Question 1

In the early days of the industrial revolution,indirect manufacturing costs:

Accepted Answer

A)  were a significant cost of producing most products. 
B)  were relatively large compared to the direct costs of producing a product. 
C)  were highly correlated with the use of labor. 
D)  were largely fixed. 
A)  were a significant cost of producing most products. 
B)  were relatively large compared to the direct costs of producing a product. 
C)  were highly correlated with the use of labor. 
D)  were largely fixed.

Question 2

Indicate whether each of the following statements is true or false.
The allocation of indirect costs using activity-based costing is a three-step process._____
The first stage of activity-based costing is to calculate activity rates._____
A typical business may engage in thousands of different activities._____
Determining the number of activity centers to use in an activity-based costing system should be based on a cost/benefit analysis._____
A traditional cost allocation system first assigns costs to activity centers and then uses a single volume-based cost driver to assign the costs to products._____

Accepted Answer

The allocation of indirect costs using a

Question 3

Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.

Accepted Answer

A)  ABC uses volume-based and activity-based cost drivers. 
B)  Volume-based drivers are most appropriate for costs that are affected by the number of units produced. 
C)  ABC's use of multiple cost drivers will produce less accurate unit costs when a company produces many different products that require different types and levels of overhead costs. 
D)  An arbitrary cost driver must be selected when allocating facility-level activity costs. 
A)  ABC uses volume-based and activity-based cost drivers. 
B)  Volume-based drivers are most appropriate for costs that are affected by the number of units produced. 
C)  ABC's use of multiple cost drivers will produce less accurate unit costs when a company produces many different products that require different types and levels of overhead costs. 
D)  An arbitrary cost driver must be selected when allocating facility-level activity costs.

Question 4

Indicate whether each of the following statements is true or false.
If a companywide overhead rate undercosts some products,it must overcost others.______
Facility-level costs usually decrease when a company decides to eliminate one product.______
Many companies do not allocate facility-level costs to products for decision-making purposes.______
Batch-level costs are usually not relevant to the decision to eliminate a product.______
Upstream costs are incurred before a product is manufactured.______

Accepted Answer

If a companywide overhead rate undercost

Question 5

Farber Company produces its product in three departments,Prepping,Machining,and Finishing.A customer recently returned a defective product that had not been machined properly.The company's accountant would classify the repair cost as an internal failure cost.

Accepted Answer

A) True 
 B)False

Question 6

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. $$\begin{array} { l c c c c } 
\text { Category } & \text { Estimated Cost } & \text { Cost Driver } & \text { Bay Windows } & \text { Casement } \
\text { Unit-level } & \$ 125,000 & \text { Labor hours } & 750 & 500 \
\text { Batch-level } & \$ 75,000 & \text { Inspections } & 30 & 20 \
\text { Product-level } & \$ 35,000 & \text { Storage Space } & 3 , 5 0 0 \text { sq feet }  & 2,100 \text { sq feet } \
\text { Facility-level } & \$ 165,000 & \text { Machine hours } & 9,000 & 6 , 0 0 0 
\end{array}$$ If bay windows and casement windows require the same amount of direct labor,using labor hours as the allocation base for facility-level costs would:

Accepted Answer

A)  Undercost the casement windows. 
B)  Overcost the bay windows. 
C)  Undercost both the bay windows and casement windows. 
D)  None of these answers are correct. 
A)  Undercost the casement windows. 
B)  Overcost the bay windows. 
C)  Undercost both the bay windows and casement windows. 
D)  None of these answers are correct.

Question 7

Which of the following is an appropriate cost driver for setting up production equipment for a production run?

Accepted Answer

A)  Machine hours 
B)  Number of setups 
C)  Setup hours 
D)  Either number of setups or setup hours would be appropriate 
A)  Machine hours 
B)  Number of setups 
C)  Setup hours 
D)  Either number of setups or setup hours would be appropriate

Question 8

To reduce its total batch-level costs,a company should produce its products in large batches.

Accepted Answer

A) True 
 B)False

Question 9

Discuss how an increase in one or more quality cost(s)can decrease others.

Accepted Answer

If a company chooses to spend more on p

Question 10

Gaining personnel support and obtaining accurate data are two of the more challenging obstacles to the implementation of a successful activity-based costing system.

Accepted Answer

A) True 
 B)False

Question 11

Valpar Company produces several lines of laundry hampers.The factory is highly automated and uses an activity-based costing system to allocate overhead costs to its various products.During the upcoming period,the company expects to produce 72,000 units.The costs and cost drivers associated with four activity cost pools are given below: $\begin{array}{lcccc}
&\text { UNIT}&\text { BATCH}&\text { PRODUCT}&\text { FACILIT }\
\text { ACTTVTIES: } & \text { LEVEL } & \text { LEVEL } & \text { LEVEL } & \text { LEVEL } \
\hline \text { Cost } & \$ 30,000 & \$ 8,000 & \$ 15,000 & \$ 36,000 \
\text { Cost driver }
 & \begin{array}{l}
12,000 \
\text { labor hrs }
\end{array} & \begin{array}{c}
200 \text { set } \
\text { ups }
\end{array} & \% \text { of use } & 72,000\text{units} \

\end{array}$ Production of 20,000 units of its popular foldable hamper required 3,000 labor hours and 75 setups and consumed one-third of the product sustaining activities.What amount of unit-level costs will be allocated to the product?

Accepted Answer

A)  $2,500 
B)  $7,500 
C)  $5,000 
D)  $6,000 
A)  $2,500 
B)  $7,500 
C)  $5,000 
D)  $6,000

Question 12

Identify the obstacle(s)in implementing a successful activity-based costing system.

Accepted Answer

A)  Gaining the cooperation and support of employees. 
B)  Obtaining accurate cost driver data. 
C)  Condensing a large number of activities down into a manageable number of activity cost pools. 
D)  All of these answers are correct. 
A)  Gaining the cooperation and support of employees. 
B)  Obtaining accurate cost driver data. 
C)  Condensing a large number of activities down into a manageable number of activity cost pools. 
D)  All of these answers are correct.

Question 13

Indicate whether each of the following statements is true or false.
For a manufacturing company,"quality" means producing products that conform to specifications.______
Companies incur internal failure costs to avoid producing nonconforming products.______
Voluntary costs refer to prevention and appraisal costs.______
Failure costs include appraisal and external failure costs.______
Managers of a company can often reduce failure costs by reducing appraisal costs.______

Accepted Answer

For a manufacturing company,"quality" me

Question 14

Select the term from the list provided that best matches each of the following descriptions.

Accepted Answer

The answer of Select the term from the list provided...

In the early days of the industrial revolution,indirect manufacturing costs:

Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.

Farber Company produces its product in three departments,Prepping,Machining,and Finishing.A customer recently returned a defective product that had not been machined properly.The company's accountant would classify the repair cost as an internal failure cost.

Which of the following is an appropriate cost driver for setting up production equipment for a production run?

To reduce its total batch-level costs,a company should produce its products in large batches.

Discuss how an increase in one or more quality cost(s)can decrease others.

Gaining personnel support and obtaining accurate data are two of the more challenging obstacles to the implementation of a successful activity-based costing system.

Identify the obstacle(s)in implementing a successful activity-based costing system.

Select the term from the list provided that best matches each of the following descriptions.

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

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

In the early days of the industrial revolution,indirect manufacturing costs:

Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.

Farber Company produces its product in three departments,Prepping,Machining,and Finishing.A customer recently returned a defective product that had not been machined properly.The company's accountant would classify the repair cost as an internal failure cost.

Which of the following is an appropriate cost driver for setting up production equipment for a production run?

To reduce its total batch-level costs,a company should produce its products in large batches.

Discuss how an increase in one or more quality cost(s)can decrease others.

Gaining personnel support and obtaining accurate data are two of the more challenging obstacles to the implementation of a successful activity-based costing system.

Identify the obstacle(s)in implementing a successful activity-based costing system.

Select the term from the list provided that best matches each of the following descriptions.

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