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

Activity-based management is not suitable for service companies as it deals with the proper allocation of manufacturing overhead.

Webster Inc.has received a bid for 12,000 units.The costing estimates show that the average cost per unit for this bid will be $600.The company uses cost-based pricing and adds 25% markup to total costs.What total price will Webster ask for the entire order?

Modiste Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $24,250.Additional information is given below. -Calculate the amount of overhead to be allocated to Satchels.

Agostino Inc.uses a just-in-time costing system.During the month,Agostino Inc.incurred $300,000 as direct labor and $9,000 as overhead.Which of the following is the correct journal entry to record the conversion costs?

Companies using just-in-time management systems are far more vulnerable to production shutdowns if they receive poor-quality or defective raw materials.

Which of the following temporary accounts is typically used in just-in-time management systems to accumulate direct labor and manufacturing overhead costs?

Which of the following is most likely to be categorized as an external failure cost?

Brannon Company manufactures ceiling fans and uses an activity-based costing system.Each ceiling fan consists of twenty separate parts.The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture.Additional information is as follows: - What is the cost of machining per ceiling fan?

Cardec Inc.,a leading manufacturer of car spare parts,divided its manufacturing process into two departments-Production and Packing.The estimated overhead cost for the Production and Packing departments amounted to $25,000,000 and $20,000,000,respectively.The company produces two types of parts-Part-1 and Part-2.The total estimated labor hours for the year 2015 were 40,000 and estimated machine hours were 50,000.The Production department is mechanized whereas the Packing department is labor-oriented.Calculate departmental overhead allocation rates.

Which of the following statements is true of an activity-based costing system?

Just-in-time costing is also known as ________.

The first step in developing an activity-based costing system is to identify the activities that will be used to assign the manufacturing overhead.

________ are costs incurred after the company delivers poor-quality goods or services to customers and then has to make things right with the customer.

Target pricing starts with the full product cost and it then adds the desired profit to arrive at the sales price.

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. - What is the cost per letter for the correspondence activity?

Alpha Company manufactures breadboxes and uses an activity-based costing system.The following information is provided for the month of May: Each breadbox consists of four parts,and the direct materials cost per breadbox is $7.00.There is no direct labor.What is the total manufacturing cost per breadbox?

Predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Vincent Jardine,a CPA,has a firm in the state of New York.Vincent uses ABC to allocate overhead costs and has computed the following predetermined overhead allocation rates: Vincent has important contacts in the northeastern parts of New York.During the past month,Vincent completed a job for Nurix Inc.The job required 135 labor hours and 4,000 photocopies.Determine the amount of indirect costs to be allocated to the job.

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. - What is the cost per line for the account billing activity?

Just-in-time management systems use a combined account for Raw Materials Inventory and Work-in-Process Inventory known as the ________.