Exam 19: Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

A furniture manufacturer has decided that its use of a single plantwide predetermined overhead allocation rate is no longer accurate.In making the transition to using multiple predetermined overhead allocation rates,which of the following statements is incorrect?

Which of the following practices is incompatible with a just-in-time management system?

In ABC systems,the best allocation base is the primary factor that causes the cost to increase or decrease.

Nourishmix,Inc.manufactures food processors.The target sales price is $420 per unit.The company desires a 30% net profit margin on its products.What is the company's target full-product cost per unit using target pricing?

Activity-based costing can be used in determining the cost of services as well as products.

Activity-based management focuses on making decisions that improve customers' satisfaction while also increasing profits.

Bean Brewers,Inc.,a manufacturer of coffee makers,had the following activities,allocated costs,and allocation bases: Activities Allocated Costs Allocation Base Account inquiry (hours) \ 67,000 2000 hours Account billing (lines) \ 37,000 18,000 lines Account verification (accounts) \ 10,000 24,000 accounts Correspondence (letters) \ 12,000 1600 letters The above activities are carried out at two of its regional offices. Activities Northeast Office Midwest Office Account inquiry (hours) 100 hours 250 hours Account billing (lines) 16,000 lines 9000 lines Account verification (accounts) 1200 accounts 600 accounts Correspondence (letters) 30 letters 120 letters How much of the correspondence cost will be assigned to the Northeast Office? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

For each of the following activities,indicate an appropriate allocation base: Activity Allocation Base Warranty Services - Providing service for defective products Setup - Setting up machines for production Shipping-Shipping finished products to customers Machining - Machine usage Purchasing - Purchasing raw materials

The common factor in all quality management systems is the desire to improve the business's performance by providing quality products or services.

Aviatrix Avionics makes three types of radios for small aircraft-Model A,Model B,and Model C.The manufacturing operations are mechanized,and there is no direct labor.Manufacturing overhead costs are significant,and Aviatrix has adopted an activity-based costing system.Direct materials costs per unit for each model are as follows: Model A \ 22 Model B \ 31 Model C \ 38 Aviatrix has three activities-assembly,materials management,and testing.The cost driver for assembly is machine hours.The cost driver for materials management is the number of parts,and the cost driver for testing is the number of units of product.Total costs and production volumes for the year were estimated as follows: Total cost Allocation Base Cost Driver Assembly \ 784,000 122,500 Machine hours Materials management \ 132,000 88,000 Parts Testing \ 26,000 5200 Units The Model A radio requires 12 parts to construct and 20 machine hours of processing.What is the manufacturing cost to make one unit of Model A? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

In the first step in developing an activity-based costing system,the management team must think about how each activity for a product or service might be improved or whether is it necessary at all.

List two types of service companies that would benefit from using activity-based management.For each company listed,state the type of cost information management needs to know. Type of service company Cost information management needs to know

Bayou Snack Company manufactures gourmet dips along with potato chips flavored with Cajun spices.The market price for similar chips is $7.The management of the company desires a 30% net profit margin. The current costing data relating to this product are as follows. Direct materials \ 1.00 Direct labor 1.50 Manufacturing overhead 2.75 Nonmanufacturing costs 0.75 Requirement: Determine if Bayou's current full-product costs meet its target cost.

The costs incurred in training employees is an example of a(n)________.

Costs incurred in customer service are categorized as ________.

Which of the following is an attribute of traditional costing systems?

Which of the following is the last step in developing an activity-based costing system?

________ are costs incurred to avoid poor-quality goods or services.

Stealth,Inc.produces two types of drones,rotary and fixed wing.Stealth estimated $765,000 of manufacturing overhead,and 51,000 machine hours for the year.The allocation base for overhead costs is machine hours.The rotary model actually consumed 21,000 machine hours,and the fixed wing type consumed 30,000 machine hours.How much overhead is allocated to the fixed wing model?

Companies with diverse products can obtain better costing information by using a single plantwide rate for allocating manufacturing costs.