Question 1

Which of the following is the most appropriate cost driver for allocating the cost of warranty services?

Accepted Answer

A) number of employees 
B) number of materials purchased 
C) number of machine hours 
D) number of service calls 
A) number of employees 
B) number of materials purchased 
C) number of machine hours 
D) number of service calls

Question 2

Dunby Inc.is a consulting firm that offers optimal legal solutions.It allocates indirect costs using a single plantwide rate with direct labor hours as the allocation base.The estimated indirect costs for this year amount to $150,000.The company is expected to work for 5,000 direct labor hours during the year.The direct labor rate is $250 per hour.Clients are billed at 140% of direct labor cost.Last month,Dunby's consultants spent 175 hours on Xyme Inc.Calculate the operating income from Xyme.

Accepted Answer

A) $49,000 
B) $43,750 
C) $38,500 
D) $12,250 
A) $49,000 
B) $43,750 
C) $38,500 
D) $12,250

Question 3

For a pharmaceutical company,the most suitable base for allocating research and development costs to the finished products would be the ________.

Accepted Answer

A) direct labor hours 
B) cost of raw materials purchased 
C) number of new patents filed 
D) number of set ups 
A) direct labor hours 
B) cost of raw materials purchased 
C) number of new patents filed 
D) number of set ups

Question 4

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

Accepted Answer

A) raw materials are ordered in large quantities 
B) production is completed in self-contained work cells 
C) suppliers make frequent deliveries of small quantities of raw materials 
D) management works with suppliers to ensure defect-free raw materials 
A) raw materials are ordered in large quantities 
B) production is completed in self-contained work cells 
C) suppliers make frequent deliveries of small quantities of raw materials 
D) management works with suppliers to ensure defect-free raw materials

Question 5

Quality management systems (QMS)are systems that help managers improve the business's performance by providing quality products and services.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true of costing systems?

Accepted Answer

A) Many traditional costing systems can distort product costs and profitability. 
B) Traditional costing systems tend to be more costly than activity-based costing systems. 
C) Activity-based costing systems tend to combine various costs into a single cost pool. 
D) Activity-based costing systems tend to use fewer cost pools than does a traditional costing system. 
A) Many traditional costing systems can distort product costs and profitability. 
B) Traditional costing systems tend to be more costly than activity-based costing systems. 
C) Activity-based costing systems tend to combine various costs into a single cost pool. 
D) Activity-based costing systems tend to use fewer cost pools than does a traditional costing system.

Question 7

Under the just-in-time management system,________.

Accepted Answer

A) a company's storage costs increase 
B) a company's inventory insurance costs increase 
C) the floor space available for production increases 
D) the risk of the inventory becoming obsolete increases 
A) a company's storage costs increase 
B) a company's inventory insurance costs increase 
C) the floor space available for production increases 
D) the risk of the inventory becoming obsolete increases

Question 8

The ________ system attracts materials,labor,and overhead into production under a just-in-time management system.

Accepted Answer

A) purchase-push 
B) demand-push 
C) purchase-pull 
D) demand-pull 
A) purchase-push 
B) demand-push 
C) purchase-pull 
D) demand-pull

Question 9

Target cost is calculated by deducting desired gross profit from target sales price.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is true of just-in-time management systems?

Accepted Answer

A) It involves ordering raw materials in large quantities to obtain volume discounts. 
B) It triggers production after the customer places an order. 
C) Its successful implementation is independent of vendor relationships. 
D) It contracts with suppliers to deliver large quantities of goods once a year. 
A) It involves ordering raw materials in large quantities to obtain volume discounts. 
B) It triggers production after the customer places an order. 
C) Its successful implementation is independent of vendor relationships. 
D) It contracts with suppliers to deliver large quantities of goods once a year.

Question 11

Dunby Inc.,a law consulting firm,has been using a single plantwide rate with direct labor hours as the allocation base to allocate overhead costs.The direct labor rate is $250 per hour.Chandler Massey,the president of Dunby,decided to develop an ABC system to accurately allocate the indirect costs.He identified two activities that amount to the total indirect costs- travel and information technology support.The other relevant details are given below:   During the current month,Dunby's consultants spent 175 labor hours for Xyme Inc.The job required the professionals to travel 30 miles in total.Determine the total cost of the consulting job using the ABC system.

Accepted Answer

A) $43,750 
B) $8,270 
C) $7,130 
D) $52,020 
A) $43,750 
B) $8,270 
C) $7,130 
D) $52,020

Question 12

Adriano Corp.sold 2,500 cell phones on account for $700 each.The standard direct material and conversion costs of each unit are $173.85 and $57.95,respectively.Record the journal entries for this transaction under the just-in-time costing system.

Accepted Answer

The answer of Adriano Corp.sold 2,500 cell phones on account...

Question 13

Cilia Corp.specializes in the production of finials which is mostly sold within the territory.The selling price for each finial is $15.Using the traditional allocation method to allocate manufacturing overhead,the full-product cost is determined to be $10.The company recently introduced activity-based costing method to allocate its overhead.The refinement of costs shows that the full-product cost is less by $2.50 from the traditional estimate.
Requirement:
1.Calculate and analyze the change in net profit percentage as a result of introduction of activity-based costing.
2.The desired net profit margin of the company is 60%.If the production costs cannot be reduced,by how much should the selling price be increased in order to achieve the desired profit? (Use the cost estimates under activity-based costing.)

Accepted Answer

1.
 @#IMG-DLM& 2.
Desired profit = 60%.Therefore,t

Question 14

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would most likely be treated as an activity in an activity-based costing system?

Accepted Answer

A) direct labor cost 
B) machine processing 
C) direct materials cost 
D) sales revenues 
A) direct labor cost 
B) machine processing 
C) direct materials cost 
D) sales revenues

Question 16

Which of the following is a nonmanufacturing cost?

Accepted Answer

A) direct labor 
B) direct materials 
C) administrative expenses 
D) indirect labor 
A) direct labor 
B) direct materials 
C) administrative expenses 
D) indirect labor

Question 17

Companies which use a just-in-time management system do not benefit from a quality management system.

Accepted Answer

A) True 
 B)False

Question 18

The just-in-time management system is a(n)________.

Accepted Answer

A) labor management system 
B) overhead management system 
C) inventory management system 
D) debt management system 
A) labor management system 
B) overhead management system 
C) inventory management system 
D) debt management system

Question 19

An activity-based costing system is developed in four steps. a.Compute the allocation rate for each activity.
B.Identify activities and estimate their total costs.
C.Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base.
D.Allocate the indirect costs to the cost object.
Which of the following is the correct order of performing these steps?

Accepted Answer

A) a,b,c,d 
B) c,a,b,d 
C) b,c,a,d 
D) b,a,c,d 
A) a,b,c,d 
B) c,a,b,d 
C) b,c,a,d 
D) b,a,c,d

Question 20

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

Accepted Answer

A) True 
 B)False

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

Which of the following is the most appropriate cost driver for allocating the cost of warranty services?

For a pharmaceutical company,the most suitable base for allocating research and development costs to the finished products would be the ________.

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

Quality management systems (QMS)are systems that help managers improve the business's performance by providing quality products and services.

Which of the following statements is true of costing systems?

Under the just-in-time management system,________.

The ________ system attracts materials,labor,and overhead into production under a just-in-time management system.

Target cost is calculated by deducting desired gross profit from target sales price.

Which of the following statements is true of just-in-time management systems?

Adriano Corp.sold 2,500 cell phones on account for $700 each.The standard direct material and conversion costs of each unit are $173.85 and $57.95,respectively.Record the journal entries for this transaction under the just-in-time costing system.

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Which of the following would most likely be treated as an activity in an activity-based costing system?

Which of the following is a nonmanufacturing cost?

Companies which use a just-in-time management system do not benefit from a quality management system.

The just-in-time management system is a(n)________.

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Accounting Information Systems

Filters