Question 1

Zero defects means that most products conform to specifications.

Accepted Answer

A) True 
 B)False

Question 2

Factors that measure the consumption of activities by products and other cost objects are value-added costs.

Accepted Answer

A) True 
 B)False

Question 3

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:
 $$\begin{array} { l r r r r } 
\text { Product } & \text { Machine Hours } & \text { Setups } & \text { Receiving Orders } & \text { Packing Orders } \
\text { basic } & 20,000 & 200 & 100 & 800 \
\text { deluxe } & 20,000 & 500 & 400 & 4,000 \
\text { Costs } & \$ 80,000 & \$ 60,000 & \$ 10,000 & \$ 30,000
\end{array}$$
-Refer to the Figure.What is the activity rate for packing that is based on packing orders?

Accepted Answer

A) $1.20 per packing order 
B) $6.25 per packing order 
C) $9.00 per packing order 
D) $10.00 per packing order 
A) $1.20 per packing order 
B) $6.25 per packing order 
C) $9.00 per packing order 
D) $10.00 per packing order

Question 4

Inspection time for a plant is 20,000 hours per year.The cost of inspection consists of the salaries of four inspectors,totalling $120,000.Inspection also uses supplies costing $6 per inspection hour.The company has a close to zero-defect state and has eliminated the need for any inspection activity.What is the non-value-added cost of inspection per year?

Accepted Answer

A) $30,000 
B) $120,000 
C) $240,000 
D) $480,000 
A) $30,000 
B) $120,000 
C) $240,000 
D) $480,000

Question 5

Refer to StrongLive Company.
 A. Calculate the activity rate for machining.
B. Calculate the activity rate for engineering.
C. Calculate the activity rate for packing.

Accepted Answer

The answer of Refer to StrongLive Company.
 A. Calculate the...

Question 6

Consider the following information on activities:
   A. Which of the three activities, if any, is value-added?
B. What is the non-value-added cost of each activity?
C. What is the total value-added cost of the activities?

Accepted Answer

The answer of Consider the following information on activities:
 ...

Question 7

What costs are incurred when products and services fail to either conform to requirements or satisfy customer needs after being delivered to customers?

Accepted Answer

A) prevention costs 
B) appraisal costs 
C) internal failure costs 
D) external failure costs 
A) prevention costs 
B) appraisal costs 
C) internal failure costs 
D) external failure costs

Question 8

Match each item with the correct statement below.
-Factors that measure the consumption of resources by activities

Accepted Answer

A) Activity drivers 
B) Activity-based costing system 
C) Consumption ratio 
D) Unit-level activities 
E) Activity attributes
F)Resource drivers 
A) Activity drivers 
B) Activity-based costing system 
C) Consumption ratio 
D) Unit-level activities 
E) Activity attributes
F)Resource drivers

Question 9

The receiving department of Powen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows:
 $$\begin{array}{l}
\text { Percentage of Time }\
\begin{array} { l c } 
\text { Activity } & \text { on Each Activity } \
\text { Unloading } & 25 \% \
\text { Counting } & 40 \% \
\text { Inspecting } & 35 \%
\end{array}
\end{array}$$
-Refer to the Figure.What is the cost of counting?

Accepted Answer

A) $50,500 
B) $52,000 
C) $54,000 
D) $56,000 
A) $50,500 
B) $52,000 
C) $54,000 
D) $56,000

Question 10

What is the term for a list of activities accompanied by information that describes each activity?

Accepted Answer

A) an activity manifesto 
B) an activity journal 
C) an activity dictionary 
D) an activity note 
A) an activity manifesto 
B) an activity journal 
C) an activity dictionary 
D) an activity note

Question 11

Match each item with the correct statement below.
-Result or product of an activity.

Accepted Answer

A) Activity analysis 
B) Value-added costs 
C) Velocity 
D) Activity inputs 
E) Activity output measure
F)Activity output 
A) Activity analysis 
B) Value-added costs 
C) Velocity 
D) Activity inputs 
E) Activity output measure
F)Activity output

Question 12

What is the term for increasing the efficiency of necessary activities by using economies of scale?

Accepted Answer

A) activity elimination 
B) activity sharing 
C) activity management 
D) activity selection 
A) activity elimination 
B) activity sharing 
C) activity management 
D) activity selection

Question 13

CompInc. produces two products: a high-end laptop computer and an inexpensive laptop. The two products use two overhead activities, which have the following costs:
The controller has collected the expected annual prime costs for each product, the machine hours, the setup hours, and the expected production.
 $\begin{array}{lr}
\text { Setting up equipment } & \$ 8,000 \
\text { Machining } & 48,000
\end{array}$ $$\begin{array} { l r r } 
& \text { High-end } & \text { Inexpensive } \
\text { Direct Labour } & \$ 24,000 & \$ 8,000 \
\text { Direct Materials } & 15,000 & 4,000 \
\text { Units } & 2,000 & 2,000 \
\text { Machine Hours } & 1,000 & 3,000 \
\text { Setup Hours } & 150 & 50
\end{array}$$
-Refer to the Figure.What is the inexpensive laptop's consumption ratio for setup hours?

Accepted Answer

A) 0.25 
B) 0.45 
C) 0.50 
D) 0.75 
A) 0.25 
B) 0.45 
C) 0.50 
D) 0.75

Question 14

SarahLou Company had sales of $2,500,000 for last year.Data on quality-related costs for last year are as follows:
 $$\begin{array} { l r } 
\text { Inspection } & \$ 80,000 \
\text { Scrap } & 10,000 \
\text { Rework } & 45,000 \
\text { Quality training } & 20,000 \
\text { Warranty work } & 100,000 \
\text { Customer complaints } & 30,000
\end{array}$$ A. Classify each of the quality-rel ated costs as control (prevention and appraisal), internal
failure, or external failure.
B. What percentage of sales is accounted for by quality-related costs?
C. If quality-related costs could be reduced to $2 \%$ of sales, by how much would SarahLou's profit increase?

Accepted Answer

The answer of SarahLou Company had sales of $2,500,000 for...

Question 15

Which of the following best characterizes unrealized external failure costs?

Accepted Answer

A) They are also called societal costs, 
B) They are paid for by the firm. 
C) They are not caused by the firm. 
D) They include the costs of treating toxic materials. 
A) They are also called societal costs, 
B) They are paid for by the firm. 
C) They are not caused by the firm. 
D) They include the costs of treating toxic materials.

Question 16

Match each item with the correct statement below.
-Costs necessary to perform value-added activities with perfect efficiency.

Accepted Answer

A) Activity analysis 
B) Value-added costs 
C) Velocity 
D) Activity inputs 
E) Activity output measure
F)Activity output 
A) Activity analysis 
B) Value-added costs 
C) Velocity 
D) Activity inputs 
E) Activity output measure
F)Activity output

Question 17

Gleen Company has a JIT system in place.Each manufacturing cell is dedicated to the production of a single product or major subassembly.One cell,dedicated to the production of guitar pickups,has four operations: machining,finishing,assembly,and qualifying (testing).
For the coming year,the pickup cell has the following budgeted costs and cell time (both at theoretical capacity):
During the year,the following actual results were obtained:
     A. Compute the theoretical velocity for the cell per hour.
B. Compute the theoretical cycle time in minutes.
C. Compute the actual velocity for the cell per hour.
D. Compute the actual cycle time in minutes.

Accepted Answer

The answer of Gleen Company has a JIT system in...

Question 18

A company takes 15,000 hours to produce 30,000 units of a product.What is the velocity?

Accepted Answer

A) 0.5 units per hour 
B) 1.0 unit per hour 
C) 2.0 units per hour 
D) 2.5 units per hour 
A) 0.5 units per hour 
B) 1.0 unit per hour 
C) 2.0 units per hour 
D) 2.5 units per hour

Question 19

Refer to Netplay Company.
 A. What is the plantwide overhead rate based on machine hours?
B. Assuming a plantwide overhead rate, what is the unit cost of the basic model?
C. Assuming a plantwide overhead rate, what is the unit cost of the premium model?

Accepted Answer

The answer of Refer to Netplay Company.
 A. What is...

Question 20

Discretionary activities are necessary to comply with legal mandates.

Accepted Answer

A) True 
 B)False

Zero defects means that most products conform to specifications.

Factors that measure the consumption of activities by products and other cost objects are value-added costs.

Refer to StrongLive Company. A. Calculate the activity rate for machining. B. Calculate the activity rate for engineering. C. Calculate the activity rate for packing.

Consider the following information on activities: A. Which of the three activities, if any, is value-added? B. What is the non-value-added cost of each activity? C. What is the total value-added cost of the activities?

What costs are incurred when products and services fail to either conform to requirements or satisfy customer needs after being delivered to customers?

Match each item with the correct statement below. -Factors that measure the consumption of resources by activities

What is the term for a list of activities accompanied by information that describes each activity?

Match each item with the correct statement below. -Result or product of an activity.

What is the term for increasing the efficiency of necessary activities by using economies of scale?

Which of the following best characterizes unrealized external failure costs?

Match each item with the correct statement below. -Costs necessary to perform value-added activities with perfect efficiency.

A company takes 15,000 hours to produce 30,000 units of a product.What is the velocity?

Refer to Netplay Company. A. What is the plantwide overhead rate based on machine hours? B. Assuming a plantwide overhead rate, what is the unit cost of the basic model? C. Assuming a plantwide overhead rate, what is the unit cost of the premium model?

Discretionary activities are necessary to comply with legal mandates.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 7: Activity-Based Costing and Management

Zero defects means that most products conform to specifications.

Factors that measure the consumption of activities by products and other cost objects are value-added costs.

Refer to StrongLive Company. A. Calculate the activity rate for machining. B. Calculate the activity rate for engineering. C. Calculate the activity rate for packing.

Consider the following information on activities: A. Which of the three activities, if any, is value-added? B. What is the non-value-added cost of each activity? C. What is the total value-added cost of the activities?

What costs are incurred when products and services fail to either conform to requirements or satisfy customer needs after being delivered to customers?

Match each item with the correct statement below. -Factors that measure the consumption of resources by activities

What is the term for a list of activities accompanied by information that describes each activity?

Match each item with the correct statement below. -Result or product of an activity.

What is the term for increasing the efficiency of necessary activities by using economies of scale?

Which of the following best characterizes unrealized external failure costs?

Match each item with the correct statement below. -Costs necessary to perform value-added activities with perfect efficiency.

A company takes 15,000 hours to produce 30,000 units of a product.What is the velocity?

Refer to Netplay Company. A. What is the plantwide overhead rate based on machine hours? B. Assuming a plantwide overhead rate, what is the unit cost of the basic model? C. Assuming a plantwide overhead rate, what is the unit cost of the premium model?

Discretionary activities are necessary to comply with legal mandates.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing, and Inventory Management

Budgeting, production, cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters