Question 1

The costs of training production personnel on their job tasks is an example of which of the following types of costs?

Accepted Answer

A) Internal failure costs 
B) External failure costs 
C) Appraisal costs 
D) Prevention costs 
A) Internal failure costs 
B) External failure costs 
C) Appraisal costs 
D) Prevention costs D

Question 2

ABM stands for

Accepted Answer

A) activity-based management. 
B) all but managers. 
C) activity-based manufacturing. 
D) activity biased management. 
A) activity-based management. 
B) all but managers. 
C) activity-based manufacturing. 
D) activity biased management. A

Question 3

Gwynnie Pie Company makes dessert pies for national fast food chains. Gwynnie Pie Company is considering using ABC costing and has the following activity cost pools and information available:   Gwynnie Pie Company currently uses a plantwide overhead rate based on total estimated machine hours of 100,000 hours.
Based on the above information, what would the activity cost allocation rate be for material handling?

Accepted Answer

A) $4.52 per machine hour 
B) $100 per batch 
C) $0.03 per unit 
D) $44.80 per batch 
A) $4.52 per machine hour 
B) $100 per batch 
C) $0.03 per unit 
D) $44.80 per batch B

Question 4

Digital Technologies manufactures three types of computers for a well known national brand. The three types are: laptops, desktops, and tablets. Currently, Digital uses a single plant-wide overhead rate to allocate its $1,667,250 of annual manufacturing overhead. Of this amount, $562,000 is associated with laptops, $492,000 is associated with desktops, and $612,750 is associated with tablets. Digital is currently using a total of 22,150 machine hours: 7,500 for laptops, 8,200 for desktops, and 6,450 for tablets. Digital uses machine hours to allocate overhead costs.
Required:
a. Calculate the plant-wide manufacturing overhead rate.
b. Calculate the departmental overhead rate for each of the three departments listed.
c. Which product line(s)have been overcosted by using the plant-wide manufacturing overhead rate? By how much per machine hour? Which product line(s)have been undercosted by using the plant-wide manufacturing overhead rate? By how much per machine hour?

Accepted Answer

SOLUTION - part a
 @#IMG-DLM&

Question 5

Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?

Accepted Answer

A) Appraisal costs 
B) Prevention costs 
C) Internal failure costs 
D) External failure costs 
A) Appraisal costs 
B) Prevention costs 
C) Internal failure costs 
D) External failure costs

Question 6

Lean companies only include manufacturers since service providers and retailers cannot adopt lean operations.

Accepted Answer

A) True 
 B)False

Question 7

If a company were to increase its appraisal costs by inspecting more units as the units are are in production (during production), the company's external failure costs would most likely

Accepted Answer

A) decrease. 
B) increase. 
C) not be affected. 
D) Unable to predict 
A) decrease. 
B) increase. 
C) not be affected. 
D) Unable to predict

Question 8

Salvatore LLC provides a wide variety of legal services and uses an activity-based costing system. Data from its activity-based costing system for all services follows:   The cost pool activity rate for client meetings is

Accepted Answer

A) $58.29 per meeting hour. 
B) $7.08 per meeting hour. 
C) $27.94 per meeting hour. 
D) $88.54 per meeting hour. 
A) $58.29 per meeting hour. 
B) $7.08 per meeting hour. 
C) $27.94 per meeting hour. 
D) $88.54 per meeting hour.

Question 9

The first step in developing an ABC system is

Accepted Answer

A) calculate an activity cost allocation rate for each activity. 
B) allocate the costs to the cost object using the activity cost allocation rates. 
C) select an allocation base for each activity. 
D) identify the primary activities and estimate a total cost pool for each. 
A) calculate an activity cost allocation rate for each activity. 
B) allocate the costs to the cost object using the activity cost allocation rates. 
C) select an allocation base for each activity. 
D) identify the primary activities and estimate a total cost pool for each.

Question 10

If a company uses departmental overhead allocation rates, then the amount of manufacturing overhead allocated to the job is equal to the plantwide overhead rate multiplied by the actual use of the cost allocation base.

Accepted Answer

A) True 
 B)False

Question 11

Hopscotch Limited, a manufacturer of a variety of products, uses an activity-based costing system. Information from its system for the year for all products follows:   Hopscotch Limited makes 440 of its product B63 a year, which requires a total of 33 machine hours, 13 inspection hours, and 17 orders. Product B63 requires $52.70 in direct materials per unit and $62.20 in direct labor per unit. Product B63 sells for $255 per unit. What is the profit margin in total for Product B63? (Round all answers to two decimal places.)

Accepted Answer

A) $49.76 
B) $21,895.50 
C) $110,342.63 
D) $59,901.53 
A) $49.76 
B) $21,895.50 
C) $110,342.63 
D) $59,901.53

Question 12

Direct labor hours would be the most appropriate cost allocation base for a Machining Department that uses machine robotics extensively.

Accepted Answer

A) True 
 B)False

Question 13

ABC can be used by which of the following companies?

Accepted Answer

A) Manufacturers 
B) Merchandisers 
C) Service Providers 
D) All of these companies can use ABC. 
A) Manufacturers 
B) Merchandisers 
C) Service Providers 
D) All of these companies can use ABC.

Question 14

Which of the following cost of quality categories represent the cost incurred to "perform preventative maintenance on machinery?"

Accepted Answer

A) Appraisal costs 
B) Prevention costs 
C) Internal failure costs 
D) External failure costs 
A) Appraisal costs 
B) Prevention costs 
C) Internal failure costs 
D) External failure costs

Question 15

Hang Ten Company manufactures surf boards and uses an activity-based costing system to allocate all manufacturing conversion costs. Each surf board consists of 10 separate parts totaling $135 in direct materials, and requires 3.0 hours of machine time to produce. Additional information follows:   What is the total manufacturing cost per surf board?

Accepted Answer

A) $211.25 
B) $97.25 
C) $227.50 
D) $30.00 
A) $211.25 
B) $97.25 
C) $227.50 
D) $30.00

Question 16

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

Accepted Answer

A) $400 
B) $1250 
C) $1600 
D) $2000 
A) $400 
B) $1250 
C) $1600 
D) $2000

Question 17

Which of the following is an example of a cost item that should be classified as an external failure cost?

Accepted Answer

A) Tooling changes 
B) Cost of a lost unit 
C) Warranty claims 
D) Cost to redesign product 
A) Tooling changes 
B) Cost of a lost unit 
C) Warranty claims 
D) Cost to redesign product

Question 18

What type of costs are incurred to avoid poor quality goods or services in the first place?

Accepted Answer

A) Appraisal costs 
B) External costs 
C) Prevention costs 
D) Internal failure costs 
A) Appraisal costs 
B) External costs 
C) Prevention costs 
D) Internal failure costs

Question 19

Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2100 units, while 1600 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours per unit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $149,315. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activity-based costing system, it would have the following three activity cost pools:   The overhead cost per Blenders using the traditional costing system would be closest to
(Round all answers to two decimal places.)

Accepted Answer

A) $28.27 
B) $37.85 
C) $93.32 
D) $19.40 
A) $28.27 
B) $37.85 
C) $93.32 
D) $19.40

Question 20

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

Accepted Answer

A) True 
 B)False

The costs of training production personnel on their job tasks is an example of which of the following types of costs?

ABM stands for

Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?

Lean companies only include manufacturers since service providers and retailers cannot adopt lean operations.

If a company were to increase its appraisal costs by inspecting more units as the units are are in production (during production), the company's external failure costs would most likely

Salvatore LLC provides a wide variety of legal services and uses an activity-based costing system. Data from its activity-based costing system for all services follows: The cost pool activity rate for client meetings is

The first step in developing an ABC system is

If a company uses departmental overhead allocation rates, then the amount of manufacturing overhead allocated to the job is equal to the plantwide overhead rate multiplied by the actual use of the cost allocation base.

Direct labor hours would be the most appropriate cost allocation base for a Machining Department that uses machine robotics extensively.

ABC can be used by which of the following companies?

Which of the following cost of quality categories represent the cost incurred to "perform preventative maintenance on machinery?"

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

Which of the following is an example of a cost item that should be classified as an external failure cost?

What type of costs are incurred to avoid poor quality goods or services in the first place?

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

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

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

The costs of training production personnel on their job tasks is an example of which of the following types of costs?

ABM stands for

Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?

Lean companies only include manufacturers since service providers and retailers cannot adopt lean operations.

If a company were to increase its appraisal costs by inspecting more units as the units are are in production (during production), the company's external failure costs would most likely

Salvatore LLC provides a wide variety of legal services and uses an activity-based costing system. Data from its activity-based costing system for all services follows: The cost pool activity rate for client meetings is

The first step in developing an ABC system is

If a company uses departmental overhead allocation rates, then the amount of manufacturing overhead allocated to the job is equal to the plantwide overhead rate multiplied by the actual use of the cost allocation base.

Direct labor hours would be the most appropriate cost allocation base for a Machining Department that uses machine robotics extensively.

ABC can be used by which of the following companies?

Which of the following cost of quality categories represent the cost incurred to "perform preventative maintenance on machinery?"

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

Which of the following is an example of a cost item that should be classified as an external failure cost?

What type of costs are incurred to avoid poor quality goods or services in the first place?

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

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters