)  None of these.

Question 10

The value-added standard is the waste-free component of the value-added activity.

Accepted Answer

A) True 
 B)False

Question 11

A defective product is one that does conform to specifications.

Accepted Answer

A) True 
 B)False

Question 12

Activities necessary to remain in business are known as _____________________.

Accepted Answer

Value-adde

Question 13

A(n) ____ ratio measures the proportion of an activity consumed by a product.

Accepted Answer

A)  production 
B)  consumption 
C)  efficiency 
D)  quality 
E)  usage 
A)  production 
B)  consumption 
C)  efficiency 
D)  quality 
E)  usage

Question 14

____ is concerned with identifying the root causes of activity costs.

Accepted Answer

A)  Direct analysis 
B)  Activity analysis 
C)  Driver analysis 
D)  Causal analysis 
E)  None of these. 
A)  Direct analysis 
B)  Activity analysis 
C)  Driver analysis 
D)  Causal analysis 
E)  None of these.

Question 15

Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is $225. Calculate the reduction in nonvalue-added cost per setup.

Accepted Answer

A)  $675 per setup 
B)  $225 per setup 
C)  $450 per setup 
D)  $800 per setup 
E)  $2,025 
A)  $675 per setup 
B)  $225 per setup 
C)  $450 per setup 
D)  $800 per setup 
E)  $2,025

Question 16

Randy Company produces candy sticks (hooked and straight). Both products pass through two producing departments. The hooked stick's production is much more labor-intensive than the straight stick. The straight stick is also more popular. The following data have been gathered for the two products:
   Total overhead costs equal $400,000. Randy applies overhead based on direct labor hours.

Accepted Answer

The answer of Randy Company produces candy sticks (hooked and...

Question 17

Activities necessary to remain in business are called valuable activities.

Accepted Answer

A) True 
 B)False

Question 18

Figure 7-2.Steller Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors. The JIT distributor places small, frequent orders and the non-JIT distributor tends to place larger, less frequent orders. Both types of distributors purchase the same product. The customer activities and costs for the previous quarter are found below:
  
-Refer to Figure 7-2. Calculate the total customer cost for the JIT distributor.

Accepted Answer

A)  $487,500 
B)  $341,753 
C)  $600,000 
D)  $250,050 
E)  $448,791 
A)  $487,500 
B)  $341,753 
C)  $600,000 
D)  $250,050 
E)  $448,791

Lorimer Company had sales of $2,500,000 for last year. Data on quality-related costs for last year are as follows:

An activity-based costing system first assigns costs to activities and then to cost objects.

A work distribution matrix is derived from an interview or a written survey.

The identification and elimination of activities that fail to add value refers to

____ focuses on the relationship of activity inputs to activity outputs.

The value-added standard is the waste-free component of the value-added activity.

A defective product is one that does conform to specifications.

Activities necessary to remain in business are known as _____________________.

A(n) ____ ratio measures the proportion of an activity consumed by a product.

____ is concerned with identifying the root causes of activity costs.

Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is $225. Calculate the reduction in nonvalue-added cost per setup.

Activities necessary to remain in business are called valuable activities.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

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Exam 7: Activity-Based Costing and Management

Lorimer Company had sales of $2,500,000 for last year. Data on quality-related costs for last year are as follows:

An activity-based costing system first assigns costs to activities and then to cost objects.

A work distribution matrix is derived from an interview or a written survey.

The identification and elimination of activities that fail to add value refers to

____ focuses on the relationship of activity inputs to activity outputs.

The value-added standard is the waste-free component of the value-added activity.

A defective product is one that does conform to specifications.

Activities necessary to remain in business are known as _____________________.

A(n) ____ ratio measures the proportion of an activity consumed by a product.

____ is concerned with identifying the root causes of activity costs.

Using the original design, a machine requires 12 hours of setup time. By redesigning the machine, the setup time is reduced by 25%. The cost per setup hour is $225. Calculate the reduction in nonvalue-added cost per setup.

Activities necessary to remain in business are called valuable activities.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing, and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters