Question 1

Which of the following is a sign that a product cost system is not working properly?

Accepted Answer

A) The cost system is fully depreciated. 
B) The cost system was installed five years ago. 
C) The cost system has multiple allocation bases. 
D) Managers don't understand costs and profits. 
A) The cost system is fully depreciated. 
B) The cost system was installed five years ago. 
C) The cost system has multiple allocation bases. 
D) Managers don't understand costs and profits.

Question 2

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 unit cost for Part 002 is closest to (rounded):

Accepted Answer

A) $6.46 
B) $8.83 
C) $8.98 
D) $4.86 
A) $6.46 
B) $8.83 
C) $8.98 
D) $4.86

Question 3

The lost profits from lost customers are an example of what type of cost?

Accepted Answer

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

Question 4

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 assembly fees for part B is

Accepted Answer

A) $3000 
B) $24,000 
C) $2700 
D) $675 
A) $3000 
B) $24,000 
C) $2700 
D) $675

Question 5

If a company were to decrease its prevention costs by eliminating employee training, the company's external failure costs would most likely

Accepted Answer

A) increase. 
B) decrease. 
C) remain the same. 
D) Unable to predict 
A) increase. 
B) decrease. 
C) remain the same. 
D) Unable to predict

Question 6

Inspection is considered a non-value-added activity.

Accepted Answer

A) True 
 B)False

Question 7

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.
The following information was gathered regarding Job 607:
# of units in the job = 5,000
# of units in each batch = 1,000
# of setups required to complete the job = 1
# of machine hours = 220
How much would the overhead be overcosted or undercosted if Gwynnie Pie Company continues to use the plantwide overhead rate as opposed to using ABC Costing?

Accepted Answer

A) $931.69 undercosted 
B) $994.40 overcosted 
C) $62.71 overcosted 
D) $45.34 undercosted 
A) $931.69 undercosted 
B) $994.40 overcosted 
C) $62.71 overcosted 
D) $45.34 undercosted

Question 8

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

Accepted Answer

A) True 
 B)False

Question 9

Indications that a product cost system needs revision include

Accepted Answer

A) managers lose bids they expected to win and win bids they expected to lose. 
B) employees do not believe the cost numbers are accurate. 
C) the company uses a single-allocation-base system developed long ago. 
D) all of the above. 
A) managers lose bids they expected to win and win bids they expected to lose. 
B) employees do not believe the cost numbers are accurate. 
C) the company uses a single-allocation-base system developed long ago. 
D) all of the above.

Question 10

The Sit-N-Spin Corporation manufactures and assembles office chairs. Sit-N-Spin uses an activity-based costing system to allocate all manufacturing conversion costs. Each chair consists of 20 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 assembling per chair?

Accepted Answer

A) $6.00 
B) $5.50 
C) $30.00 
D) $55.00 
A) $6.00 
B) $5.50 
C) $30.00 
D) $55.00

Question 11

Which of the following items is not a characteristic of a lean company?

Accepted Answer

A) Machines are arranged by function. 
B) Machine setup times are reduced. 
C) Production is in small batches. 
D) Employees are trained to operate more than one machine. 
A) Machines are arranged by function. 
B) Machine setup times are reduced. 
C) Production is in small batches. 
D) Employees are trained to operate more than one machine.

Question 12

The cost allocation rate for each activity is equal to the total estimated activity cost pool divided by the total estimated activity allocation base.

Accepted Answer

A) True 
 B)False

Question 13

The cost of training quality control supervisors who are responsible for overseeing the inspection of units 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 14

The costs incurred when poor quality goods or services are detected and corrected after delivery to customers are called ________ costs.

Accepted Answer

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

Question 15

Regarding activity-based costing systems, which of the following statements is true?

Accepted Answer

A) ABC systems accumulate overhead costs by departments. 
B) ABC costing systems are less complex and, therefore, less costly than traditional systems. 
C) ABC costing systems have separate indirect cost allocation rates for each activity. 
D) ABC costing systems can be used in manufacturing firms only. 
A) ABC systems accumulate overhead costs by departments. 
B) ABC costing systems are less complex and, therefore, less costly than traditional systems. 
C) ABC costing systems have separate indirect cost allocation rates for each activity. 
D) ABC costing systems can be used in manufacturing firms only.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The eight wastes of traditional operations includes all of the following except

Accepted Answer

A) defects. 
B) overproduction. 
C) waiting. 
D) utilizing people to their full potential. 
A) defects. 
B) overproduction. 
C) waiting. 
D) utilizing people to their full potential.

Question 18

The cost to design and market new models would be considered a facility-level cost.

Accepted Answer

A) True 
 B)False

Question 19

Quality-related costs generally fall into four different categories, which include all of the following except

Accepted Answer

A) prevention costs. 
B) appraisal costs. 
C) internal failure costs. 
D) transportation costs. 
A) prevention costs. 
B) appraisal costs. 
C) internal failure costs. 
D) transportation costs.

Question 20

All of the following are considered to be part of the cost hierarchy often used to implement ABC, with the exception of

Accepted Answer

A) production-level activity. 
B) batch-level activity. 
C) product-level activity. 
D) unit-level activity. 
A) production-level activity. 
B) batch-level activity. 
C) product-level activity. 
D) unit-level activity.

Which of the following is a sign that a product cost system is not working properly?

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 unit cost for Part 002 is closest to (rounded):

The lost profits from lost customers are an example of what type of cost?

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 assembly fees for part B is

If a company were to decrease its prevention costs by eliminating employee training, the company's external failure costs would most likely

Inspection is considered a non-value-added activity.

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

Indications that a product cost system needs revision include

Which of the following items is not a characteristic of a lean company?

The cost allocation rate for each activity is equal to the total estimated activity cost pool divided by the total estimated activity allocation base.

The cost of training quality control supervisors who are responsible for overseeing the inspection of units would be classified as a(n)________ cost.

The costs incurred when poor quality goods or services are detected and corrected after delivery to customers are called ________ costs.

Regarding activity-based costing systems, which of the following statements is true?

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

The eight wastes of traditional operations includes all of the following except

The cost to design and market new models would be considered a facility-level cost.

Quality-related costs generally fall into four different categories, which include all of the following except

All of the following are considered to be part of the cost hierarchy often used to implement ABC, with the exception of

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 sign that a product cost system is not working properly?

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 unit cost for Part 002 is closest to (rounded):

The lost profits from lost customers are an example of what type of cost?

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 assembly fees for part B is

If a company were to decrease its prevention costs by eliminating employee training, the company's external failure costs would most likely

Inspection is considered a non-value-added activity.

Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.

Indications that a product cost system needs revision include

Which of the following items is not a characteristic of a lean company?

The cost allocation rate for each activity is equal to the total estimated activity cost pool divided by the total estimated activity allocation base.

The cost of training quality control supervisors who are responsible for overseeing the inspection of units would be classified as a(n)________ cost.

The costs incurred when poor quality goods or services are detected and corrected after delivery to customers are called ________ costs.

Regarding activity-based costing systems, which of the following statements is true?

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

The eight wastes of traditional operations includes all of the following except

The cost to design and market new models would be considered a facility-level cost.

Quality-related costs generally fall into four different categories, which include all of the following except

All of the following are considered to be part of the cost hierarchy often used to implement ABC, with the exception of

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