Question 1

Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?

Accepted Answer

No. Traditional systems contain smaller

Question 2

For each of the following activities identify an appropriate activity-cost driver.
a. machine maintenance
b. machine setup
c. quality control
d. material ordering
e. production scheduling
f. warehouse expense
g. engineering design

Accepted Answer

Any one of

Question 3

Answer the following questions using the information below:
King Corporation has two departments, Small and Large. Central costs could be allocated to the two departments in various ways.
  
-If advertising expense of $300,000 is allocated on the basis of sales, the amount allocated to the Small Department would be:

Accepted Answer

A) $50,000 
B) $75,000 
C) $210,000 
D) $250,000 
A) $50,000 
B) $75,000 
C) $210,000 
D) $250,000

Question 4

Answer the following questions using the information below:
Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2010, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 Velshi Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:
   During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
  
-Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Money Managers during 2010?

Accepted Answer

A) $5,000 
B) $3,500 
C) $4,200 
D) $6,000 
A) $5,000 
B) $3,500 
C) $4,200 
D) $6,000

Question 5

Simply because activity-based costing systems employ more activity-cost drivers, they provide more accurate product costs than traditional systems.

Accepted Answer

A) True 
 B)False

Question 6

The unique feature of an ABC system is the emphasis on:

Accepted Answer

A) costing individual jobs 
B) department indirect-cost rates 
C) multiple-cost pools 
D) individual activities 
A) costing individual jobs 
B) department indirect-cost rates 
C) multiple-cost pools 
D) individual activities

Question 7

Answer the following questions using the information below:
Whitman Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 Whitman Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:
   During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
  
-Activity-based management (ABM)includes decisions about all EXCEPT:

Accepted Answer

A) pricing and product mix 
B) smoothing costs 
C) reducing costs 
D) improving processes 
A) pricing and product mix 
B) smoothing costs 
C) reducing costs 
D) improving processes

Question 8

Answer the following questions using the information below:
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is analyzed as follows:
   What is projected operating income if direct materials costs of T-Shirts increase to $4.00 per unit and direct labor costs of Sweatshirts increase to $8.20 per unit.
-Under the revised ABC system, total overhead costs allocated to Sweatshirts will be:

Accepted Answer

A) $ 48,720 
B) $ 76,720 
C) $224,920 
D) None of these answers are correct. 
A) $ 48,720 
B) $ 76,720 
C) $224,920 
D) None of these answers are correct.

Question 9

Answer the following questions using the information below:
Mayan Potters manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:
     Mayan Potters uses an ABC system and assigns overhead costs based on the overhead activity information provided above.
-The inspections activity-cost driver rate is:

Accepted Answer

A) $0.50 
B) $2.00 
C) $20.00 
D) $5.00 
A) $0.50 
B) $2.00 
C) $20.00 
D) $5.00

Question 10

Refining a cost system includes:

Accepted Answer

A) classifying as many costs as indirect costs as is feasible 
B) creating as many cost pools as possible 
C) identifying the activities involved in a process 
D) seeking a lesser level of detail 
A) classifying as many costs as indirect costs as is feasible 
B) creating as many cost pools as possible 
C) identifying the activities involved in a process 
D) seeking a lesser level of detail

Question 11

Direct tracing of costs improves cost accuracy.

Accepted Answer

A) True 
 B)False

Question 12

When designing a costing system, it is easiest to:

Accepted Answer

A) calculate total costs first and then per-unit cost 
B) calculate per-unit costs first and then total costs 
C) calculate long-term costs first and then short-term costs 
D) calculate short-term costs first and then long-term costs 
A) calculate total costs first and then per-unit cost 
B) calculate per-unit costs first and then total costs 
C) calculate long-term costs first and then short-term costs 
D) calculate short-term costs first and then long-term costs

Question 13

Answer the following questions using the information below:
Whitman Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2010 Whitman Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:
   During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:
  
-Using the cost driver rate determined in the previous question, what is the manufacturing overhead cost estimate for Hospital Systems during 2010?

Accepted Answer

A) Manufacturing overhead costs applied to Hospital Systems total $4,200. 
B) Manufacturing overhead costs applied to Hospital Systems total $3,800. 
C) Manufacturing overhead costs applied to Hospital Systems total $5,320. 
D) Manufacturing overhead costs applied to Hospital Systems total $7,200. 
A) Manufacturing overhead costs applied to Hospital Systems total $4,200. 
B) Manufacturing overhead costs applied to Hospital Systems total $3,800. 
C) Manufacturing overhead costs applied to Hospital Systems total $5,320. 
D) Manufacturing overhead costs applied to Hospital Systems total $7,200.

Question 14

Answer the following questions using the information below:
Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit.
-Given this change in the cost:

Accepted Answer

A) SR6 will now command a higher sales price 
B) SR6 has benefited from the new system 
C) SR6 is definitely more accurately costed 
D) the costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system 
A) SR6 will now command a higher sales price 
B) SR6 has benefited from the new system 
C) SR6 is definitely more accurately costed 
D) the costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system

Question 15

Traditional cost systems distort product costs because:

Accepted Answer

A) they do not know how to identify the appropriate units 
B) competitive pricing is ignored 
C) they emphasize financial accounting requirements 
D) they apply average support costs to each unit of product 
A) they do not know how to identify the appropriate units 
B) competitive pricing is ignored 
C) they emphasize financial accounting requirements 
D) they apply average support costs to each unit of product

Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?

For each of the following activities identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense g. engineering design

Simply because activity-based costing systems employ more activity-cost drivers, they provide more accurate product costs than traditional systems.

The unique feature of an ABC system is the emphasis on:

Refining a cost system includes:

Direct tracing of costs improves cost accuracy.

When designing a costing system, it is easiest to:

Traditional cost systems distort product costs because:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 5: Activity-Based Costing and Activity-Based Management

Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?

For each of the following activities identify an appropriate activity-cost driver. a. machine maintenance b. machine setup c. quality control d. material ordering e. production scheduling f. warehouse expense g. engineering design

Simply because activity-based costing systems employ more activity-cost drivers, they provide more accurate product costs than traditional systems.

The unique feature of an ABC system is the emphasis on:

Refining a cost system includes:

Direct tracing of costs improves cost accuracy.

When designing a costing system, it is easiest to:

Traditional cost systems distort product costs because:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters