Question 1

Which of the following is a lean strategy?

Accepted Answer

A) Group like machines together. 
B) Produce in smaller batches than a traditional system. 
C) Maintain a higher level of inventory than a traditional system. 
D) Lengthen setup times relative to a traditional system. 
A) Group like machines together. 
B) Produce in smaller batches than a traditional system. 
C) Maintain a higher level of inventory than a traditional system. 
D) Lengthen setup times relative to a traditional system.

Question 2

Lean thinking typically focuses on strengthening supply-chain management.

Accepted Answer

A) True 
 B)False

Question 3

The movement of parts is considered a non-value-added activity.

Accepted Answer

A) True 
 B)False

Question 4

Vintage Fun reproduces old-fashioned style roller skates and skateboards. The annual production and sales of roller skates is 900 units, while 1700 skateboards are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Roller skates require 3.5 direct labor hours per unit, while skateboards require 1.25 direct labor hours per unit. The total estimated overhead for the period is $115,300. 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 skateboard using an activity-based costing system would be closest to (Round all answers to two decimal places.)

Accepted Answer

A) $46.11 
B) $134.65 
C) $63.18 
D) $33.45 
A) $46.11 
B) $134.65 
C) $63.18 
D) $33.45

Question 5

Which of the following does activity-based costing consider to be the fundamental cost object?

Accepted Answer

A) Direct labor hours 
B) Activities 
C) Direct materials 
D) Finished goods 
A) Direct labor hours 
B) Activities 
C) Direct materials 
D) Finished goods

Question 6

Beaver Company manufactures coffee tables and uses an activity-based costing system. Each coffee table consists of 30 separate parts totaling $210 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows:   What is the cost of materials handling per coffee table?

Accepted Answer

A) $90 
B) $30 
C) $13 
D) $12 
A) $90 
B) $30 
C) $13 
D) $12

Question 7

Watson's Computer Company uses ABC to account for its manufacturing process.   Watson's Computer Company expects to produce 2620 computers. Watson's Computer Company also expects to use 15,000 parts and have 20 setups.
The allocation rate for packaging is (Round all answers to two decimal places.)

Accepted Answer

A) $3.47 
B) $10.69 
C) $5.65 
D) $5.93 
A) $3.47 
B) $10.69 
C) $5.65 
D) $5.93

Question 8

Lean companies typically arrange production activities into self-contained cells.

Accepted Answer

A) True 
 B)False

Question 9

Logan Manufacturing manufactures several different products and uses an activity-based costing system. Information from its system for the year for all products follows:
   The annual production and sales of one of its products, the Sizzler, are 1,500 units. The following data relate to the production and sales of Sizzlers in the most recent year:
   Required:
1. Calculate the activity cost pool rates for each of the three activity cost pools listed.
2. Calculate the average cost of one Sizzler.

Accepted Answer

The answer of Logan Manufacturing manufactures several different products and...

Question 10

When a company has established separate manufacturing overhead rates for each department, it is using

Accepted Answer

A) departmental overhead rates. 
B) cost distortion. 
C) a plantwide overhead rate. 
D) none of the above. 
A) departmental overhead rates. 
B) cost distortion. 
C) a plantwide overhead rate. 
D) none of the above.

Question 11

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

Accepted Answer

A) Net cost of scrap 
B) Technical support provided to suppliers 
C) Customer returns of defective products 
D) Supplies used in the quality inspection program 
A) Net cost of scrap 
B) Technical support provided to suppliers 
C) Customer returns of defective products 
D) Supplies used in the quality inspection program

Question 12

The benefits of adopting ABC/ABM are higher for companies in more competitive markets.

Accepted Answer

A) True 
 B)False

Question 13

One condition that favors using plantwide overhead rates, rather than departmental overhead rates, is that different jobs or products use the departments to a different extent.

Accepted Answer

A) True 
 B)False

Question 14

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 manufacturing costs for Part 003 is

Accepted Answer

A) $40,075 
B) $27,650 
C) $50,075 
D) $37,650 
A) $40,075 
B) $27,650 
C) $50,075 
D) $37,650

Question 15

Most companies adopt ABC in order to

Accepted Answer

A) cut costs. 
B) get a more accurate price of products. 
C) help make product mix decisions. 
D) all of the above are correct. 
A) cut costs. 
B) get a more accurate price of products. 
C) help make product mix decisions. 
D) all of the above are correct.

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 packaging fees for all three parts is:

Accepted Answer

A) $36,000 
B) $32,000 
C) $16,875 
D) $15,300 
A) $36,000 
B) $32,000 
C) $16,875 
D) $15,300

Question 17

As a result of cost distortion, some products will be overcosted while other products will be undercosted.

Accepted Answer

A) True 
 B)False

Question 18

Non-value-added activities can be described as activities for which the customer is willing to pay.

Accepted Answer

A) True 
 B)False

Question 19

The cost of maintaining quality control testing equipment would be classified as a(n)________ cost.

Accepted Answer

A) appraisal 
B) prevention 
C) internal failure 
D) external failure 
A) appraisal 
B) prevention 
C) internal failure 
D) external failure

Question 20

Using departmental overhead rates is generally less accurate than using a single plantwide overhead rate.

Accepted Answer

A) True 
 B)False

Which of the following is a lean strategy?

Lean thinking typically focuses on strengthening supply-chain management.

The movement of parts is considered a non-value-added activity.

Which of the following does activity-based costing consider to be the fundamental cost object?

Watson's Computer Company uses ABC to account for its manufacturing process. Watson's Computer Company expects to produce 2620 computers. Watson's Computer Company also expects to use 15,000 parts and have 20 setups. The allocation rate for packaging is (Round all answers to two decimal places.)

Lean companies typically arrange production activities into self-contained cells.

When a company has established separate manufacturing overhead rates for each department, it is using

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

The benefits of adopting ABC/ABM are higher for companies in more competitive markets.

One condition that favors using plantwide overhead rates, rather than departmental overhead rates, is that different jobs or products use the departments to a different extent.

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 manufacturing costs for Part 003 is

Most companies adopt ABC in order to

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 packaging fees for all three parts is:

As a result of cost distortion, some products will be overcosted while other products will be undercosted.

Non-value-added activities can be described as activities for which the customer is willing to pay.

The cost of maintaining quality control testing equipment would be classified as a(n)________ cost.

Using departmental overhead rates is generally less accurate than using a single plantwide overhead rate.

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

Which of the following is a lean strategy?

Lean thinking typically focuses on strengthening supply-chain management.

The movement of parts is considered a non-value-added activity.

Which of the following does activity-based costing consider to be the fundamental cost object?

Watson's Computer Company uses ABC to account for its manufacturing process. Watson's Computer Company expects to produce 2620 computers. Watson's Computer Company also expects to use 15,000 parts and have 20 setups. The allocation rate for packaging is (Round all answers to two decimal places.)

Lean companies typically arrange production activities into self-contained cells.

When a company has established separate manufacturing overhead rates for each department, it is using

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

The benefits of adopting ABC/ABM are higher for companies in more competitive markets.

One condition that favors using plantwide overhead rates, rather than departmental overhead rates, is that different jobs or products use the departments to a different extent.

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 manufacturing costs for Part 003 is

Most companies adopt ABC in order to

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 packaging fees for all three parts is:

As a result of cost distortion, some products will be overcosted while other products will be undercosted.

Non-value-added activities can be described as activities for which the customer is willing to pay.

The cost of maintaining quality control testing equipment would be classified as a(n)________ cost.

Using departmental overhead rates is generally less accurate than using a single plantwide overhead rate.

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