Exam 4: Cost Management Systems and Activity-Based Costing

SLOW Company has determined the following information about a new product.The manufacturing process used for the product is very complex and it has a higher proportion of indirect costs than direct costs.The company wants a 100% markup on cost.The following data is available: Product cost according to traditional costing system………...$4.00 per unit Product cost according to activity-based costing system……$7.00 per unit What price per unit should SLOW Company use for this new product?

An example of a strategic management decision is the establishment of a pricing policy for a new product.

Allocation of costs to cost objects may be described as apportion or attribute.

A cost accounting system first assigns costs to organizational units and then accumulates these costs within the unit.

For both merchandising and manufacturing firms,selling and administrative costs are period costs.

Due to the decline in indirect costs in most companies,allocating indirect costs is no longer necessary to determine accurate product costs.

A cost management system provides information for strategic management decisions and financial reporting.

A cost pool is a group of individual costs that is allocated to cost objects using multiple cost drivers.

Unallocated costs ________.

Costs that can be allocated to a cost object are called direct costs.

Companies try to maximize non-value-added costs.

Allocated costs are irrelevant for most decisions when indirect costs represent a larger proportion of product costs than direct costs.

Value-added costs are not necessary for most products.

Traditional costing systems generally assign only production costs to products.

In a merchandising company,________.

Activity-based costing systems should be adopted when ________.

Where a specific manufactured product is the cost object,the hourly wages of assembly workers who work on only that product would be classified as a(n)________.

Cost allocation refers to an ________.

A manufacturing firm typically has ________ inventory account(s).

Yesterday Bank had the following activities,traceable costs,and physical flow of driver units: The above activities are used by Downtown branch and North branch as follows: Required: A)Compute the new account cost assigned to the Downtown branch. B)Compute the deposit processing cost assigned to the North branch. C)Compute the withdrawal processing cost assigned to the North branch.