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

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Potter & Weasley uses activity based costing. The above activities are used by Departments P and Q as follows: How much of the account inquiry cost will be assigned to Department Q?

Which of the following systems focuses on activities as the fundamental cost objects and uses the costs of those activities as building blocks for compiling the indirect costs of products and other cost objects?

Molding and sanding each unit of product would most likely be classified as a ________ cost.

Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $60.00 of direct materials, includes 40 parts and requires 3 hours of machine time. Additional information follows: What is the cost of machining per phone?

Which of the following can be used in conjunction with activity-based costing?

Benjamin Company manufactures a wide variety of products and uses an activity-based costing system. Data from its activity-based costing system for all products follows: What is the engineering cost pool rate per engineering hour?

Merchandising and service companies, as well as governmental agencies, can use refined cost allocation systems to provide their managers with better cost information.

OP Technologies Manufacturing manufactures small parts and uses an activity-based costing system. The following parts were produced in October with the following information: Total manufacturing costs for part B is

The cost to research and develop, design and market new models would be considered a product-level cost.

A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is

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

The goal of total quality management (TQM)is to provide customers with inferior products and services.

One key element of lean production is to produce large batches.

Production loss caused by downtime is an example of a(n)

The cost of installing improved production equipment and production processes is a(n)________ cost.

Value-added activities are activities that could be reduced or removed from the process with no ill effect on the end product or service.

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs by the estimated total quantity of the cost allocation base.

Lean thinking is a management strategy that includes maintaining large inventories.

Traditional costing systems are generally more accurate than ABC costing.

When calculating a departmental overhead rate, what should the numerator be?