Exam 7: Activity-Based Costing and Management

Solo Company has developed cost formulas for the drivers of the following production activities: What is the budgeted inspection cost for 20 setups? Driver Activity Fixed Variable Labour hours Materials -0- 40 Labour hours Labour -0- 20 Machine hours Maintenance 20,000 16 Machine hours Machining 100,000 4 Number of setups Inspections 60,000 400 Number of setups Setups -0- 600 Number of purchase orders Purchasing 150,000 6

Which costing system first assigns costs to activities and then to products?

What type of costs are scrap and retesting?

Which of the following activity performance measures is concerned with doing the activity right the first time it is performed?

The moving activity has an expected cost of $80,000.Expected direct labour hours are 20,000,and the expected number of moves is 40,000.What is the best activity rate for moving?

Refer to Netplay Company. A. What is the activity rate for maintaining equipment based on maintenance hours? B. What is the activity rate for setting up equipment based on number of setups? C. What is the activity rate for purchasing materials based on number of requisitions? D. What is the unit cost of the basic model (rounded to the nearest cent)? E. What is the unit cost of the premium model (rounded to the nearest cent)?

Which of the following is NOT a possible source of customer diversity?

Which of the following is NOT a component of process value analysis?

Tigra Company manufactures engines. Tigra produces all the parts necessary for its engines except for one electronic component, which is purchased from two local suppliers: Customer 1 and Customer 2. Both suppliers are reliable and rarely deliver late; however, Customer 1 sells the component for $10.00 per unit and Customer 2 sells the same component for $8.95. Hamilton purchases 70% of its components from Customer 2 because of the lower price. The total annual demand is 75,000 units. I. Activity Data Inspecting components (sampling only) \ 190,000 Reworking products (due to failed component) \ 2,254,000 Warranty work (due to failed component) \ 1,723,000 II. Supplier Data Customer 1 Customer 2 Units Purchase Price \ 10.00 \ 8.95 Units Purchased 22,500 52,500 Sampling Hours 50 2,450 Rework Hours 135 3,625 Warranty Hours 475 6,000 -Refer to the Figure.What is the total cost per component associated with using Customer 2 as the supplier?

Match each item with the correct statement below. -Factors that measure the consumption of activities by products and other cost objects

Environmental costs are costs that are incurred because poor environmental quality exists.

What type of costs typically represent a much higher percentage of product costs than direct labour?

Andiamo Manufacturing produces two types of tablets: basic and deluxe. The tablets are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows: Product Machine Hours Setups Receiving Orders Packing Orders basic 20,000 200 100 800 deluxe 20,000 500 400 4,000 Costs \ 80,000 \ 60,000 \ 10,000 \ 30,000 -Refer to the Figure.What is the consumption ratio for setups on the deluxe?

Develop a set of at least five interview questions that could be used in the construction of an activity dictionary.Also explain why you would ask each question; i.e.,what information you hope to acquire and how it would apply to the activity dictionary.

A factory produces 108,000 3D televisions per quarter.A total of 12,000 production hours are used within the factory per quarter.What is the velocity in units per hour?

What quality-control method involves sampling from batches of finished goods to determine whether they meet an acceptable quality level?

Activity attributes are financial and nonfinancial information items that describe individual activities.

A company was evaluating the activity-based environmental cost of two different products: Product ABC and Product XYZ.Information on two environmental activities is as follows: Data on Product X and Product Y follows: A. Assign the environmental activity costs to Product $\mathrm { ABC }$ and to Product $X Y Z$ . B. Calculate the unit environmental cost of Froduct $A B C$ . C. Calculate the unit environmental cost of Froduct XYZ. D. Calculate the overall unit cost of Product $\mathrm { ABC }$ . E. Calculate the overall unit cost of Product XYZ.

The activity driver for the shipping activity is the number of orders shipped.Product X uses 40 orders,and Product Y uses 120 orders.What is the consumption ratio for product X?

Blackie Manufacturing Company uses activity-based costing.The overhead budget for the coming period is $1,053,000,consisting of the following: The potential allocation bases and their estimated amounts were as follows: