Exam 10: Fundamentals of Cost Management

Gundy Press reports the following information about resources.At the beginning of the year,Gundy estimated it would spend $42,000 for setups and $21,000 for clerical. Compute unused resource capacity for clerical for Gundy Press.

The amount of production possible under normal working conditions,including planned downtime and scheduled vacations,is called:

Activity-based cost management (ABM)uses the information provided by activity-based costing (ABC)to identify ways to improve operations.ABM is the managerial use of ABC information.

Folly Beach Industries decides to price delivery service according to the results of a recent activity-based costing (ABC)study.The study indicates Folly Beach should charge $16 per order,1% of the order's value for general delivery costs,$2.50 per item,and $45 for delivery.A year later,Folly Beach collected the following information for three of its customers: What are the total delivery costs charged to Customer B during the year?

Which of the following activities is most likely to be classified as value-added for a manufacturing company?

The basic concepts involved in activity-based costing (ABC)can be used to determine customer profitability as well as product costs.The definition of the cost object is the only thing that is different.

Chang Inc.has developed the following unit costs for the production of one of its products,based on a normal activity of 10,000 units per month: What is the total amount of direct labor budgeted for a month in which production is expected to be 11,000 units?

Beta Company is preparing its annual profit plan.As part of its analysis of the profitability of its customers,management estimates that the $12,000 for sales support should be assigned to the individual customers from the information given as follows: What is the amount of the sales support costs that should be allocated to Customer B,assuming Beta uses units purchased to compute activity-based costs?

Prevention activities:

BC Enterprises' quality control report for August contains the following items. What would be the total of the prevention costs on the August quality control report for BC Enterprises?

A cost of quality system is based on the trade-off between incurring costs to meet product (or service)specifications and the costs of failing to meet those specifications.There is a tension between the two that must be considered.

Lemaire Products reports the following information about resources.At the beginning of the year,Lemaire estimated it would spend $8,000 for energy and $12,000 for repairs. Compute unused resource capacity for energy for Lemaire Products.

Activity analysis is an important approach to operations control and the successful implementation of an activity-based costing (ABC)system.Which of the following procedures is not part of activity analysis?

Beta Company is preparing its annual profit plan.As part of its analysis of the profitability of its customers,management estimates that the $12,000 for sales support should be assigned to the individual customers from the information given as follows: What is the amount of the sales support costs that should be allocated to Customer B,assuming Beta uses purchases orders to compute activity-based costs?

Which of the following is a prevention activity in controlling quality?

Quality can be defined as the degree to which a product or service performs as it was designed to.This is the most general definition of quality.

Which of the following is not a prevention activity in controlling quality?

In an activity-based costing (ABC)system,cost reduction is accomplished by identifying and eliminating: (CPA adapted)

Gundy Press reports the following information about resources.At the beginning of the year,Gundy estimated it would spend $42,000 for setups and $21,000 for clerical. Compute unused resource capacity for setups for Gundy Press.

Rogers Company is preparing its annual profit plan.As part of its analysis of the cost of its purchasing activity,management estimates that the $48,000 for purchasing support should be assigned to the individual vendors from the information given as follows: What is the amount of the purchasing costs that should be allocated to Vendor A,assuming Rogers uses units purchased to compute activity-based costs?