Question 1

________ costs support the organization as a whole.

Accepted Answer

A) Unit-level 
B) Batch-level 
C) Product-sustaining 
D) Facility-sustaining 
A) Unit-level 
B) Batch-level 
C) Product-sustaining 
D) Facility-sustaining

Question 2

Activity-based costing information can be used for ________.

Accepted Answer

A) product-mix decisions 
B) pricing decisions 
C) advertisement decisions 
D) inventory valuation 
A) product-mix decisions 
B) pricing decisions 
C) advertisement decisions 
D) inventory valuation

Question 3

Distribution can be a cost-driver for a manufacturing company under ABC system.

Accepted Answer

A) True 
 B)False

Question 4

Aqua Company produces two products-Alpha and Beta.Alpha has a high market share and is produced in bulk.Production of Beta is based on customer orders and is custom designed.Also,55% of Beta's cost is shared between design and setup costs,while Alpha's major portions of costs are direct costs.Alpha is using a single cost pool to allocate indirect costs.Which of the following statements is true of Aqua?

Accepted Answer

A) Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs. 
B) Aqua will undercost Alpha's indirect costs because alpha has high direct costs. 
C) Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs. 
D) Aqua will overcost Beta's indirect costs because beta has high indirect costs. 
A) Aqua will overcost Beta's direct costs as it is using a single cost pool to allocate indirect costs. 
B) Aqua will undercost Alpha's indirect costs because alpha has high direct costs. 
C) Aqua will overcost Alpha's indirect costs as it is using a single cost pool to allocate indirect costs. 
D) Aqua will overcost Beta's indirect costs because beta has high indirect costs.

Question 5

North Street Corporation manufactures two models of motorized go-carts,a standard and a deluxe model.The following activity and cost information has been compiled:

Assume a traditional costing system applies the $37,960 of overhead costs based on direct labor hours.What is the total amount of overhead cost assigned to the deluxe model? (Do not round interim calculations.Round the final answer to the nearest whole dollar. )

Accepted Answer

A) $14,109 
B) $23,851 
C) $23,294 
D) $14,666 
A) $14,109 
B) $23,851 
C) $23,294 
D) $14,666

Question 6

It is usually difficult to find good cost driver (cause-and-effect relationship)between ________ and a cost allocation base.

Accepted Answer

A) unit-level costs 
B) batch-level costs 
C) product-sustaining costs 
D) facility-sustaining costs 
A) unit-level costs 
B) batch-level costs 
C) product-sustaining costs 
D) facility-sustaining costs

Question 7

For an ABC system to be useful,it must allocated costs from all "links "of the value chain.

Accepted Answer

A) True 
 B)False

Question 8

Stark Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways.
 
If administrative expense of $77,500 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be ________.

Accepted Answer

A) $38,750.00 
B) $52,364.86 
C) $25,135.14 
D) $51,278.20 
A) $38,750.00 
B) $52,364.86 
C) $25,135.14 
D) $51,278.20

Question 9

Which of the following statements is true of ABC systems?

Accepted Answer

A) ABC systems are time-driven cost systems. 
B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs. 
C) ABC systems provide valuable information to managers beyond accurate product costs. 
D) ABC systems assume all costs are variable costs. 
A) ABC systems are time-driven cost systems. 
B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs. 
C) ABC systems provide valuable information to managers beyond accurate product costs. 
D) ABC systems assume all costs are variable costs.

Question 10

ABC systems provide greater insight than traditional systems into the management of indirect costs.

Accepted Answer

A) True 
 B)False

Question 11

As product diversity and indirect costs increase,it is usually best to switch away from a broad averaging system to an activity-based cost system.

Accepted Answer

A) True 
 B)False

Question 12

Nichols Inc.manufactures remote controls.Currently the company uses a plant-wide rate for allocating manufacturing overhead.The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows:
 
The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $30 per labor hour.
Nichols' management is considering to implement ABC system because ________.

Accepted Answer

A) ABC system can be implemented cheaply 
B) ABC system provides more accurate direct cost figures 
C) ABC system is a highly refined costing system 
D) ABC system requires minimal expertise to operate 
A) ABC system can be implemented cheaply 
B) ABC system provides more accurate direct cost figures 
C) ABC system is a highly refined costing system 
D) ABC system requires minimal expertise to operate

Question 13

Overcosting a particular product may result in:

Accepted Answer

A) pricing the product too high 
B) pricing the product too low 
C) operating efficiencies 
D) understating total product costs 
A) pricing the product too high 
B) pricing the product too low 
C) operating efficiencies 
D) understating total product costs

Question 14

Is it advisable to ignore facility-sustaining cost drivers during product costing?

Accepted Answer

Facility-sustaining cost drivers are ign

Question 15

It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that ________.

Accepted Answer

A) total costs reflect market price 
B) value-added costs can be eliminated 
C) there is high likelihood of cross-subsidizing of product costs 
D) product-pricing errors are minimal 
A) total costs reflect market price 
B) value-added costs can be eliminated 
C) there is high likelihood of cross-subsidizing of product costs 
D) product-pricing errors are minimal

Question 16

How does ABC costing system help service companies?

Accepted Answer

The widespread use of ABC systems in ser

Question 17

Indirect labor and distribution costs would most likely be in the same activity-cost pool.

Accepted Answer

A) True 
 B)False

Question 18

An effective activity-based cost system always ignores facility-sustaining cost drivers.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true of costing systems?

Accepted Answer

A) Single-indirect cost pool systems always result in overcosting of products. 
B) Single-indirect cost pool systems classify some direct costs as indirect costs. 
C) ABC systems always result in overcosting of products. 
D) ABC systems classify some indirect costs as direct costs helping to improve processes 
A) Single-indirect cost pool systems always result in overcosting of products. 
B) Single-indirect cost pool systems classify some direct costs as indirect costs. 
C) ABC systems always result in overcosting of products. 
D) ABC systems classify some indirect costs as direct costs helping to improve processes

Question 20

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

Accepted Answer

A) $88,825 
B) $118,825 
C) $120,000 
D) $85,075 
A) $88,825 
B) $118,825 
C) $120,000 
D) $85,075

________ costs support the organization as a whole.

Activity-based costing information can be used for ________.

Distribution can be a cost-driver for a manufacturing company under ABC system.

It is usually difficult to find good cost driver (cause-and-effect relationship)between ________ and a cost allocation base.

For an ABC system to be useful,it must allocated costs from all "links "of the value chain.

Stark Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways. If administrative expense of $77,500 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be ________.

Which of the following statements is true of ABC systems?

ABC systems provide greater insight than traditional systems into the management of indirect costs.

As product diversity and indirect costs increase,it is usually best to switch away from a broad averaging system to an activity-based cost system.

Overcosting a particular product may result in:

Is it advisable to ignore facility-sustaining cost drivers during product costing?

It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that ________.

How does ABC costing system help service companies?

Indirect labor and distribution costs would most likely be in the same activity-cost pool.

An effective activity-based cost system always ignores facility-sustaining cost drivers.

Which of the following statements is true of costing systems?

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

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

________ costs support the organization as a whole.

Activity-based costing information can be used for ________.

Distribution can be a cost-driver for a manufacturing company under ABC system.

It is usually difficult to find good cost driver (cause-and-effect relationship)between ________ and a cost allocation base.

For an ABC system to be useful,it must allocated costs from all "links "of the value chain.

Stark Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways. If administrative expense of $77,500 is allocated on the basis of number of employees,the amount allocated to the Car Rental Department would be ________.

Which of the following statements is true of ABC systems?

ABC systems provide greater insight than traditional systems into the management of indirect costs.

As product diversity and indirect costs increase,it is usually best to switch away from a broad averaging system to an activity-based cost system.

Overcosting a particular product may result in:

Is it advisable to ignore facility-sustaining cost drivers during product costing?

It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that ________.

How does ABC costing system help service companies?

Indirect labor and distribution costs would most likely be in the same activity-cost pool.

An effective activity-based cost system always ignores facility-sustaining cost drivers.

Which of the following statements is true of costing systems?

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

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