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

Pitt Jones Company,a manufacturer of small appliances,had the following activities,allocated costs,and allocation bases: The above activities are carried out at two of its regional offices. - How much of the correspondence cost will be assigned to the Northeast Office?

Jetz Inc.manufactures water bottles for children.Similar water bottles are available in the market for $5.Jetz desires a 20% net profit margin.Jetz's target cost is ________.

Oscar Inc.,a manufacturer of gift articles,uses a single plantwide rate to allocate indirect costs.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead cost for the year is $5,000,000.And estimated machine hours are 25,000.During the year,the actual machine hours used was 30,000.Calculate the predetermined overhead allocation rate.

Under the just-in-time costing system,a credit purchase of raw materials is recorded by ________.

Cost incurred in the inspection of final products or services is an example of a(n)________.

J-Time Inc.is planning to launch a new brand of watches for kids.Similar watches are available in the market for $50.In order to penetrate the market,the company plans to use target pricing and desires a 20% net profit markup on total cost.Calculate the target cost.

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

Just-in-time costing does not track the cost of products from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.

Appraisal costs are costs incurred ________.

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

Businesses should invest up front in internal and external failure costs to reduce prevention and appraisal costs.

Alfeo Corp.has adopted a JIT management system and has the following transactions in February: Open a T-account for Conversion Costs.Post appropriate entries to determine the amount of underallocated or overallocated overhead.Record the adjusting entry.

Orlando 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 Orlando has adopted an activity-based costing system.Direct materials costs per unit for each model are as follows: Orlando 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 2015 were estimated as follows: The Model A radio requires twelve parts to construct,and requires 16 machine hours of processing.What is the manufacturing cost to make one unit of Model A?

In target pricing,the target price is the ________.

Under just-in-time costing,the purchase of raw materials is recorded by debiting the Raw Materials Inventory account.

Activity-based management (ABM)can be used to make pricing and product mix decisions.

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.What is the predetermined overhead allocation rate per direct labor hour?

Which of the following is an example of internal failure costs?

The just-in-time costing system waits until the units are completed to record the cost of production.

Quality management systems emphasize external failure costs.