Question 1

Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?

Accepted Answer

No.Traditional systems contain smaller a

Question 2

If the separate activities of design,process design,and prototyping are combined into one activity called "design" in an ABC system,management is forming one homogeneous cost pool.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a sign that an ABC system will provide benefits?

Accepted Answer

A) There are relatively few indirect cost pools associated with the product and the indirect costs are a small percentage of total product cost 
B) All the products produced are similar and sell in equal proportions (sales mix) 
C) Operations staff has no substantial disagreements with the reported costs of manufacturing and marketing products and services. 
D) All or most indirect costs are treated as output-unit level costs. 
A) There are relatively few indirect cost pools associated with the product and the indirect costs are a small percentage of total product cost 
B) All the products produced are similar and sell in equal proportions (sales mix) 
C) Operations staff has no substantial disagreements with the reported costs of manufacturing and marketing products and services. 
D) All or most indirect costs are treated as output-unit level costs.

Question 4

Department costing systems always properly recognize how resources are used by products as they require the creation of multiple indirect cost pools.

Accepted Answer

A) True 
 B)False

Question 5

Excellent Printing has contracts to complete weekly supplements required by forty-six customers.For the year 2018,manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2018,Excellent Printing decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs,it was determined that number of design changes,setups,and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis:
 
During 2018,two customers,Money Managers and Hospital Systems,are expected to use the following printing services:
 
When costs are assigned using the single cost driver,number of pages printed,then Hospital 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 likely seek to do business with competitors 
D) will contribute too little to profits,and Wallace Printing will not want to accept additional work from the company 
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 likely seek to do business with competitors 
D) will contribute too little to profits,and Wallace Printing will not want to accept additional work from the company

Question 6

Which of the following is a reason that has accelerated the demand for refinements to the costing system?

Accepted Answer

A) The declining demand for customized products has led managers to decrease the variety of products and services their companies offer. 
B) The use of product and process technology has led to an increase in indirect costs and a decrease in direct costs. 
C) The increased of automated processes has led to the increase in direct manufacturing cost leading to a decrease in break even point. 
D) The increasing competition in product markets has led to an increase in contribution margin resulting in a decrease of break even point. 
A) The declining demand for customized products has led managers to decrease the variety of products and services their companies offer. 
B) The use of product and process technology has led to an increase in indirect costs and a decrease in direct costs. 
C) The increased of automated processes has led to the increase in direct manufacturing cost leading to a decrease in break even point. 
D) The increasing competition in product markets has led to an increase in contribution margin resulting in a decrease of break even point.

Question 7

What are the factors that are causing many companies to refine their costing systems to obtain more accurate measures of the costs of their products?

Accepted Answer

The first cause is increasing product di

Question 8

Canton Corp.manufactures two sizes of ceramic paperweights,regular and jumbo.The following information applies to their expectations for the planning period:

Expected direct costs amounts to $927,000 for the period.Support cost requirements of both products are substantially different from one another.Zitriks uses an ABC costing system.
Which of the following is true of Canton's overhead costing?

Accepted Answer

A) Multiple cost pools are appropriate for Canton's because of high direct costs. 
B) Single cost pool is appropriate for Canton's because of high direct costs. 
C) Multiple cost pools are appropriate for Canton's because of diverse support costs. 
D) Single cost pool is appropriate for Canton's because of diverse support costs. 
A) Multiple cost pools are appropriate for Canton's because of high direct costs. 
B) Single cost pool is appropriate for Canton's because of high direct costs. 
C) Multiple cost pools are appropriate for Canton's because of diverse support costs. 
D) Single cost pool is appropriate for Canton's because of diverse support costs.

Question 9

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts,what would be the best allocation base for human resource adminstration costs?

Accepted Answer

A) direct labor hours 
B) electricity costs 
C) number of parts purchased 
D) machine hours 
A) direct labor hours 
B) electricity costs 
C) number of parts purchased 
D) machine hours

Question 10

When "available time" (i.e. ,setup-hours)is used to calculate a cost of a resource and to allocate costs to cost objects ,the system is called:

Accepted Answer

A) job costing 
B) process costing 
C) hybrid costing 
D) time-driven activity based costing 
A) job costing 
B) process costing 
C) hybrid costing 
D) time-driven activity based costing

Question 11

Gregory Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year:
 
The accounting records show the Mossman Job consumed the following resources:
 
Which method of allocation probably best estimates actual overhead costs used? Why?

Accepted Answer

A) Single direct labor-hours cost driver because it is best to allocate total costs uniformly to individual jobs. 
B) Single direct labor-hours cost driver because it is easiest to analyze and interpret. 
C) Three activity-cost drivers because they best reflect the relative consumption of resources. 
D) Three activity-cost drivers because product costs can be significantly cross-subsidized. 
A) Single direct labor-hours cost driver because it is best to allocate total costs uniformly to individual jobs. 
B) Single direct labor-hours cost driver because it is easiest to analyze and interpret. 
C) Three activity-cost drivers because they best reflect the relative consumption of resources. 
D) Three activity-cost drivers because product costs can be significantly cross-subsidized.

Question 12

Extreme Manufacturing Company provides the following ABC costing information:
 
The above activities are used by Departments A and B as follows:
 
How much of account verification costs will be assigned to Department A?

Accepted Answer

A) $23,750 
B) $28,500 
C) $95,000 
D) $47,500 
A) $23,750 
B) $28,500 
C) $95,000 
D) $47,500

Question 13

Over time,the cost of design activities depend largely on the time designers spend on designing and modifying the product not on the number of products made or the number of batches produced.

Accepted Answer

A) True 
 B)False

Question 14

Product-cost cross-subsidization means that:

Accepted Answer

A) when one product is overcosted,it results in more than one other product being overcosted 
B) when a company undercosts more than one of its products,it will overcost more than one of its other products 
C) when a company undercosts one of its products,it will overcost at least one of its other products 
D) when one product is overcosted it results in all other products being overcosted 
A) when one product is overcosted,it results in more than one other product being overcosted 
B) when a company undercosts more than one of its products,it will overcost more than one of its other products 
C) when a company undercosts one of its products,it will overcost at least one of its other products 
D) when one product is overcosted it results in all other products being overcosted

Question 15

Tiger Pride produces two product lines: T-shirts and Sweatshirts.Product profitability is analyzed as follows:
 
Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information:

Using an ABC system,next year's estimates show manufacturing overhead costs will total $227,300 for 46,000 T-shirts.If all other T-shirt costs and sales prices remain the same,the profitability that can be expected is ________.(Round the final answer to the nearest whole cent. )

Accepted Answer

A) $8.60 per t-shirt 
B) $4.94 per t-shirt 
C) $3.66 per t-shirt 
D) ($0.27)per t-shirt 
A) $8.60 per t-shirt 
B) $4.94 per t-shirt 
C) $3.66 per t-shirt 
D) ($0.27)per t-shirt

Question 16

Activity based costing system differs from traditional costing systems in the treatment of ________.

Accepted Answer

A) direct labor costs 
B) direct material costs 
C) prime costs 
D) indirect costs 
A) direct labor costs 
B) direct material costs 
C) prime costs 
D) indirect costs

Question 17

The goal of a properly constructed ABC system is to ________.

Accepted Answer

A) have the most accurate cost system 
B) identify more indirect costs 
C) develop the best cost system that meets the cost/benefit test 
D) have separate allocation rates for each department 
A) have the most accurate cost system 
B) identify more indirect costs 
C) develop the best cost system that meets the cost/benefit test 
D) have separate allocation rates for each department

Question 18

Excellent Printers has contracts to complete weekly supplements required by forty-six customers.For the year 2018,manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.
For 2018 Excellent Printers has decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs,it was determined that number of design changes,setups,and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis:
 
During 2018,two customers,Money Managers and Hospital Systems,are expected to use the following printing services:
 
When costs are assigned using the single cost driver,number of pages printed,then ________.

Accepted Answer

A) Excellent Printers will want to retain this highly profitable customer 
B) Money Managers will likely seek to do business with competitors 
C) Money Managers is unfairly over billed for its use of printing resources 
D) Money Managers is grossly under billed for the job,while other jobs will be unfairly over billed 
A) Excellent Printers will want to retain this highly profitable customer 
B) Money Managers will likely seek to do business with competitors 
C) Money Managers is unfairly over billed for its use of printing resources 
D) Money Managers is grossly under billed for the job,while other jobs will be unfairly over billed

Question 19

High Traffic Products Corporation has two departments,Small and Large.Central costs could be allocated to the two departments in various ways.
 
If total rent expense of $71,550 is allocated on the basis of square footage,the amount allocated to the Small Department would be ________.(Do not round interim calculations.Round the final answer to the nearest whole dollar. )

Accepted Answer

A) $51,900 
B) $19,650 
C) $35,775 
D) $27,090 
A) $51,900 
B) $19,650 
C) $35,775 
D) $27,090

Question 20

Activity-based management refers to the use of information derived from ABC analysis to analyze and improve operations.

Accepted Answer

A) True 
 B)False

Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?

If the separate activities of design,process design,and prototyping are combined into one activity called "design" in an ABC system,management is forming one homogeneous cost pool.

Which of the following is a sign that an ABC system will provide benefits?

Department costing systems always properly recognize how resources are used by products as they require the creation of multiple indirect cost pools.

Which of the following is a reason that has accelerated the demand for refinements to the costing system?

What are the factors that are causing many companies to refine their costing systems to obtain more accurate measures of the costs of their products?

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts,what would be the best allocation base for human resource adminstration costs?

When "available time" (i.e. ,setup-hours)is used to calculate a cost of a resource and to allocate costs to cost objects ,the system is called:

Gregory Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year: The accounting records show the Mossman Job consumed the following resources: Which method of allocation probably best estimates actual overhead costs used? Why?

Extreme Manufacturing Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of account verification costs will be assigned to Department A?

Over time,the cost of design activities depend largely on the time designers spend on designing and modifying the product not on the number of products made or the number of batches produced.

Product-cost cross-subsidization means that:

Activity based costing system differs from traditional costing systems in the treatment of ________.

The goal of a properly constructed ABC system is to ________.

Activity-based management refers to the use of information derived from ABC analysis to analyze and improve operations.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 5: Activity-Based Costing and Activity-Based Management

Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not?

If the separate activities of design,process design,and prototyping are combined into one activity called "design" in an ABC system,management is forming one homogeneous cost pool.

Which of the following is a sign that an ABC system will provide benefits?

Department costing systems always properly recognize how resources are used by products as they require the creation of multiple indirect cost pools.

Which of the following is a reason that has accelerated the demand for refinements to the costing system?

What are the factors that are causing many companies to refine their costing systems to obtain more accurate measures of the costs of their products?

For a manufacturing firm that produces multiple families of products requiring various combinations of different types of parts,what would be the best allocation base for human resource adminstration costs?

When "available time" (i.e. ,setup-hours)is used to calculate a cost of a resource and to allocate costs to cost objects ,the system is called:

Gregory Enterprises has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year: The accounting records show the Mossman Job consumed the following resources: Which method of allocation probably best estimates actual overhead costs used? Why?

Extreme Manufacturing Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of account verification costs will be assigned to Department A?

Over time,the cost of design activities depend largely on the time designers spend on designing and modifying the product not on the number of products made or the number of batches produced.

Product-cost cross-subsidization means that:

Activity based costing system differs from traditional costing systems in the treatment of ________.

The goal of a properly constructed ABC system is to ________.

Activity-based management refers to the use of information derived from ABC analysis to analyze and improve operations.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters