Exam 12: Activity-Based Management

What is responsibility accounting? Compare and contrast financial-based responsibility accounting with activity-based responsibility accounting.

Setup time for a product is 14 hours. A firm that uses JIT and produces the same product has reduced setup time by 2 hours. Setup labor is $35 per hour. If the company wants to reduce non-value-added costs by 40 percent next year, the currently attainable standard for setup time would be

Mendelsohn company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the competitor's carrying costs average $2,000 per day. The value-added costs are

The term(s )which refer(s) to a global incentive that encourages employees to contribute to the overall financial well-being is(are) called

Mattison Company has developed cost formulas for the drivers of the following production activities: If the actual activity was 20 setups and the actual fixed cost for inspections was $28,000 and the variable cost for inspections was $5,000, the total variance for inspections is

Livingston Company has developed capacity standards. Information about a non-value-added activity is as follows: The volume variance is

Bandolero Corporation has developed ideal standards for four activities: labor, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The non-value-added costs for materials are

A company has 19 days of finished goods inventory on hand to avoid stockouts. The carrying costs of the inventory average $6,000 per day. The non-value-added costs are

Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs $6 per pound. If the company wants to reduce non-value-added costs by 25 percent next year, the currently attainable standard for material would be

Controlling the cost reduction process using Kaizen costing is accomplished

The process which refers to incremental or continual increases in the efficiency of an existing product is called:

Which of the following is NOT part of the process dimension of the activity-based management model?

The resource(s) consumed by the activity in producing its output is(are) called:

Financial-based responsibility accounting focuses on functional organizational units.

A time-and-motion study revealed that it should take 2 hours to produce a product that currently takes 6 hours to produce. Labor is $8 per hour. The value-added costs are

Your company keeps 15 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $5,000 per day. A competitor keeps 12 days of inventory on hand, and the competitor's carrying costs average $3,000 per day. The non-value-added costs would be

Activity-based management attempts to

Activity-based responsibility accounting assigns responsibility to processes and uses only nonfinancial measures of performance.

A firm's warranty costs are $125,000 per year. A competitor's warranty costs are $25,000 per year. The non-value-added costs are

Describe how the activity-based management model combines the process and costing views. What are the steps involved in each? What are the objectives of the activity-based management system?