Question 1

Activity input measure is the result or product of an activity.

Accepted Answer

A) True 
 B)False

Question 2

A plant produces 92 different electronic products.Each product requires an average of seven components that are purchased externally.By redesigning the products,it is possible to produce the 92 products that have five components in common.This redesign will reduce the demand for purchasing,receiving,and paying bills.Estimated savings from the reduced demand are $1,500,000 per year.What is the non-value-added cost of purchasing,receiving,and paying bills?

Accepted Answer

A)  $600,000 
B)  $900,000 
C)  $1,000,000 
D)  $1,500,000 
A)  $600,000 
B)  $900,000 
C)  $1,000,000 
D)  $1,500,000

Question 3

Which of the following activity performance measures is concerned with doing the activity right the first time it is performed?

Accepted Answer

A)  time 
B)  efficiency 
C)  quality 
D)  velocity 
A)  time 
B)  efficiency 
C)  quality 
D)  velocity

Question 4

$$\begin{array} { l r r } 
& \text { JIT } & \text { Non-JIT } \
\text { Sales Orders } & 300 & 20 \
\text { Sales Calls } & 25 & 25 \
\text { Service Calls } & 150 & 75 \
\text { Average Order Size } & 100 & 1,000 \
\text { Manufacturing Cost/Unit } & \$ 50 & \$ 50
\end{array}$$ $$\begin{array}{l}
\text { Customer Costs: }\
\begin{array} { l l } 
\text { Processing Sales Orders } & \$ 200,000 \
\text { Selling Goods } & \$ 120,000 \
\text { Servicing Goods } & \$ 150,000 \
\text { Total } & \$ 470,000
\end{array}
\end{array}$$
-Refer to the Figure.What is the activity rate for processing sales orders?

Accepted Answer

A)  $1.47 per order 
B)  $182.00 per order 
C)  $625.00 per order 
D)  $667.00 per order 
A)  $1.47 per order 
B)  $182.00 per order 
C)  $625.00 per order 
D)  $667.00 per order

Question 5

Refer to StrongLive Company. 
A.	Calculate the activity rate for machining.
B.	Calculate the activity rate for engineering.
C.	Calculate the activity rate for packing.

Accepted Answer

The answer of Refer to StrongLive Company. 
A.	Calculate the activity...

Question 6

A manual process takes 36 minutes of direct labour time and 12 kg of material to make a product.Automating the process requires 24 minutes of machine time and 10 kg of material.The cost per labour hour is $18,the cost per machine hour is $14,and the cost per kilogram of materials is $22. What is the non-value-added cost per unit?

Accepted Answer

A)  $5.60 per unit 
B)  $10.80 per unit 
C)  $44.00 per unit 
D)  $49.20 per unit 
A)  $5.60 per unit 
B)  $10.80 per unit 
C)  $44.00 per unit 
D)  $49.20 per unit

Question 7

Inspection time for a plant is 20,000 hours per year.The cost of inspection consists of the salaries of four inspectors,totalling $120,000.Inspection also uses supplies costing $6 per inspection hour.The company has a close to zero-defect state and has eliminated the need for any inspection activity.What is the non-value-added cost of inspection per year?

Accepted Answer

A)  $30,000 
B)  $120,000 
C)  $240,000 
D)  $480,000 
A)  $30,000 
B)  $120,000 
C)  $240,000 
D)  $480,000

Question 8

Robustness means hitting the target value every time.

Accepted Answer

A) True 
 B)False

Question 9

Refer to the Figure.Suppose that Tigra loses $2,500,000 in sales per year because of its reputation for defective units attributable to failed components.Using warranty hours,assign the proportional cost of lost sales to Customer 1.What would be the new cost per unit as a result of the lost sales?

Accepted Answer

A)  $4.00 per unit 
B)  $8.15 per unit 
C)  $8.95 per unit 
D)  $25.00 per unit 
A)  $4.00 per unit 
B)  $8.15 per unit 
C)  $8.95 per unit 
D)  $25.00 per unit

Question 10

Refer to First Choice Credit Union.First Choice Credit Union uses an activity-based costing system.The activity rate for opening and closing statements is based on the number of accounts opened and closed.The activity rate for issuing monthly statements is based on the number of statements issued.The activity rate for processing transactions is based on the number of transactions processed.The activity rate for customer inquiries is based on the number of telephone minutes.The rate for ATM services is based on the number of ATM transactions. 
A.	Calculate the activity rate for opening and closing accounts.
B.	Calculate the activity rate for issuing monthly statements.
C.	Calculate the activity rate for processing transactions.
D.	Calculate the activity rate for customer inquiries.
E.	Calculate the activity rate for providing ATM services.
F.	Calculate the cost per account by customer category using the five activity rates.
G.	First Choice Credit Union offers free chequing to all its customers. Overall, the interest revenues average $105 per account; however, the interest revenues earned per account by category are $95, $115, and $180 from the low, medium, and high balance accounts, respectively. Calculate the average profit per account for each of the three customer categories.

