Question 1

Where outputs consume resources ________,the management accountant traces these to the cost objects.

Accepted Answer

A) gradually 
B) indirectly 
C) spontaneously 
D) directly 
A) gradually 
B) indirectly 
C) spontaneously 
D) directly

Question 2

Information derived from an ABC analysis might be used to eliminate non-value-added activities.

Accepted Answer

A) True 
 B)False

Question 3

If managers were interested in long-run decisions,they would focus on the variable costs only.

Accepted Answer

A) True 
 B)False

Question 4

Answer the following questions using the information below:
Fremantle Corporation has two departments,Sails and Masts.Central costs could be allocated to the two departments in various ways.
 $$\begin{array} { l r r } 
& \text { Sails Department } & \text { Masts Department } \
\text { Square metreage } & 6000 & 18000 \
\text { Number of employees } & 1120 & 480 \
\text { Sales } & \$ 400000 & \$ 2000000
\end{array}$$
-If a total rent expense of $120 000 is allocated on the basis of square metreage,the amount allocated to the Sails Department would be:

Accepted Answer

A) $84 000 
B) $30 000 
C) $90 000 
D) $20 000 
A) $84 000 
B) $30 000 
C) $90 000 
D) $20 000

Question 5

Answer the following questions using the information below:
Mt Panorama Racing Corporation manufactures two models of motorised go-carts,a standard and a deluxe model.The following activity and cost information has been compiled:
 $$\begin{array} { l r r r } 
\text { Product } & \begin{array} { r } 
\text { Number of } \
\text { Set-ups }
\end{array} & \begin{array} { r } 
\text { Number of } \
\text { Components }
\end{array} & \begin{array} { r } 
\text { Number of } \
\text { Direct Labour Hours }
\end{array} \
\hline \text { Standard } & 15 & 10 & 750 \
\text { Deluxe } & 35 & 15 & 500 \
\text { Overhead costs } & \$ 30000 & \$ 50000 &
\end{array}$$
-Number of set-ups and number of components are identified as activity-cost drivers for overheads.Assuming an activity-based costing system is used,what is the total amount of overhead cost assigned to the standard model?

Accepted Answer

A) $48 000 
B) $30 000 
C) $29 000 
D) $51 000 
A) $48 000 
B) $30 000 
C) $29 000 
D) $51 000

Question 6

Which of the following statements about activity-based costing is NOT true?

Accepted Answer

A) Activity-based costing is useful for allocating marketing and distribution costs. 
B) Activity-based costing differs from traditional costing systems in that products are not cross-subsidised. 
C) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. 
D) Activity-based costing seeks to distinguish batch-level,product-sustaining and facility-sustaining costs,especially when they are not proportionate to one another. 
A) Activity-based costing is useful for allocating marketing and distribution costs. 
B) Activity-based costing differs from traditional costing systems in that products are not cross-subsidised. 
C) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. 
D) Activity-based costing seeks to distinguish batch-level,product-sustaining and facility-sustaining costs,especially when they are not proportionate to one another.

Question 7

In an ABC system,the ________ allocation is the allocation of costs accumulated in support departments to each activity-cost pool.

Accepted Answer

A) fourth-stage 
B) third-stage 
C) second-stage 
D) first-stage 
A) fourth-stage 
B) third-stage 
C) second-stage 
D) first-stage

Question 8

ABC systems:

Accepted Answer

A) help control non-financial items such as number of set-up hours. 
B) help identify new designs to reduce costs. 
C) reveal activities that can be eliminated. 
D) All of these answers are correct. 
A) help control non-financial items such as number of set-up hours. 
B) help identify new designs to reduce costs. 
C) reveal activities that can be eliminated. 
D) All of these answers are correct.

Question 9

How does activity-based costing eliminate cost distortions?

Accepted Answer

A) Recognises interactions between different departments in assigning support costs 
B) Eliminates product variations 
C) Establishes multiple cost pools 
D) Develops cost drivers that have a cause-and-effect relationship with the activities performed 
A) Recognises interactions between different departments in assigning support costs 
B) Eliminates product variations 
C) Establishes multiple cost pools 
D) Develops cost drivers that have a cause-and-effect relationship with the activities performed

Question 10

When refining a costing system,a company should classify as many costs as possible as 'indirect costs'.

Accepted Answer

A) True 
 B)False

Where outputs consume resources ________,the management accountant traces these to the cost objects.

Information derived from an ABC analysis might be used to eliminate non-value-added activities.

If managers were interested in long-run decisions,they would focus on the variable costs only.

Which of the following statements about activity-based costing is NOT true?

In an ABC system,the ________ allocation is the allocation of costs accumulated in support departments to each activity-cost pool.

ABC systems:

How does activity-based costing eliminate cost distortions?

When refining a costing system,a company should classify as many costs as possible as 'indirect costs'.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters

Exam 8: Activity-Based Management and Activity-Based Costing

Where outputs consume resources ________,the management accountant traces these to the cost objects.

Information derived from an ABC analysis might be used to eliminate non-value-added activities.

If managers were interested in long-run decisions,they would focus on the variable costs only.

Which of the following statements about activity-based costing is NOT true?

In an ABC system,the ________ allocation is the allocation of costs accumulated in support departments to each activity-cost pool.

ABC systems:

How does activity-based costing eliminate cost distortions?

When refining a costing system,a company should classify as many costs as possible as 'indirect costs'.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

Filters