Question 1

If the cost of an activity increases with the quantity of items used, it is which of the following?

Accepted Answer

A) market-sustaining cost 
B) output unit-level cost 
C) batch-level cost 
D) product-sustaining (service-sustaining)costs 
E) facility-sustaining cost 
A) market-sustaining cost 
B) output unit-level cost 
C) batch-level cost 
D) product-sustaining (service-sustaining)costs 
E) facility-sustaining cost B

Question 2

The costs of hiring building security would be which of the following?

Accepted Answer

A) output unit-level costs 
B) batch-level costs 
C) general-level costs 
D) product-sustaining costs 
E) facility-sustaining costs 
A) output unit-level costs 
B) batch-level costs 
C) general-level costs 
D) product-sustaining costs 
E) facility-sustaining costs E

Question 3

When ever possible use the number of units produced as the cost-allocation base for homogeneous indirect cost pools.

Accepted Answer

A) True 
 B)False  False

Question 4

By defining activities and identifying the costs of performing each activity, ABC systems provide detailed information regarding how an organization utilizes its available resources.

Accepted Answer

A) True 
 B)False

Question 5

The Guy Fawkes Company is noted for an exceptionally impressive line of Mardi Gras masks.Guy Fawkes has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the current year:
   Required:
a.Determine the activity-cost-driver rate for each of the four selling and distribution activities.
b.Under what circumstances is it appropriate to use each of the activity-cost drivers?
c.Describe at least one possible negative behavioral consequence for each of the four activity-cost drivers.

Accepted Answer

a.Activity-cost driver rate for Marketin

Question 6

Use the information below to answer the following question(s).A transportation company provides bussing, limo and taxi service.The company charges: $350 per day for bussing service; $2.00 per kilometre for taxi service; and, $3.50 per kilometre for limo service.Two individual clients, the school board and the city government offices use the majority of the limo service on a contract agreement.Bussing services are used exclusively by the school board, and the taxi service is used almost exclusively by the general public, although the school board uses the taxi services when individual students have to be transported on occasion.Indirect costs are accumulated on internal records at $1.50 per kilometre for limo use and $1.00 per kilometre for taxi use, and $195 per day for each of the twenty buses.The company's costing system has tracked the following activities for the month:
  
-The previous controller at the transportation company had always estimated the indirect costs at 25% of billings.What indirect costs were accumulated for each major client for the month under this assumption?

Accepted Answer

A) School Board, $33,610.00; City Gov't, $1,080.88 
B) School Board, $2,022.50; City Gov't, $33,610.00 
C) School Board, $33,610.00; City Gov't, $1,762.63 
D) School Board, $1,762.63; City Gov't, $1,921.25 
E) School Board, $2,022.50; City Gov't, $1,762.63 
A) School Board, $33,610.00; City Gov't, $1,080.88 
B) School Board, $2,022.50; City Gov't, $33,610.00 
C) School Board, $33,610.00; City Gov't, $1,762.63 
D) School Board, $1,762.63; City Gov't, $1,921.25 
E) School Board, $2,022.50; City Gov't, $1,762.63

Question 7

Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White.Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of brass, chrome and white faucets, respectively.The following additional data apply:
   Per Unit data:
   Overhead cost based on direct labour
   Hours per 1,000-unit batch:
   Total overhead costs and activity levels for the year are estimated as follows:
   Required:
   b.Determine the activity cost driver rate for setup costs and inspection costs.
c.Using the ABC system, for the brass style of faucet:
   d.Explain the difference between the profits obtained from the traditional system and the ABC system.Which system provides a better estimate of profitability? Why?

Accepted Answer

a.Traditional system:
 @#IMG-DLM& b.Set-

Question 8

List and describe the purposes of the three main guidelines for refining a cost system.

Accepted Answer

@#IMG-DLM& 2.Indirect-cost pools.Expand the number

Question 9

Which of the following is a sign that an ABC system may be useful?

Accepted Answer

A) There are small amounts of indirect costs. 
B) Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity. 
C) Products that a company is well-suited to make and sell show large profits; whereas products that a company is less suited to produce and sell show small profits. 
D) Operations staff agrees with accountants about the costs of manufacturing and marketing products and services. 
E) Almost none of the indirect costs are identified as output unit-level costs. 
A) There are small amounts of indirect costs. 
B) Products make diverse demands on resources because of differences in volume, process steps, batch size, or complexity. 
C) Products that a company is well-suited to make and sell show large profits; whereas products that a company is less suited to produce and sell show small profits. 
D) Operations staff agrees with accountants about the costs of manufacturing and marketing products and services. 
E) Almost none of the indirect costs are identified as output unit-level costs.

Question 10

Answer the following questions using the information below:
Gregory Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year:
   The accounting records show the Mossman Job consumed the following resources:
  
-If Gregory Enterprises uses a simple cost system based on direct labour hours then what amount of indirect costs will be allocated to the Mossman job?

Accepted Answer

A) $60 
B) $240 
C) $100 
D) $160 
E) $80 
A) $60 
B) $240 
C) $100 
D) $160 
E) $80

Question 11

Answer the following question(s)using the information below.Wallace Printing has contracts to complete weekly supplements required by forty-six customers.For the year 2019, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 10 million pages.For 2019 Wallace Printing decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis:
   During 2019, two customers, Wayward Insurance and Hapless Systems, are expected to use the following printing services:
  
-Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Hapless Systems during 2019?

Accepted Answer

A) $19,000 
B) $3,800 
C) $1,900 
D) $2,520 
E) $3,192 
A) $19,000 
B) $3,800 
C) $1,900 
D) $2,520 
E) $3,192

Question 12

Which of the following is relevant concerning cost hierarchies?

Accepted Answer

A) activity levels 
B) determining whether costs are variable or fixed 
C) costing on the value chain 
D) separating inventoriable costs from period costs 
E) minimum cost required for a particular process 
A) activity levels 
B) determining whether costs are variable or fixed 
C) costing on the value chain 
D) separating inventoriable costs from period costs 
E) minimum cost required for a particular process

Question 13

Match the cost driver in the right column below to the appropriate function in the left column.
A)Number of shipments
B)Number of purchase orders
C)Number of employees
D)Number of customers
E)Number of desktop computers
F)Number of invoices
-Shipping

Accepted Answer

The answer of Match the cost driver in the right...

Question 14

Outsourcing the accounting function is an example of what facet of activity-based management?

Accepted Answer

A) increase effective coordination among business function activities 
B) reduce costs of non-value-added activities 
C) improve selection of process activities to enhance profit 
D) match the company's use of resources to customer demand 
E) achieve planned growth 
A) increase effective coordination among business function activities 
B) reduce costs of non-value-added activities 
C) improve selection of process activities to enhance profit 
D) match the company's use of resources to customer demand 
E) achieve planned growth

Question 15

A product that consumes a relatively high level of resources but is reported to have a relatively low cost, is an example of

Accepted Answer

A) increased market share. 
B) product marketing. 
C) product undercosting. 
D) product overcosting. 
E) product sub-optimization. 
A) increased market share. 
B) product marketing. 
C) product undercosting. 
D) product overcosting. 
E) product sub-optimization.

Question 16

A division of a company manufactures two products, which are in high demand in the defence industry.Product A is stamped out in a machine press, at the rate of 10,000 per hour.Product B is identical to product A, with the exception that it is made from thicker steel, and requires the machine press to be recalibrated.Product A is produced on the day shift and product B is produced on the afternoon shift, allowing set up changes to be done between shifts.In this case, set up hours are related to which of the following?

Accepted Answer

A) units of output 
B) batches of output 
C) the number of customers 
D) machine hours 
E) labour hours 
A) units of output 
B) batches of output 
C) the number of customers 
D) machine hours 
E) labour hours

Question 17

Answer the following question(s)using the information below.Wallace Printing has contracts to complete weekly supplements required by forty-six customers.For the year 2019, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 10 million pages.For 2019 Wallace Printing decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis:
   During 2019, two customers, Wayward Insurance and Hapless Systems, are expected to use the following printing services:
  
-Using activity-based costing to allocate overhead costs, what is the total manufacturing overhead cost estimate for Hapless Systems during 2019?

Accepted Answer

A) $3,113.75 
B) $1,495.00 
C) $2,068.00 
D) $3,412.50 
E) $3,665.00 
A) $3,113.75 
B) $1,495.00 
C) $2,068.00 
D) $3,412.50 
E) $3,665.00

Question 18

The use of a single indirect cost rate is more likely to

Accepted Answer

A) undercost high volume simple products. 
B) undercost low volume complex products. 
C) undercost lower priced products. 
D) overcost higher priced products. 
E) overcost low volume complex products. 
A) undercost high volume simple products. 
B) undercost low volume complex products. 
C) undercost lower priced products. 
D) overcost higher priced products. 
E) overcost low volume complex products.

Question 19

Which of the following is NOT an activity under an ABC system?

Accepted Answer

A) designing products 
B) engineering 
C) setting up equipment 
D) distributing products 
E) customers 
A) designing products 
B) engineering 
C) setting up equipment 
D) distributing products 
E) customers

Question 20

Which of the following does not characterize an ABC system, as compared to a traditional costing system?

Accepted Answer

A) smaller cost pools 
B) more cost drivers 
C) more homogeneous cost pools 
D) focus on activities 
E) less expensive to set up and maintain 
A) smaller cost pools 
B) more cost drivers 
C) more homogeneous cost pools 
D) focus on activities 
E) less expensive to set up and maintain

If the cost of an activity increases with the quantity of items used, it is which of the following?

The costs of hiring building security would be which of the following?

When ever possible use the number of units produced as the cost-allocation base for homogeneous indirect cost pools.

By defining activities and identifying the costs of performing each activity, ABC systems provide detailed information regarding how an organization utilizes its available resources.

List and describe the purposes of the three main guidelines for refining a cost system.

Which of the following is a sign that an ABC system may be useful?

Which of the following is relevant concerning cost hierarchies?

Match the cost driver in the right column below to the appropriate function in the left column. A)Number of shipments B)Number of purchase orders C)Number of employees D)Number of customers E)Number of desktop computers F)Number of invoices -Shipping

Outsourcing the accounting function is an example of what facet of activity-based management?

A product that consumes a relatively high level of resources but is reported to have a relatively low cost, is an example of

The use of a single indirect cost rate is more likely to

Which of the following is NOT an activity under an ABC system?

Which of the following does not characterize an ABC system, as compared to a traditional costing system?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 5: Activity-Based Costing and Management

If the cost of an activity increases with the quantity of items used, it is which of the following?

The costs of hiring building security would be which of the following?

When ever possible use the number of units produced as the cost-allocation base for homogeneous indirect cost pools.

By defining activities and identifying the costs of performing each activity, ABC systems provide detailed information regarding how an organization utilizes its available resources.

List and describe the purposes of the three main guidelines for refining a cost system.

Which of the following is a sign that an ABC system may be useful?

Which of the following is relevant concerning cost hierarchies?

Match the cost driver in the right column below to the appropriate function in the left column. A)Number of shipments B)Number of purchase orders C)Number of employees D)Number of customers E)Number of desktop computers F)Number of invoices -Shipping

Outsourcing the accounting function is an example of what facet of activity-based management?

A product that consumes a relatively high level of resources but is reported to have a relatively low cost, is an example of

The use of a single indirect cost rate is more likely to

Which of the following is NOT an activity under an ABC system?

Which of the following does not characterize an ABC system, as compared to a traditional costing system?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters