Question 1

Product-sustaining (service-sustaining)costs are the costs of resources sacrificed on activities undertaken to support specific services.

Accepted Answer

A) True 
 B)False

Question 2

A cost hierarchy is a categorization of costs into different cost pools on the basis of different classes of cost drivers or different degrees of difficulty in determining cause-and-effect relationships.

Accepted Answer

A) True 
 B)False

Question 3

What is activity-based management and how can it be used to improve the profitability of a company?

Accepted Answer

Activity-based management is a method of

Question 4

A product that consumes a relatively high level of resources but is reported to have a relatively low cost,is an example of

Accepted Answer

A) increased market share. 
B) product marketing. 
C) product undercosting. 
D) product overcosting. 
E) product sub-optimization. 
A) increased market share. 
B) product marketing. 
C) product undercosting. 
D) product overcosting. 
E) product sub-optimization.

Question 5

Using activity-based costing to allocate overhead costs,what is the total manufacturing overhead cost estimate for Wealth Managers during 2015?

Accepted Answer

A) $6,850 
B) $3,250 
C) $4,020 
D) $3,430 
E) $5,096 
A) $6,850 
B) $3,250 
C) $4,020 
D) $3,430 
E) $5,096

Question 6

Analyze the two costing systems below and determine which one is an ABC system,stating the reasons for your choice.

Accepted Answer

System A has the indications of a refine

Question 7

Summer Daze Corporation manufactures two products,Bocce Ball Sets and Croquet Sets.Croquet Sets were added as a product line two years ago.Croquet Sets are the more complex of the two products,requiring one hour of direct labour time per unit to manufacture,compared to one-half hours of direct labour time for Bocce Ball Set.Croquet Sets are produced on an automated production line.
Indirect costs are currently allocated to the products on the basis of direct labour hours.The company estimated it would incur $332,500 in manufacturing overhead costs and produce 6,000 units of Croquet Sets and 20,000 units of Bocce Ball Sets during the current year.
Unit costs for materials and direct labour are:
   
Required:
a.Determine the unit cost of a Bocce Ball Set using traditional (simple)costing with units as the allocation base.
b.Determine the unit cost of a Bocce Ball Set using activity-based costing.

Accepted Answer

a.Traditional Costin

Question 8

Activity-based costing is not adaptable to merchandising organizations.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a sign that an ABC system may be useful?

Accepted Answer

A) There are small amounts of indirect costs. 
B) Products make diverse demands on resources because of differences in volume,process steps,batch size,or complexity. 
C) Products that a company is well-suited to make and sell show large profits;whereas products that a company is less suited to produce and sell show small profits. 
D) Operations staff agrees with accountants about the costs of manufacturing and marketing products and services. 
E) Almost none of the indirect costs are identified as output unit-level costs. 
A) There are small amounts of indirect costs. 
B) Products make diverse demands on resources because of differences in volume,process steps,batch size,or complexity. 
C) Products that a company is well-suited to make and sell show large profits;whereas products that a company is less suited to produce and sell show small profits. 
D) Operations staff agrees with accountants about the costs of manufacturing and marketing products and services. 
E) Almost none of the indirect costs are identified as output unit-level costs.

Question 10

A well designed,activity-based cost system helps managers make better decisions because information derived from an ABC analysis

Accepted Answer

A) can be used to improve the efficiency of activities. 
B) is easy to analyze and interpret. 
C) takes the choices and judgement challenges away from managers. 
D) emphasizes how managers can achieve higher sales. 
E) helps identify trends in the market place. 
A) can be used to improve the efficiency of activities. 
B) is easy to analyze and interpret. 
C) takes the choices and judgement challenges away from managers. 
D) emphasizes how managers can achieve higher sales. 
E) helps identify trends in the market place.

Question 11

Determining what activities add customer value is an example of what facet of activity-based management?

Accepted Answer

A) increase effective coordination among business function activities 
B) reduce costs of non-value-added activities 
C) improve selection of process activities to enhance profit 
D) match the company's use of resources to customer demand 
E) achieve planned growth 
A) increase effective coordination among business function activities 
B) reduce costs of non-value-added activities 
C) improve selection of process activities to enhance profit 
D) match the company's use of resources to customer demand 
E) achieve planned growth

Question 12

Provided a single allocation base is used,jobs are typically overcosted if

Accepted Answer

A) jobs consume proportionately less of the indirect activity but is reported to have higher cost. 
B) jobs require more employees. 
C) jobs consume proportionately more of the indirect activity and is reported to have higher cost. 
D) jobs consume proportionately more of the indirect activity but is reported to have lower cost. 
E) jobs cannot be overcosted;only products or service can be overcosted. 
A) jobs consume proportionately less of the indirect activity but is reported to have higher cost. 
B) jobs require more employees. 
C) jobs consume proportionately more of the indirect activity and is reported to have higher cost. 
D) jobs consume proportionately more of the indirect activity but is reported to have lower cost. 
E) jobs cannot be overcosted;only products or service can be overcosted.

Question 13

When selling prices are based on costs assigned using the single cost driver,number of pages printed,then Hapless Systems

Accepted Answer

A) is fairly billed because resources are allocated uniformly to all jobs. 
B) is grossly under billed for the job,while other jobs will be unfairly over billed. 
C) will be pleased because all customers will be under billed for their jobs. 
D) will contribute too little to profits,and Wallace Printing will not want to accept additional work.from the company 
E) will likely seek to do business with competitors. 
A) is fairly billed because resources are allocated uniformly to all jobs. 
B) is grossly under billed for the job,while other jobs will be unfairly over billed. 
C) will be pleased because all customers will be under billed for their jobs. 
D) will contribute too little to profits,and Wallace Printing will not want to accept additional work.from the company 
E) will likely seek to do business with competitors.

Question 14

Homogeneous cost pools and the choice of cost-allocation bases are not tied to the cost hierarchy.

Accepted Answer

A) True 
 B)False

Question 15

A top-selling product might actually result in recorded losses for the company.

Accepted Answer

A) True 
 B)False

Question 16

In a homogeneous cost pool,all costs have a similar cause-and-effect relationship with the cost-allocation base.

Accepted Answer

A) True 
 B)False

Question 17

List and describe the purposes of the three main guidelines for refining a cost system.

Accepted Answer

1.Direct-cost tracing.Identify as many d

Question 18

The benefits of adopting ABC/ABM are higher for companies in competitive markets because

Accepted Answer

A) accurate product cost information is essential to be competitive,regardless of the cost. 
B) ABM can pinpoint opportunities for cost savings,which increase the company's profit or are passed on to customers through lower prices. 
C) ABM allows managers to ignore competition when making pricing decisions thus making more accurate decisions. 
D) the more competitive the market,the more likely the competition is using ABC. 
E) ABC/ABM should not be used in a competitive market because traditional costing is less expensive allowing for lower prices. 
A) accurate product cost information is essential to be competitive,regardless of the cost. 
B) ABM can pinpoint opportunities for cost savings,which increase the company's profit or are passed on to customers through lower prices. 
C) ABM allows managers to ignore competition when making pricing decisions thus making more accurate decisions. 
D) the more competitive the market,the more likely the competition is using ABC. 
E) ABC/ABM should not be used in a competitive market because traditional costing is less expensive allowing for lower prices.

Question 19

ABC systems seek a cost-allocation base that has a cause-and-effect relationship with costs in the cost pool.

Accepted Answer

A) True 
 B)False

Question 20

The Marionettes Company is noted for an exceptionally impressive line of Mardi Gras masks.Marionettes has established the following selling and distribution support activity-cost pools and their corresponding activity drivers for the year 2012:
   
Required:
a.Determine the activity cost driver rate for each of the four selling and distribution activities.
b.Under what circumstances is it appropriate to use each of the activity cost drivers?
c.Describe at least one possible negative behavioral consequence for each of the four activity cost drivers.

Accepted Answer

a.Activity cost driver rate for Marketin

Product-sustaining (service-sustaining)costs are the costs of resources sacrificed on activities undertaken to support specific services.

A cost hierarchy is a categorization of costs into different cost pools on the basis of different classes of cost drivers or different degrees of difficulty in determining cause-and-effect relationships.

What is activity-based management and how can it be used to improve the profitability of a company?

A product that consumes a relatively high level of resources but is reported to have a relatively low cost,is an example of

Using activity-based costing to allocate overhead costs,what is the total manufacturing overhead cost estimate for Wealth Managers during 2015?

Analyze the two costing systems below and determine which one is an ABC system,stating the reasons for your choice.

Activity-based costing is not adaptable to merchandising organizations.

Which of the following is a sign that an ABC system may be useful?

A well designed,activity-based cost system helps managers make better decisions because information derived from an ABC analysis

Determining what activities add customer value is an example of what facet of activity-based management?

Provided a single allocation base is used,jobs are typically overcosted if

When selling prices are based on costs assigned using the single cost driver,number of pages printed,then Hapless Systems

Homogeneous cost pools and the choice of cost-allocation bases are not tied to the cost hierarchy.

A top-selling product might actually result in recorded losses for the company.

In a homogeneous cost pool,all costs have a similar cause-and-effect relationship with the cost-allocation base.

List and describe the purposes of the three main guidelines for refining a cost system.

The benefits of adopting ABC/ABM are higher for companies in competitive markets because

ABC systems seek a cost-allocation base that has a cause-and-effect relationship with costs in the cost pool.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 5: Activity-Based Costing and Management

Product-sustaining (service-sustaining)costs are the costs of resources sacrificed on activities undertaken to support specific services.

A cost hierarchy is a categorization of costs into different cost pools on the basis of different classes of cost drivers or different degrees of difficulty in determining cause-and-effect relationships.

What is activity-based management and how can it be used to improve the profitability of a company?

A product that consumes a relatively high level of resources but is reported to have a relatively low cost,is an example of

Using activity-based costing to allocate overhead costs,what is the total manufacturing overhead cost estimate for Wealth Managers during 2015?

Analyze the two costing systems below and determine which one is an ABC system,stating the reasons for your choice.

Activity-based costing is not adaptable to merchandising organizations.

Which of the following is a sign that an ABC system may be useful?

A well designed,activity-based cost system helps managers make better decisions because information derived from an ABC analysis

Determining what activities add customer value is an example of what facet of activity-based management?

Provided a single allocation base is used,jobs are typically overcosted if

When selling prices are based on costs assigned using the single cost driver,number of pages printed,then Hapless Systems

Homogeneous cost pools and the choice of cost-allocation bases are not tied to the cost hierarchy.

A top-selling product might actually result in recorded losses for the company.

In a homogeneous cost pool,all costs have a similar cause-and-effect relationship with the cost-allocation base.

List and describe the purposes of the three main guidelines for refining a cost system.

The benefits of adopting ABC/ABM are higher for companies in competitive markets because

ABC systems seek a cost-allocation base that has a cause-and-effect relationship with costs in the cost pool.

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets,variances,and Management Control: I

Flexible Budgets,variances,and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, product Profitability Decisions, and Cost Management

Strategy,balanced Scorecard,and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters