Exam 4: Activity-Based Costing, lean Production, and the Costs of Quality

Which term below best describes the quality cost category for "preventive maintenance on machinery"?

A plantwide overhead rate is calculated by multiplying the estimated total manufacturing overhead costs for the year by the estimated total amount of the allocation base for the year.

Sparrow Manufacturing manufactures small parts and uses an activity-based costing system. Activity Est. Indirect Activity Costs Allocation base Cost allocation rate Materials \ 70,000 Material moves \ 2.00/ move Assembling \ 240,000 Direct labor hours \ 8.00/ dir. labor hour Packaging \ 80,000 \# of finished units \ 0.80/ finished unit The following parts were produced in October with the following information: Part \# Produced Materials Costs \# Moves Dir. Labor Hrs. A 2,500 \ 2,500 800 200 B 3,500 \ 7,000 1,500 300 C 4,500 \ 11,250 2,200 1,000 - Total manufacturing costs for part C is:

Waste activities is another name for value-added activities.

Electronics Unlimited uses activity-based costing to allocate all manufacturing conversion costs.Electronics Unlimited produces computer keyboards; each computer keyboard has $8.00 of direct materials,includes 12 parts and requires 1/2 hour of machine time.Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts \ .25 per part Machining Machine hours \ 12.00 per machine hour Assembling Number of parts \ 1.00 per part Packaging Number of finished units \ 1.75 per finished unit - What is the cost of materials handling per computer keyboard?

Which of the following is NOT considered to be part of the cost hierarchy often used to implement ABC?

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

Lean production systems typically have employees cross-trained to perform more than one activity.

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) \ 75,000 2,500 Account billing (lines) \ 45,000 30,000 Account verification (accounts) \ 18,000 24,000 Correspondence (letters) \ 40,000 4,000 Hinckley & Granger uses activity based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 300 600 Account billing (lines) 8,000 6,000 Account verification (accounts) 5,000 4,500 Correspondence (letters) 500 600 - How much of the account inquiry cost will be assigned to Department Q?

Electronics Unlimited uses activity-based costing to allocate all manufacturing conversion costs.Electronics Unlimited produces computer keyboards; each computer keyboard has $8.00 of direct materials,includes 12 parts and requires 1/2 hour of machine time.Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts \ .25 per part Machining Machine hours \ 12.00 per machine hour Assembling Number of parts \ 1.00 per part Packaging Number of finished units \ 1.75 per finished unit - What is the cost of machining per computer keyboard?

Sparrow Manufacturing manufactures small parts and uses an activity-based costing system. Activity Est. Indirect Activity Costs Allocation base Cost allocation rate Materials \ 70,000 Material moves \ 2.00/ move Assembling \ 240,000 Direct labor hours \ 8.00/ dir. labor hour Packaging \ 80,000 \# of finished units \ 0.80/ finished unit The following parts were produced in October with the following information: Part \# Produced Materials Costs \# Moves Dir. Labor Hrs. A 2,500 \ 2,500 800 200 B 3,500 \ 7,000 1,500 300 C 4,500 \ 11,250 2,200 1,000 - Total manufacturing costs for part B is:

Lean production systems typically arrange production activities in self-contained cells.

Durable Engines Company uses ABC to account for it manufacturing process. Activities Indirect activity budget Allocation base (cost driver) Materials handling \ 36,000 Based an number af parts Maching setup \ 19,200 Based an number of setups Assembling \ 6,000 Based an number of parts Packaping \ 12,800 Based an number af finished units Durable Engines Company expects to produce 2,000 engines.Durable Engines Company also expects to use 12,000 parts and have 16 setups. - The allocation rate for materials handling will be:

When calculating a departmental overhead rate,the numerator should be the:

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) \ 75,000 2,500 Account billing (lines) \ 45,000 30,000 Account verification (accounts) \ 18,000 24,000 Correspondence (letters) \ 40,000 4,000 Hinckley & Granger uses activity based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 300 600 Account billing (lines) 8,000 6,000 Account verification (accounts) 5,000 4,500 Correspondence (letters) 500 600 - How much of the account verification costs will be assigned to Department P?

The cost of product liability claims is an example of a(n):

Signs that a product cost system is not working properly include that:

An example of a prevention cost is the cost of redesigning the product to reduce its complexity.

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) \ 75,000 2,500 Account billing (lines) \ 45,000 30,000 Account verification (accounts) \ 18,000 24,000 Correspondence (letters) \ 40,000 4,000 Hinckley & Granger uses activity based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 300 600 Account billing (lines) 8,000 6,000 Account verification (accounts) 5,000 4,500 Correspondence (letters) 500 600 - What is the cost per driver unit for the account inquiry activity?

Durable Engines Company uses ABC to account for it manufacturing process. Activities Indirect activity budget Allocation base (cost driver) Materials handling \ 36,000 Based an number af parts Maching setup \ 19,200 Based an number of setups Assembling \ 6,000 Based an number of parts Packaping \ 12,800 Based an number of finished urits Durable Engines Company expects to produce 2,000 engines.Durable Engines Company also expects to use 12,000 parts and have 16 setups. - The allocation rate for engine setups is: