Question 1

All of the following are hierarchical categories in which a firm's overhead support costs can be classified except:

Accepted Answer

A)  product-level activities. 
B)  industry-level activities. 
C)  batch-level activities. 
D)  facility-level activities. 
A)  product-level activities. 
B)  industry-level activities. 
C)  batch-level activities. 
D)  facility-level activities.

Question 2

Which activity is likely to be involved in the acquisition of raw materials?

Accepted Answer

A)  Identifying potential suppliers 
B)  Getting price quotations 
C)  Preparing purchase orders 
D)  All of the other answers are correct. 
A)  Identifying potential suppliers 
B)  Getting price quotations 
C)  Preparing purchase orders 
D)  All of the other answers are correct.

Question 3

Upstream costs are relevant for deciding whether to discontinue a product line.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is the most appropriate cost driver for maintaining parts inventory?

Accepted Answer

A)  Number of parts for a product 
B)  Direct labor hours 
C)  Sales dollars 
D)  Number of setups 
A)  Number of parts for a product 
B)  Direct labor hours 
C)  Sales dollars 
D)  Number of setups

Question 5

Which of the following allocation bases for automation costs would be an improvement over direct labor hours?

Accepted Answer

A)  Number of units sold 
B)  Direct labor costs 
C)  Machine hours 
D)  Direct material cost 
A)  Number of units sold 
B)  Direct labor costs 
C)  Machine hours 
D)  Direct material cost

Question 6

Which of the following would be classified as a batch-level activity?

Accepted Answer

A)  Depreciation on production equipment 
B)  Inspection of a product, where each unit must be individually inspected 
C)  Changing machine configuration before starting a production run 
D)  Sales commissions 
A)  Depreciation on production equipment 
B)  Inspection of a product, where each unit must be individually inspected 
C)  Changing machine configuration before starting a production run 
D)  Sales commissions

Question 7

Which of the following activity costs would not likely be included in a unit-level activity cost pool?

Accepted Answer

A)  Indirect material 
B)  Packaging costs 
C)  Machine setup costs 
D)  Machine-related utilities 
A)  Indirect material 
B)  Packaging costs 
C)  Machine setup costs 
D)  Machine-related utilities

Question 8

Which of the following is an internal failure cost?

Accepted Answer

A)  Costs to rework defective units 
B)  Warranty replacement costs 
C)  Engineering and design costs 
D)  Depreciation on testing equipment 
A)  Costs to rework defective units 
B)  Warranty replacement costs 
C)  Engineering and design costs 
D)  Depreciation on testing equipment

Question 9

Which of the following is an upstream cost?

Accepted Answer

A)  Research and development costs 
B)  Shipping costs to ship completed goods 
C)  Sales commissions 
D)  Sales promotion and advertising costs 
A)  Research and development costs 
B)  Shipping costs to ship completed goods 
C)  Sales commissions 
D)  Sales promotion and advertising costs

Question 10

Managing quality costs to achieve the highest level of customer satisfaction is known as:

Accepted Answer

A)  activity-based management. 
B)  total quality management. 
C)  strategic management. 
D)  quality costs. 
A)  activity-based management. 
B)  total quality management. 
C)  strategic management. 
D)  quality costs.

Question 11

A number of quality-related costs are provided in the following table:
   Required:
Classify the above costs by cost of quality category.That is,for each item in the table,place a check mark in the appropriate column.

Accepted Answer

The answer of A number of quality-related costs are provided...

Question 12

Which of the following statements is incorrect?

Accepted Answer

A)  An activity-based costing system uses more cause-and-effect relationships in tracing costs than does a traditional cost allocation system. 
B)  An activity-based costing system first assigns or traces costs to the departments in which products are made. 
C)  The hierarchical categories into which activities are grouped are unit-level, batch-level, product-level, and facility-level activities. 
D)  The total amount of unit-level costs changes in proportion to the number of units of product made. 
A)  An activity-based costing system uses more cause-and-effect relationships in tracing costs than does a traditional cost allocation system. 
B)  An activity-based costing system first assigns or traces costs to the departments in which products are made. 
C)  The hierarchical categories into which activities are grouped are unit-level, batch-level, product-level, and facility-level activities. 
D)  The total amount of unit-level costs changes in proportion to the number of units of product made.

Question 13

Match between columns
                        Premises:  New techniques designed to measure more accurately and control costs; developed in response to today's complex automated business environment.
 Activities that support a specific product or product line, such as inventory holding costs.
 Allocation process that uses a variety of cost drivers and initially assigns costs to cost centers.
 Activities performed for the benefit of the production process as a whole.
 Activities that are related to the production of groups of products, such as materials handling costs and setup costs.
 The cost of goods that occur before goods are manufactured.
 Cost centers organized around operating activities that have similar characteristics.
 A pricing scheme in which managers first determine the price that customers are willing to pay and then seek to produce the product at a cost that will allow the company to earn an acceptable profit.
 Costs that occur after goods are manufactured, such as sales commissions.
 Activities that increase each time another unit of product is made.
 Measures of volume, such as labor hours, machine hours, or quality of materials; have a strong correlation with unit-level overhead costs.
 The use of direct labor hours or another measure of volume to allocate overhead costs to all of a company's products.
 Measures of the use and consumption of activities that are used as allocation bases to improve the accuracy of allocations in automated businesses.

Accepted Answer

The Answer of Activity-based cost drivers and Activity centers and is...

Question 14

Which of the following statements regarding activity-based cost drivers is correct?

Accepted Answer

A)  Activity-based cost drivers are measures of activity that are directly associated with production. 
B)  Activity-based cost drivers are directly related to the volume of production. 
C)  Activity-based cost drivers improve the accuracy of direct cost allocations. 
D)  None of these answers are correct. 
A)  Activity-based cost drivers are measures of activity that are directly associated with production. 
B)  Activity-based cost drivers are directly related to the volume of production. 
C)  Activity-based cost drivers improve the accuracy of direct cost allocations. 
D)  None of these answers are correct.

Question 15

All of the following are internal failure costs except:

Accepted Answer

A)  inventory inspection costs. 
B)  rework costs. 
C)  downtime costs. 
D)  scrap costs. 
A)  inventory inspection costs. 
B)  rework costs. 
C)  downtime costs. 
D)  scrap costs.

Question 16

Activity-based costing does not use volume-based cost drivers.

Accepted Answer

A) True 
 B)False

Question 17

Traditional cost systems usually allocate overhead to products based on direct labor.

Accepted Answer

A) True 
 B)False

Question 18

Costs incurred to avoid nonconforming products are:

Accepted Answer

A)  prevention costs. 
B)  appraisal costs. 
C)  failure costs. 
D)  voluntary costs. 
A)  prevention costs. 
B)  appraisal costs. 
C)  failure costs. 
D)  voluntary costs.

Question 19

Pro Tool Company expects to produce 24,000 total units during the current period.The costs and cost drivers associated with four activity cost pools are given below: $\begin{array}{lcccc}
\text { ACTIVITIES: } & \text { UNIT } & \text { BATCH } & \text { PRODUCT } & \text { FACILITY } \
& \text { LEVEL } & \text { LEVEL } & \text { LEVEL } & \text { LEVEL } \
\hline
\text { Cost } & \$ 50,000 & ? & \$ 10,000 & \$ 120,000 \
 \text { Cost Driver } & \text { 4,000 labor hrs} & 100 \text { set ups } & \% \text { of use } & 24,000 \text { units } \

\end{array}$
  Production of 1,000 units of an auto towing tool required 800 labor hours and 12 setups and consumed 30% of the product sustaining activities.How much total overhead cost will be allocated to this product if the company allocates overhead using a single overhead allocation rate based on direct labor hours?

Accepted Answer

A)  $18,400 
B)  $10,000 
C)  $100,000 
D)  $40,000 
A)  $18,400 
B)  $10,000 
C)  $100,000 
D)  $40,000

Question 20

Depreciation on a manufacturing facility is an example of a(n):

Accepted Answer

A)  unit-level activity. 
B)  batch-level activity. 
C)  product-level activity. 
D)  facility-level activity. 
A)  unit-level activity. 
B)  batch-level activity. 
C)  product-level activity. 
D)  facility-level activity.

All of the following are hierarchical categories in which a firm's overhead support costs can be classified except:

Which activity is likely to be involved in the acquisition of raw materials?

Upstream costs are relevant for deciding whether to discontinue a product line.

Which of the following is the most appropriate cost driver for maintaining parts inventory?

Which of the following allocation bases for automation costs would be an improvement over direct labor hours?

Which of the following would be classified as a batch-level activity?

Which of the following activity costs would not likely be included in a unit-level activity cost pool?

Which of the following is an internal failure cost?

Which of the following is an upstream cost?

Managing quality costs to achieve the highest level of customer satisfaction is known as:

A number of quality-related costs are provided in the following table: Required: Classify the above costs by cost of quality category.That is,for each item in the table,place a check mark in the appropriate column.

Which of the following statements is incorrect?

Which of the following statements regarding activity-based cost drivers is correct?

All of the following are internal failure costs except:

Activity-based costing does not use volume-based cost drivers.

Traditional cost systems usually allocate overhead to products based on direct labor.

Costs incurred to avoid nonconforming products are:

Depreciation on a manufacturing facility is an example of a(n):

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 5: Cost Management in an Automated Business Environment: ABC, ABM, and TQM

All of the following are hierarchical categories in which a firm's overhead support costs can be classified except:

Which activity is likely to be involved in the acquisition of raw materials?

Upstream costs are relevant for deciding whether to discontinue a product line.

Which of the following is the most appropriate cost driver for maintaining parts inventory?

Which of the following allocation bases for automation costs would be an improvement over direct labor hours?

Which of the following would be classified as a batch-level activity?

Which of the following activity costs would not likely be included in a unit-level activity cost pool?

Which of the following is an internal failure cost?

Which of the following is an upstream cost?

Managing quality costs to achieve the highest level of customer satisfaction is known as:

A number of quality-related costs are provided in the following table: Required: Classify the above costs by cost of quality category.That is,for each item in the table,place a check mark in the appropriate column.

Which of the following statements is incorrect?

Which of the following statements regarding activity-based cost drivers is correct?

All of the following are internal failure costs except:

Activity-based costing does not use volume-based cost drivers.

Traditional cost systems usually allocate overhead to products based on direct labor.

Costs incurred to avoid nonconforming products are:

Depreciation on a manufacturing facility is an example of a(n):

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters