Exam 4: Activity-Based Costing, lean Operations, and the Costs of Quality

Kramer Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs.Each coffee tables consists of 20 separate parts totaling $240 in direct materials,and requires 5.0 hours of machine time to produce.Additional information follows: What is the cost of assembling per coffee table?

The new manager at Sailboat Manufacturing oversees the manufacturing operations to ensure the effective manufacturing process of sails to accommodate the special-orders of sails they receive for sailboats.The manager compiled a report that contained the following data: Compute the activity cost allocation rate for each of Sailboat Manufacturing's production activities listed in the report.What should the new manager understand about the cost allocation rates at Sailboat Manufacturing? How will the new manager use the activity cost allocation rates during the coming year at Sailboat Manufacturing?

The Cosmo Corporation manufactures and assembles office chairs.Cosmo uses an activity-based costing system to allocate all manufacturing conversion costs.Each chair consists of 15 separate parts totaling $125 in direct materials,and requires 2.0 hours of machine time to produce.Additional information follows: What is the cost of materials handling per chair?

Which of the following does ABC take into account?

A lean company typically strives to lengthen the manufacturing cycle time.

Lean thinking typically focuses on strengthening supply-chain management.

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. The following units were produced in December with the following information: Total assembly fees for Part 002 is

On a Cost of Quality report,which of the following cost items should be classified as an external failure cost?

A company is a company that has reengineered its production process and the next step is to review and potentially revise its activity-based costing system.

To determine the amount of overhead allocated,the overhead rate is divided by the cost driver.

The first step in developing an ABC system is

Facility-level activities and costs are incurred for every individual unit.

Traditional costing systems are generally more accurate than ABC costing.

Which of the following is not a factor in the success of a lean company?

Ryan Fabrication allocates manufacturing overhead to each job using departmental overhead rates.Ryan's operations are divided into a metal casting department and a metal finishing department.The casting department uses a departmental overhead rate of $52 per machine hour,while the finishing department uses a departmental overhead rate of $28 per direct labor hour.Job A216 used the following direct labor hours and machine hours in the two departments: The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by Job A216 is $1,800. What was the total cost of Job A216 if Ryan Fabrication used the departmental overhead rates to allocate manufacturing overhead?

Companies often refine their cost allocation systems to minimize the amount of cost distortion caused by the simpler cost allocation systems.

The cost of evaluating potential raw material suppliers is an example of what type of cost?

Watson's Computer Company uses ABC to account for its manufacturing process. Watson's Computer Company expects to produce 2,250 computers.Watson's Computer Company also expects to use 13,000 parts and have 20 setups. The allocation rate for materials handling will be

A plantwide overhead rate is calculated by multiplying the estimated total manufacturing overhead costs for the year by estimated total amount of the allocation base for the year.

Lean thinking is a management philosophy that strives to create value by eliminating waste.