Exam 5: Activity-Based Costing and Management

Falcon Enterprises, which manufactures lawn mowers, recently installed a just-in-time purchasing system and an activity-based management program. Required: A. Determine whether the following items would be apt to increase or decrease as a result of the just-in-time system: 1. Inventory storage costs. 2. Number of suppliers used. 3. Number of raw material shipments handled. 4. Dollars available for alternative investment opportunities. 5. Quality of raw materials purchased. B. Identify the following items as value-added activities, non-value-added activities, or both. 1. Attaching the engine to the mower's body. 2. Installing a new air-conditioning system in the executive offices. 3. Replacing a defective wheel with a new wheel. 4. Designing and printing an owner's instruction manual for a new model. 5. Moving completed mowers to the finished-goods warehouse. 6. Attaching the handle to the mower's body. The process took longer than normal because of a worker slowdown caused by disgruntled employees.

The adoption of a 24/7 customer service help line is an example of a:

Which of the following is not a broad, cost classification category typically used in activity-based costing?

Which of the following is least likely to be classified as a batch-level activity in an activity-based costing system?

Aladdin's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the wholesale operation should amount to: