Exam 7: Activity-Based Costing and Activity Based Management

Assume you have been hired by a company that is considering implementing an activity-based costing system.One of your co-workers is not eager to change and believes the benefits of moving to activity-based costing will not be worth the time and effort of implementing the new system.Explain to your co-worker the characteristics of an organization that make it a good candidate to implement activity-based costing and how activity-based costing might benefit the company.

Which of the following is not a way a company can use information about activities to manage its operations?

A firm produces and sells two products,Standard and Deluxe.The following information relates to setup costs a part of factory overhead of $180,000. Activity-based costing would allocate which of the following amounts of setup cost to each

Activity-based costing information may be used by managers for

Place and "X" in the column that corresponds to the type of activity referred to in each scenario.

Which of the following is not a reason that managers use activity-based costing information?

Murphy Company produces two products: Standard and Deluxe.The company uses an activity-based costing system.Murphy produces 8,000

Activities that are performed for specific customers are classified as an

Which of the following would be a likely activity driver for product design?

Camping Suppliers,Inc.manufactures two types of safety strobe lights,one that is visible for one mile and one that is visible for two miles.Manufacturing overhead has been applied on the basis of direct labor costs.Camping Suppliers has gathered some activity information and is interested in implementing an activity-based costing system.The company wants all overhead costs to be allocated to products.The overhead cost pools and activity drivers are as follows: Other product information is as follows: Required: a.Using the traditional method,calculate the predetermined overhead rate as a percentage of direct labor cost. b.Using the activity-based costing approach,determine the two activity rates. c.Using the activity-based costing approach,determine the unit product cost for the one mile light. Unit 7-2,

Which of the following is not a consequence of poor management of an organization's activities?

Those activities that consume resources but do not contribute to the value of the product are referred as

Which of the following is formula for calculating the activity rate in an activity-based costing system?

The two categories - valued-added and non-value added - are defined from the organization's management perspective.

Which of the following would be considered a product-level activity?

Which of the following activities would be classified as non-value-added in the manufacture of dresses?

The process of using activity-based costing information to manage a business's activities,and thus its costs,is called

Which of the following would be the most appropriate cost driver for the purchasing department?

In changing from a traditional costing system to an activity-based costing system,overhead costs tend to shift from high-volume standard products to low-volume premium products because

First-stage allocation is the process of assigning manufacturing overhead costs to activity pools.