Question 1

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

Accepted Answer

A) Purchasing. 
B) Waiting. 
C) Receiving. 
D) Setting up. 
A) Purchasing. 
B) Waiting. 
C) Receiving. 
D) Setting up.

Question 2

Which of the following is not an example of an external failure cost?

Accepted Answer

A) Accepting company liability resulting from product failure. 
B) Experiencing decreasing sales as a result of poor-quality products. 
C) Repairing or replacing defective products after they've been sold. 
D) Testing products in use at the customer's site. 
A) Accepting company liability resulting from product failure. 
B) Experiencing decreasing sales as a result of poor-quality products. 
C) Repairing or replacing defective products after they've been sold. 
D) Testing products in use at the customer's site.

Question 3

In general,the capacity-level costs in an activity-based costing (ABC)system are variable costs.Capacity-level costs are normally fixed costs.

Accepted Answer

A) True 
 B)False

Question 4

Le Francois Company developed the following information for its first quarter cost of quality report:   The total cost of external failure activities at Le Francois is:

Accepted Answer

A) $420,560. 
B) $31,920. 
C) $117,600. 
D) $175,000. 
A) $420,560. 
B) $31,920. 
C) $117,600. 
D) $175,000.

Question 5

QC Enterprises quality control report for August contains the following items.   What would be the total of the nonconformance costs on the August quality control report for QC Enterprises?

Accepted Answer

A) $120,000. 
B) $150,000. 
C) $180,000. 
D) $210,000. 
A) $120,000. 
B) $150,000. 
C) $180,000. 
D) $210,000.

Question 6

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 B,assuming Rogers uses number of shipments received to compute activity-based costs?

Accepted Answer

A) $9,000. 
B) $16,000. 
C) $32,000. 
D) $39,000. 
A) $9,000. 
B) $16,000. 
C) $32,000. 
D) $39,000.

Question 7

Appraisal activities:

Accepted Answer

A) seek to prevent defects in the products or services being produced. 
B) inspect inputs and attributes of individual units of products or services to detect whether they conform to specifications or customer expectations. 
C) correct defective processes or products and services before they are delivered to customers. 
D) are activities required after defective products or services are delivered to customers. 
A) seek to prevent defects in the products or services being produced. 
B) inspect inputs and attributes of individual units of products or services to detect whether they conform to specifications or customer expectations. 
C) correct defective processes or products and services before they are delivered to customers. 
D) are activities required after defective products or services are delivered to customers.

Question 8

In general,the unit-level costs in an activity-based costing (ABC)system are variable costs.Unit-level (or volume-related)increase as volume increases-this is the definition of variable cost.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) $22,000. 
B) $21,000. 
C) $14,000. 
D) $13,000. 
A) $22,000. 
B) $21,000. 
C) $14,000. 
D) $13,000.

Question 10

Le Francois Company developed the following information for its first quarter cost of quality report:   The relevant percentage to be used to express internal failure activities at Le Francois is:

Accepted Answer

A) 27.9%. 
B) 4.77%. 
C) 4.2%. 
D) 15.02%. 
A) 27.9%. 
B) 4.77%. 
C) 4.2%. 
D) 15.02%.

Question 11

Which of the following is not an explanation of why a company would operate at less than theoretical capacity?

Accepted Answer

A) Scheduled maintenance of equipment. 
B) Breakdowns in equipment. 
C) Customer demand is less than anticipated. 
D) Customer demand is more than anticipateD.More than anticipated customer demand would cause the company to operate at theoretical capacity. 
A) Scheduled maintenance of equipment. 
B) Breakdowns in equipment. 
C) Customer demand is less than anticipated. 
D) Customer demand is more than anticipateD.More than anticipated customer demand would cause the company to operate at theoretical capacity.

Question 12

Theoretical capacity is the amount of production possible assuming expected downtime for scheduled maintenance and normal breaks and vacations.Theoretical capacity does not allow for any downtime,whether planned or unplanned.

Accepted Answer

A) True 
 B)False

Question 13

A company has high winter demand and low summer demand for its services.The cost of the unused summer capacity should be allocated:

Accepted Answer

A) to an account called Idle Capacity. 
B) evenly to all customers. 
C) only to the winter customers. 
D) only to the summer customers. 
A) to an account called Idle Capacity. 
B) evenly to all customers. 
C) only to the winter customers. 
D) only to the summer customers.

Question 14

The unused resource capacity is the difference between the resources supplied and the resources:

Accepted Answer

A) purchased. 
B) wasted. 
C) used. 
D) on hanD.This is the definition of unused resource capacity. 
A) purchased. 
B) wasted. 
C) used. 
D) on hanD.This is the definition of unused resource capacity.

Question 15

Sullivan Inc.reports the following information about resources.At the beginning of the year,Sullivan estimated it would spend $180,000 for materials,$42,000 for purchasing,$35,000 for setups,and $36,000 for repairs.   Compute unused resource capacity for purchasing for Sullivan.

Accepted Answer

A) $5,538. 
B) $2,000. 
C) $4,300. 
D) $2,300. 
A) $5,538. 
B) $2,000. 
C) $4,300. 
D) $2,300.

Question 16

Which of the following items would be classified as a product-level cost in an activity-based cost management (ABM)system?

Accepted Answer

A) Change order to meet a new customer's specification. 
B) Movement of materials for products in production. 
C) Long-term lease payments for factory equipment. 
D) Insurance and property taxes on faculty building. 
A) Change order to meet a new customer's specification. 
B) Movement of materials for products in production. 
C) Long-term lease payments for factory equipment. 
D) Insurance and property taxes on faculty building.

Question 17

In an activity-based cost management (ABM)system,facility-level costs are those that are incurred to:

Accepted Answer

A) sustain the company's marketing program. 
B) maintain the plant's production capacity. 
C) support the research and development process. 
D) caused by a change in the engineering plans for a product. 
A) sustain the company's marketing program. 
B) maintain the plant's production capacity. 
C) support the research and development process. 
D) caused by a change in the engineering plans for a product.

Question 18

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 repairs for Lemaire Products.

Accepted Answer

A) $2,400. 
B) $12,000. 
C) $6,000. 
D) $3,600. 
A) $2,400. 
B) $12,000. 
C) $6,000. 
D) $3,600.

Question 19

Which of the following items would be classified as a volume-level cost in an activity-based cost management (ABM)system?

Accepted Answer

A) Indirect materials. 
B) Production supervisor's salary. 
C) Depreciation on factory building. 
D) Research and development. 
A) Indirect materials. 
B) Production supervisor's salary. 
C) Depreciation on factory building. 
D) Research and development.

Question 20

Which of the following statements regarding the trade-off between conformance and nonconformance costs is(are)false? (A)The optimal level for a company's quality control program occurs when its conformance costs equal its nonconformance costs.(B)There is an inverse relationship between the costs spent on nonconformance costs and the level of quality achieved.

Accepted Answer

A) Only A is false. 
B) Only B is false. 
C) Both A and B are false. 
D) Neither A nor B is false. 
A) Only A is false. 
B) Only B is false. 
C) Both A and B are false. 
D) Neither A nor B is false.

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

Which of the following is not an example of an external failure cost?

In general,the capacity-level costs in an activity-based costing (ABC)system are variable costs.Capacity-level costs are normally fixed costs.

Le Francois Company developed the following information for its first quarter cost of quality report: The total cost of external failure activities at Le Francois is:

QC Enterprises quality control report for August contains the following items. What would be the total of the nonconformance costs on the August quality control report for QC Enterprises?

Appraisal activities:

In general,the unit-level costs in an activity-based costing (ABC)system are variable costs.Unit-level (or volume-related)increase as volume increases-this is the definition of variable cost.

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

Le Francois Company developed the following information for its first quarter cost of quality report: The relevant percentage to be used to express internal failure activities at Le Francois is:

Which of the following is not an explanation of why a company would operate at less than theoretical capacity?

Theoretical capacity is the amount of production possible assuming expected downtime for scheduled maintenance and normal breaks and vacations.Theoretical capacity does not allow for any downtime,whether planned or unplanned.

A company has high winter demand and low summer demand for its services.The cost of the unused summer capacity should be allocated:

The unused resource capacity is the difference between the resources supplied and the resources:

Sullivan Inc.reports the following information about resources.At the beginning of the year,Sullivan estimated it would spend $180,000 for materials,$42,000 for purchasing,$35,000 for setups,and $36,000 for repairs. Compute unused resource capacity for purchasing for Sullivan.

Which of the following items would be classified as a product-level cost in an activity-based cost management (ABM)system?

In an activity-based cost management (ABM)system,facility-level costs are those that are incurred to:

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 repairs for Lemaire Products.

Which of the following items would be classified as a volume-level cost in an activity-based cost management (ABM)system?

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

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Exam 10: Fundamentals of Cost Management

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

Which of the following is not an example of an external failure cost?

In general,the capacity-level costs in an activity-based costing (ABC)system are variable costs.Capacity-level costs are normally fixed costs.

Le Francois Company developed the following information for its first quarter cost of quality report: The total cost of external failure activities at Le Francois is:

QC Enterprises quality control report for August contains the following items. What would be the total of the nonconformance costs on the August quality control report for QC Enterprises?

Appraisal activities:

In general,the unit-level costs in an activity-based costing (ABC)system are variable costs.Unit-level (or volume-related)increase as volume increases-this is the definition of variable cost.

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

Le Francois Company developed the following information for its first quarter cost of quality report: The relevant percentage to be used to express internal failure activities at Le Francois is:

Which of the following is not an explanation of why a company would operate at less than theoretical capacity?

Theoretical capacity is the amount of production possible assuming expected downtime for scheduled maintenance and normal breaks and vacations.Theoretical capacity does not allow for any downtime,whether planned or unplanned.

A company has high winter demand and low summer demand for its services.The cost of the unused summer capacity should be allocated:

The unused resource capacity is the difference between the resources supplied and the resources:

Sullivan Inc.reports the following information about resources.At the beginning of the year,Sullivan estimated it would spend $180,000 for materials,$42,000 for purchasing,$35,000 for setups,and $36,000 for repairs. Compute unused resource capacity for purchasing for Sullivan.

Which of the following items would be classified as a product-level cost in an activity-based cost management (ABM)system?

In an activity-based cost management (ABM)system,facility-level costs are those that are incurred to:

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 repairs for Lemaire Products.

Which of the following items would be classified as a volume-level cost in an activity-based cost management (ABM)system?

Cost Accounting: Information for Decision Making

Cost Concepts and Behavior

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

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