Accepted Answer

The answer of Refer to First Choice Credit Union.First Choice...

Question 11

What is the term for the time required to produce one unit of a product?

Accepted Answer

A)  efficiency 
B)  velocity 
C)  speed 
D)  cycle time 
A)  efficiency 
B)  velocity 
C)  speed 
D)  cycle time

Question 12

Blackie Manufacturing Company uses activity-based costing.The overhead budget for the coming period is $1,053,000,consisting of the following: $\begin{array}{lr}&\text { Budgeted }\\text { Cost Pool }&\text { Amount }\
\text { Supervision } & \$ 320,000 \
\text { Machine usage } & 420,000 \
\text { Machine setups } & 187,000 \
\text { Design changes } & 126,000 \
\text { Totals } & \$ 1,053,000 \
\hline
\end{array}$ The potential allocation bases and their estimated amounts were as follows: $\begin{array}{lr}\text { Allocation } & \text { Budgeted } \
\text { Base } & \text { Amount }\
\text { Number of design changes } & 35 \
\text { Number of setups } & 110 \
\text { Machine hours } & 6,000 \
\text { Direct labour hours } & 10,000
\end{array}$ A. Determine the overhead rate for each cost pool, using the most appropriate allocation base for each pool.
Job 80130 required $\$ 45,000$ for direct materials, $\$ 20,000$ for direct labour, 2,000 direct
B. labour hours, 800 machine hours, five setups, and four design changes. Determine the cost of Job 80130.

Accepted Answer

The answer of Blackie Manufacturing Company uses activity-based costing.The overhead...

Question 13

$$\begin{array} { l r r } 
& \text { JIT } & \text { Non-JIT } \
\text { Sales Orders } & 300 & 20 \
\text { Sales Calls } & 25 & 25 \
\text { Service Calls } & 150 & 75 \
\text { Average Order Size } & 100 & 1,000 \
\text { Manufacturing Cost/Unit } & \$ 50 & \$ 50
\end{array}$$ $$\begin{array}{l}
\text { Customer Costs: }\
\begin{array} { l l } 
\text { Processing Sales Orders } & \$ 200,000 \
\text { Selling Goods } & \$ 120,000 \
\text { Servicing Goods } & \$ 150,000 \
\text { Total } & \$ 470,000
\end{array}
\end{array}$$
-Refer to the Figure.What is the activity rate for selling goods?

Accepted Answer

A)  $375 per sales call 
B)  $1,200 per sales call 
C)  $2,400 per sales call 
D)  $4,800 per sales call 
A)  $375 per sales call 
B)  $1,200 per sales call 
C)  $2,400 per sales call 
D)  $4,800 per sales call

Question 14

What costing method can help a company to become more competitive by providing more accurate cost data?

Accepted Answer

A)  unit-based costing 
B)  volume-based costing 
C)  production costing 
D)  activity-based costing 
A)  unit-based costing 
B)  volume-based costing 
C)  production costing 
D)  activity-based costing

Question 15

Solo Company has developed cost formulas for the drivers of the following production activities: $$\begin{array} { l l r r } 
\text { Driver } & \text { Activity } & \text { Fixed } & \text { Variable } \
\text { Labour hours } & \text { Materials } & - 0 - & 40 \
\text { Labour hours } & \text { Labour } & - 0 - & 20 \
\text { Machine hours } & \text { Maintenance } & 20,000 & 16 \
\text { Machine hours } & \text { Machining } & 100,000 & 4 \
\text { Number of setups } & \text { Inspections } & 60,000 & 400 \
\text { Number of setups } & \text { Setups } & - 0 - & 600 \
\text { Number of purchase orders } & \text { Purchasing } & 150,000 & 6
\end{array}$$ What is the budgeted inspection cost for 20 setups?

Accepted Answer

A)  $60,000 
B)  $68,000 
C)  $160,000 
D)  $330,000 
A)  $60,000 
B)  $68,000 
C)  $160,000 
D)  $330,000

Question 16

$$\begin{array} { l r r r r } 
\text { Product } & \text { Machine Hours } & \text { Setups } & \text { Receiving Orders } & \text { Packing Orders } \
\text { basic } & 20,000 & 200 & 100 & 800 \
\text { deluxe } & 20,000 & 500 & 400 & 4,000 \
\text { Costs } & \$ 80,000 & \$ 60,000 & \$ 10,000 & \$ 30,000
\end{array}$$
-Refer to the Figure.What is the consumption ratio for setups on the deluxe?

Accepted Answer

A)  0.500 
B)  0.688 
C)  0.700 
D)  0.714 
A)  0.500 
B)  0.688 
C)  0.700 
D)  0.714

Question 17

Product diversity means that products consume overhead activities in systematically similar proportions.

Accepted Answer

A) True 
 B)False

Question 18

What is the term for the identification and removal of activities that fail to add value?

Accepted Answer

A)  activity selection 
B)  activity stabilization 
C)  activity reduction 
D)  activity elimination 
A)  activity selection 
B)  activity stabilization 
C)  activity reduction 
D)  activity elimination

Question 19

What type of product meets or exceeds customer expectations?

Accepted Answer

A)  a robust product 
B)  a defective product 
C)  a traditional product 
D)  a quality product 
A)  a robust product 
B)  a defective product 
C)  a traditional product 
D)  a quality product

Question 20

Lindsay Company uses activity-based costing to figure product cost.Three activities have been determined and rate calculated. 
$\begin{array}{ll}
\text { Setting up equipment } & =\$ 500 \text { per setup } \
\text { Moving goods } & =\$ 20 \text { per move } \
\text { Machining } & =\$ 4 \text { per machine hour }
\end{array}$
$\text { Lindsay provided the following data from the job order cost sheet for Job } \# 550 \text {. }$

$\begin{array}{lr}
\text { Direct materials } & \$ 2,000 \
\text { Direct labour } & 1,800 \
\text { Setups } & 1 \
\text { Moves } & 30 \
\text { Machine hours } & 900
\end{array}$
A.	Calculate the overhead applied to Job #550.
B.	Calculate the total cost of Job #550.
C.	If price is calculated by applying a 30% markup on cost, what is the price for Job #550?
D.	Assume Job #550 required 2 setups, 15 moves, and 700 machine hours. Calculate the overhead applied to Job #550.
E.	Assuming a 50% markup on cost, what is the price of Job #550 using the overhead rate calculated in part D?

Accepted Answer

The answer of Lindsay Company uses activity-based costing to figure...

Activity input measure is the result or product of an activity.

Which of the following activity performance measures is concerned with doing the activity right the first time it is performed?

Refer to StrongLive Company. A. Calculate the activity rate for machining. B. Calculate the activity rate for engineering. C. Calculate the activity rate for packing.

Robustness means hitting the target value every time.

Refer to the Figure.Suppose that Tigra loses $2,500,000 in sales per year because of its reputation for defective units attributable to failed components.Using warranty hours,assign the proportional cost of lost sales to Customer 1.What would be the new cost per unit as a result of the lost sales?

What is the term for the time required to produce one unit of a product?

What costing method can help a company to become more competitive by providing more accurate cost data?

Product Machine Hours Setups Receiving Orders Packing Orders basic 20,000 200 100 800 deluxe 20,000 500 400 4,000 Costs \ 80,000 \ 60,000 \ 10,000 \ 30,000 -Refer to the Figure.What is the consumption ratio for setups on the deluxe?

Product diversity means that products consume overhead activities in systematically similar proportions.

What is the term for the identification and removal of activities that fail to add value?

What type of product meets or exceeds customer expectations?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 7: Activity-Based Costing and Management

Activity input measure is the result or product of an activity.

Which of the following activity performance measures is concerned with doing the activity right the first time it is performed?

Refer to StrongLive Company. A. Calculate the activity rate for machining. B. Calculate the activity rate for engineering. C. Calculate the activity rate for packing.

Robustness means hitting the target value every time.

Refer to the Figure.Suppose that Tigra loses $2,500,000 in sales per year because of its reputation for defective units attributable to failed components.Using warranty hours,assign the proportional cost of lost sales to Customer 1.What would be the new cost per unit as a result of the lost sales?

What is the term for the time required to produce one unit of a product?

What costing method can help a company to become more competitive by providing more accurate cost data?

Product Machine Hours Setups Receiving Orders Packing Orders basic 20,000 200 100 800 deluxe 20,000 500 400 4,000 Costs \ 80,000 \ 60,000 \ 10,000 \ 30,000 -Refer to the Figure.What is the consumption ratio for setups on the deluxe?

Product diversity means that products consume overhead activities in systematically similar proportions.

What is the term for the identification and removal of activities that fail to add value?

What type of product meets or exceeds customer expectations?

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters