Question 1

In the below graph,which shows the relationship among components of quality cost,Line "B" depicts:

Accepted Answer

A)  total quality costs. 
B)  external failure quality cost. 
C)  voluntary quality costs. 
D)  internal failure quality costs. 
A)  total quality costs. 
B)  external failure quality cost. 
C)  voluntary quality costs. 
D)  internal failure quality costs.

Question 2

Which of the following is an appraisal cost?

Accepted Answer

A)  Depreciation of testing equipment 
B)  Customer service costs 
C)  Engineering and design costs 
D)  Costs to repair defective units 
A)  Depreciation of testing equipment 
B)  Customer service costs 
C)  Engineering and design costs 
D)  Costs to repair defective units

Question 3

The objective of using the following graph is to:

Accepted Answer

A)  minimize quality. 
B)  maximize profit. 
C)  minimize total quality costs. 
D)  maximize total quality costs. 
A)  minimize quality. 
B)  maximize profit. 
C)  minimize total quality costs. 
D)  maximize total quality costs.

Question 4

Franklin Manufacturing manufactures two models of windows,bay windows and casement windows.Franklin uses an activity-based costing system.The following information about the activities used to produce the company's products has been provided. $$\begin{array} { l c c c c } 
\text { Category } & \text { Estimated Cost } & \text { Cost Driver } & \text { Bay Windows } & \text { Casement } \
\text { Unit-level } & \$ 125,000 & \text { Labor hours } & 750 & 500 \
\text { Batch-level } & \$ 75,000 & \text { Inspections } & 30 & 20 \
\text { Product-level } & \$ 35,000 & \text { Storage Space } & 3 , 5 0 0 \text { sq feet } & 2,100 \text { sq feet } \
\text { Facility-level } & \$ 165,000 & \text { Machine hours } & 9,000 & \mathbf { 6 , 0 0 0 }
\end{array}$$ The amount of product-level cost that should be allocated to the casement windows equals:

Accepted Answer

A)  $13,125. 
B)  $21,875. 
C)  $30,000. 
D)  $45,000. 
A)  $13,125. 
B)  $21,875. 
C)  $30,000. 
D)  $45,000.

Question 5

Mason Company is planning to introduce an activity-based costing system.Which of the following actions by employees could lower the success of the new system?

Accepted Answer

A)  Employees may purposely report on their time cards different amounts of time than they actually worked. 
B)  Employees may decrease their productivity to demonstrate their dissatisfaction with the new system. 
C)  Employees may resist having to maintain additional records (such as the number of setups). 
D)  All of these answers are correct. 
A)  Employees may purposely report on their time cards different amounts of time than they actually worked. 
B)  Employees may decrease their productivity to demonstrate their dissatisfaction with the new system. 
C)  Employees may resist having to maintain additional records (such as the number of setups). 
D)  All of these answers are correct.

Question 6

Indicate whether each of the following statements is true or false.
In an activity-based costing system,the same amount of facility-level costs should be assigned to all products.______
Raw materials inventory holding costs are usually classified as unit-level costs.______
Costs associated with obtaining and defending a patent generally would be classified as product-level costs.______
Activities that benefit the production process as a whole are product-level activities.______
Manufacturing equipment depreciation is classified as a facility-level activity.______

Accepted Answer

In an activity-based costing system,the

Question 7

Playtime Electronics produces two kinds of electronic toys,Wizards and Gizmos.During the current period,8,000 Wizards and 16,000 Gizmos were produced and sold,generating revenues of $500,000 and $2,000,000,respectively.Unit production costs for the two toys are $50 for Wizards and $70 for Gizmos.In calculating the cost of goods sold,Playtime uses activity-based costing to allocate its overhead costs.However,upstream costs of $240,000 are allocated equally to the two products.
Required:
1)Compute the total net profit for each product and for the firm as a whole.
2)Would you advise eliminating either toy? Why or why not?

Accepted Answer

1)Net profit
 @#IMG-DLM& 
2)Wizards are showing a

Question 8

The objective of target pricing is to establish a price that will maximize profits given existing costs.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements regarding unit-level activities is (are)true? I.Unit-level activities occur each time a batch of units is produced.
II)Unit-level costs follow a variable cost behavior pattern.
III)Unit-level activities benefit the production as a whole and are not related to any specific product.

Accepted Answer

A)  I only 
B)  I and II 
C)  II and III 
D)  II only 
A)  I only 
B)  I and II 
C)  II and III 
D)  II only

Question 10

Which of the following is an appropriate cost driver for issuance of purchase orders?

Accepted Answer

A)  Number of units 
B)  Number of purchase orders 
C)  Number of setups 
D)  Either number of units or number of purchase orders would be appropriate 
A)  Number of units 
B)  Number of purchase orders 
C)  Number of setups 
D)  Either number of units or number of purchase orders would be appropriate

Question 11

An increase in prevention costs may result in decreases in appraisal,internal failure,and external failure costs and a decrease in total quality costs.

Accepted Answer

A) True 
 B)False

Question 12

The voluntary costs of quality include:

Accepted Answer

A)  Internal failure costs. 
B)  External failure costs. 
C)  Appraisal costs. 
D)  All of these answers are correct. 
A)  Internal failure costs. 
B)  External failure costs. 
C)  Appraisal costs. 
D)  All of these answers are correct.

Question 13

What is the purpose of target pricing? What are the steps in target pricing?

Accepted Answer

The purpose of target pricing is to set

Question 14

Which of the following costs is the result of a facility-level activity?

Accepted Answer

A)  Utility costs related to heating and lighting a manufacturing facility 
B)  The cost of landscaping the grounds for the manufacturing unit 
C)  Costs associated with trademarks 
D)  Both utility costs related to heating and lighting a manufacturing facility and the cost of landscaping the grounds for the manufacturing unit are correct 
A)  Utility costs related to heating and lighting a manufacturing facility 
B)  The cost of landscaping the grounds for the manufacturing unit 
C)  Costs associated with trademarks 
D)  Both utility costs related to heating and lighting a manufacturing facility and the cost of landscaping the grounds for the manufacturing unit are correct

Question 15

Explain how the competitive global environment has motivated United States companies to increase their use of technology.

Accepted Answer

Answers will vary
Many US companies face

Question 16

What is the basic premise behind activity-based costing systems (ABC)? What is an activity? Describe how ABC systems work.

Accepted Answer

The basic premise behind ABC is that ac

Question 17

An increase in appraisal costs will probably lead to a decrease in internal failure costs and an increase in external failure costs.

Accepted Answer

A) True 
 B)False

Question 18

Implementation of an activity-based costing system requires a company to generate more detailed accounting information than would be required by a traditional product cost system.

Accepted Answer

A) True 
 B)False

Question 19

Most companies allocate facility-level activity costs directly to products for decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 20

Actions or units of work undertaken by an organization to accomplish its mission are referred to as:

Accepted Answer

A)  costs. 
B)  work in process. 
C)  activities. 
D)  cost objects. 
A)  costs. 
B)  work in process. 
C)  activities. 
D)  cost objects.

In the below graph,which shows the relationship among components of quality cost,Line "B" depicts:

Which of the following is an appraisal cost?

The objective of using the following graph is to:

Mason Company is planning to introduce an activity-based costing system.Which of the following actions by employees could lower the success of the new system?

The objective of target pricing is to establish a price that will maximize profits given existing costs.

Which of the following is an appropriate cost driver for issuance of purchase orders?

An increase in prevention costs may result in decreases in appraisal,internal failure,and external failure costs and a decrease in total quality costs.

The voluntary costs of quality include:

What is the purpose of target pricing? What are the steps in target pricing?

Which of the following costs is the result of a facility-level activity?

Explain how the competitive global environment has motivated United States companies to increase their use of technology.

What is the basic premise behind activity-based costing systems (ABC)? What is an activity? Describe how ABC systems work.

An increase in appraisal costs will probably lead to a decrease in internal failure costs and an increase in external failure costs.

Implementation of an activity-based costing system requires a company to generate more detailed accounting information than would be required by a traditional product cost system.

Most companies allocate facility-level activity costs directly to products for decision-making purposes.

Actions or units of work undertaken by an organization to accomplish its mission are referred to as:

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

In the below graph,which shows the relationship among components of quality cost,Line "B" depicts:

Which of the following is an appraisal cost?

The objective of using the following graph is to:

Mason Company is planning to introduce an activity-based costing system.Which of the following actions by employees could lower the success of the new system?

The objective of target pricing is to establish a price that will maximize profits given existing costs.

Which of the following is an appropriate cost driver for issuance of purchase orders?

An increase in prevention costs may result in decreases in appraisal,internal failure,and external failure costs and a decrease in total quality costs.

The voluntary costs of quality include:

What is the purpose of target pricing? What are the steps in target pricing?

Which of the following costs is the result of a facility-level activity?

Explain how the competitive global environment has motivated United States companies to increase their use of technology.

What is the basic premise behind activity-based costing systems (ABC)? What is an activity? Describe how ABC systems work.

An increase in appraisal costs will probably lead to a decrease in internal failure costs and an increase in external failure costs.

Implementation of an activity-based costing system requires a company to generate more detailed accounting information than would be required by a traditional product cost system.

Most companies allocate facility-level activity costs directly to products for decision-making purposes.

Actions or units of work undertaken by an organization to accomplish its mission are referred to as:

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