Question 1

As non-value-added activities and their associated resources are eliminated,a company's

Accepted Answer

A) costs will decrease. 
B) fixed costs will be eliminated. 
C) variable costs will increase. 
D) fixed costs will increase. 
A) costs will decrease. 
B) fixed costs will be eliminated. 
C) variable costs will increase. 
D) fixed costs will increase.

Question 2

The total amount of manufacturing overhead allocated to a particular product will always be the same for both the traditional overhead allocation method based on direct labor hours and the activity-based costing overhead allocation.

Accepted Answer

A) True 
 B)False

Question 3

Place an "X" in the column that corresponds to the type of activity referred to in a hospital setting.

Accepted Answer

The answer of Place an "X" in the column that...

Question 4

A difference in GAAP-based product costing and activity-based costing is that under activity-based costing

Accepted Answer

A) all costs are classified as product and period costs whereas under GAAP they are classified by behavior. 
B) sales less cost of goods sold is classified as gross profit whereas under GAAP this subtotal is titled contribution margin. 
C) selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level,batch-level or product-level activities. 
D) all costs are traceable whereas in GAAP-based costing all costs are not traceable. 
A) all costs are classified as product and period costs whereas under GAAP they are classified by behavior. 
B) sales less cost of goods sold is classified as gross profit whereas under GAAP this subtotal is titled contribution margin. 
C) selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level,batch-level or product-level activities. 
D) all costs are traceable whereas in GAAP-based costing all costs are not traceable.

Question 5

A simple ABC model can have fewer than 20 activities; a complex model may include up to 100 activities,but no more.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following characteristics relate to non-value-added activities?

Accepted Answer

A) They are sometimes essential to production. 
B) They can sometimes be decreased without affecting the quality of operations. 
C) Both they are sometimes essential to production and they can sometimes be decreased without affecting the quality of operations. 
D) Neither that they are sometimes essential to production nor that they can sometimes be decreased without affecting the quality of operations. 
A) They are sometimes essential to production. 
B) They can sometimes be decreased without affecting the quality of operations. 
C) Both they are sometimes essential to production and they can sometimes be decreased without affecting the quality of operations. 
D) Neither that they are sometimes essential to production nor that they can sometimes be decreased without affecting the quality of operations.

Question 7

In an activity-based costing system,after the manufacturing overhead costs have been assigned to activity cost pools,the next step is to calculate the

Accepted Answer

A) True 
 B)False

Question 8

Schwynn Inc.manufactures street bicycle tires and mountain bicycle tires.To determine the amount of overhead to assign to each product line,the controller,Chu has developed the following information.
Street Mountain
Estimated tires produced 25,000 15,000
Direct labor hours per tire 2 4
Total estimated overhead costs for the two product lines are $990,000.
Required:
a.Compute the overhead cost assigned to the street tires and mountain tires,assuming that direct labor hours is used to allocate overhead costs.
b.Chu is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the mountain tire product line because of its complexity.He therefore develops the following three activity cost pools and related cost drivers to better understand these costs.
   
Compute the activity-based overhead rates for these three cost pools. 
c.Compute the cost that is assigned to the street tires and mountain tires product lines using an activity-based costing system,given the following information.
Expected Use of Cost Drivers per Product
Street Mountain
Number of setups 150 350
Direct labor hours 25,000 15,000
Number of inspections 180 320
d.What do you believe Chu should do?

Accepted Answer

a.Direct labor hours for street tires 25

Question 9

Jones Manufacturing Company makes two products.The company's budget includes $500,000 of overhead.In the past,the company allocated overhead based on estimated total direct labor hours of 20,000.Jones recently implemented an activity-based costing system and had determined that overhead can be broken into three overhead pools: processed purchase orders,machine setups,and good shipped.The following is a summary of company information:
   Required: 
a.Calculate the company's overhead rate based on total direct hours.
b.Calculate the company's overhead rates using the activity-based costing pools.
Unit 7-2,

Accepted Answer

a.$500,000/20,000 = $25 per di

Question 10

Dawson Company manufactures two products,Regular and Deluxe.Overhead costs consist of machining,$2,500,000; and assembly,$1,250,000.Recent data are provided below: Regular Deluxe
Direct labor hours 10,000 15,000
Machine hours 10,000 30,000
Number of parts 90,000 160,000
Overhead allocated to Regular using a single overhead rate based on number of parts and using activity based costing,respectively,are:

Accepted Answer

A) $2,400,000 and $2,625,000 
B) $937,500 and $2,812,500 
C) $1,350,000 and $1,125,000 
D) $1,075,000 and $2,675,000 
A) $2,400,000 and $2,625,000 
B) $937,500 and $2,812,500 
C) $1,350,000 and $1,125,000 
D) $1,075,000 and $2,675,000

Question 11

With activity-based costing,the goal is to

Accepted Answer

A) develop a product cost that captures the amount of each resource consumed by the activities performed to produce a specific product. 
B) develop a product cost that allocates manufacturing overhead to each resource consumed by the activities performed to a group of similar products. 
C) develop a product cost that eliminates all waste such as machine down time and defective products. 
D) develop a product cost by revenue allocations. 
A) develop a product cost that captures the amount of each resource consumed by the activities performed to produce a specific product. 
B) develop a product cost that allocates manufacturing overhead to each resource consumed by the activities performed to a group of similar products. 
C) develop a product cost that eliminates all waste such as machine down time and defective products. 
D) develop a product cost by revenue allocations.

Question 12

The following list includes activities that are performed in a manufacturing company.Classify each activity as value-added or non-value added.

Accepted Answer

The answer of The following list includes activities that are...

Question 13

Which of the following is a way a company can use information about activities to manage its operations?

Accepted Answer

A) Activity-based costing 
B) Activity-based management 
C) Activity-based budgeting 
D) Activity-based costing,activity-based management,and activity-based budgeting 
A) Activity-based costing 
B) Activity-based management 
C) Activity-based budgeting 
D) Activity-based costing,activity-based management,and activity-based budgeting

Question 14

The categories of activities that are required to produce and sell products,non-value-added and value-added,are defined from which of the following perspectives?

Accepted Answer

A) Industry 
B) Management 
C) Customer 
D) Organization 
A) Industry 
B) Management 
C) Customer 
D) Organization

Question 15

Identifying activities performed in the organization is the first step in developing activity-based product costs.Which of the following is a way to identify these activities?

Accepted Answer

A) Asking employees what they do 
B) Observe what employees do 
C) Both asking employees what they do and observing what employees do 
D) Neither asking employees what they do nor observing what employees do 
A) Asking employees what they do 
B) Observe what employees do 
C) Both asking employees what they do and observing what employees do 
D) Neither asking employees what they do nor observing what employees do

Question 16

The first step in developing activity-based product costs is to develop activity cost pools.

Accepted Answer

A) True 
 B)False

Question 17

The examination of business processes to identify incremental changes that may reduce operating costs is referred to as

Accepted Answer

A) process improvement. 
B) incremental analysis. 
C) business process analysis. 
D) activity-based management. 
A) process improvement. 
B) incremental analysis. 
C) business process analysis. 
D) activity-based management.

Question 18

A characteristic of non-value-added activities is that they

Accepted Answer

A) can always be eliminated. 
B) can never be eliminated. 
C) are always related to fixed costs. 
D) are sometimes essential to production or business operations. 
A) can always be eliminated. 
B) can never be eliminated. 
C) are always related to fixed costs. 
D) are sometimes essential to production or business operations.

Question 19

The calculation to allocate cost to products or services is to divide the activity driver consumption by the activity rate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is the step in implementing an activity-based costing system that can generate the greatest error?

Accepted Answer

A) Identifying activities 
B) Developing activity cost pools 
C) Calculating activity cost pool rates 
D) Calculate the 
A) Identifying activities 
B) Developing activity cost pools 
C) Calculating activity cost pool rates 
D) Calculate the

As non-value-added activities and their associated resources are eliminated,a company's

The total amount of manufacturing overhead allocated to a particular product will always be the same for both the traditional overhead allocation method based on direct labor hours and the activity-based costing overhead allocation.

Place an "X" in the column that corresponds to the type of activity referred to in a hospital setting.

A difference in GAAP-based product costing and activity-based costing is that under activity-based costing

A simple ABC model can have fewer than 20 activities; a complex model may include up to 100 activities,but no more.

Which of the following characteristics relate to non-value-added activities?

In an activity-based costing system,after the manufacturing overhead costs have been assigned to activity cost pools,the next step is to calculate the

With activity-based costing,the goal is to

The following list includes activities that are performed in a manufacturing company.Classify each activity as value-added or non-value added.

Which of the following is a way a company can use information about activities to manage its operations?

The categories of activities that are required to produce and sell products,non-value-added and value-added,are defined from which of the following perspectives?

Identifying activities performed in the organization is the first step in developing activity-based product costs.Which of the following is a way to identify these activities?

The first step in developing activity-based product costs is to develop activity cost pools.

The examination of business processes to identify incremental changes that may reduce operating costs is referred to as

A characteristic of non-value-added activities is that they

The calculation to allocate cost to products or services is to divide the activity driver consumption by the activity rate.

Which of the following is the step in implementing an activity-based costing system that can generate the greatest error?

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters

Exam 7: Activity-Based Costing and Activity Based Management

As non-value-added activities and their associated resources are eliminated,a company's

The total amount of manufacturing overhead allocated to a particular product will always be the same for both the traditional overhead allocation method based on direct labor hours and the activity-based costing overhead allocation.

Place an "X" in the column that corresponds to the type of activity referred to in a hospital setting.

A difference in GAAP-based product costing and activity-based costing is that under activity-based costing

A simple ABC model can have fewer than 20 activities; a complex model may include up to 100 activities,but no more.

Which of the following characteristics relate to non-value-added activities?

In an activity-based costing system,after the manufacturing overhead costs have been assigned to activity cost pools,the next step is to calculate the

With activity-based costing,the goal is to

The following list includes activities that are performed in a manufacturing company.Classify each activity as value-added or non-value added.

Which of the following is a way a company can use information about activities to manage its operations?

The categories of activities that are required to produce and sell products,non-value-added and value-added,are defined from which of the following perspectives?

Identifying activities performed in the organization is the first step in developing activity-based product costs.Which of the following is a way to identify these activities?

The first step in developing activity-based product costs is to develop activity cost pools.

The examination of business processes to identify incremental changes that may reduce operating costs is referred to as

A characteristic of non-value-added activities is that they

The calculation to allocate cost to products or services is to divide the activity driver consumption by the activity rate.

Which of the following is the step in implementing an activity-based costing system that can generate the greatest error?

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Performance Evaluation: Variance Analysis

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters