Deck 10: Activity-Based Budgeting

Question 1

The primary focus of an activity-based budget is

A) Control of inputs
B) Control over processes
C) Efficiency
D) Effectiveness

Answer 1

B

Question 2

The part of a system that an activity-based budget focuses on is the

A) Inputs
B) Throughputs
C) Outputs
D) Outcomes
E) Feedback

Answer 2

B

Question 3

The metric used in activity-based budgeting is

A) Total cost
B) Cost per output
C) Marginal cost
D) Cost per outcome
E) Cost per activity

Answer 3

E

Question 4

Specialization increases productivity by reducing the

A) Time needed to shift from one task using one set of tools in one location to another
B) Opportunity for workers to take more the necessary time to shift tasks
C) Time needed to achieve proficiency after starting a new task
D) All of the above

Question 5

The goal of activity-based costing is

A) Allocate costs to products
B) Trace costs to activities and activities to products
C) Produce more accurate financial statements
D) Ensure proper stewardship of resources

Question 6

Which component of the ABC cross-examines the who or what activities are undertaken for?

A) Resources
B) Resource cost assignment
C) Activities
D) Activity cost assignment
E) Cost objects

Question 7

Which component of the ABC cross-examines the cost per activity?

A) Resources
B) Resource cost assignment
C) Activities
D) Activity cost assignment
E) Cost objects

Question 8

The first step of the activity-based cost tracing process, resources, examines

A) Cost per input
B) Inputs per activity
C) Efficiency of activity performed
D) Number of activities performed
E) The who or what activities are performed for

Question 9

Activity cost assignment examines

A) Cost per input
B) Inputs per activity
C) Efficiency of activity performed
D) Number of activities performed
E) The who or what activities are performed for

Question 10

The management (horizontal) axis is designed to facilitate all of the following EXCEPT

A) Control cost drivers
B) Control the cost of inputs
C) Control the range and number of activities undertaken
D) Improve how work is performed

Question 11

Frederick Taylor and the scientific management movement constructed cost estimates using time studies that included all of the following steps EXCEPT

A) Dividing jobs into elementary movement
B) Discarding useless movements and selecting the best movements
C) Recording the performance of skilled workers
D) Adding additional time for unavoidable delays, rest time, and new workers
E) All of the above steps were used to construct cost estimates

Question 12

Which of the following is NOT a benefit of activity-based costing?

A) Provides a process view of work
B) Places responsibility on employees to manage their activities
C) Identifies variation in activity and its impact on cost
D) Relies on the standard traditional accounting chart of accounts view
E) Highlights excess or insufficient capacity

Question 13

Identifying resources, the first step in the activity-based budgeting process, is designed to fulfill all of the following EXCEPT

A) Identify the number of resources available,
B) Identify total expense associated with the resources employed,
C) Identify the average cost per resource employed,
D) Identify the average cost per activity
E)g., average salary medicine dispensed

Question 14

Comparing available and required resources, the final step in the activity-based budgeting process, is designed to

A) Determine if too many or too few resources are employed based on the output produced
B) Determine the number of required activities to produce an output
C) Calculate the number of outputs required
D) Calculate the total resource cost

Question 15

Which of the following is a strength of activity-based budgeting?

A) Provides the most realistic view of operations
B) Is primarily concerned with outcomes
C) Formalizes organizational priorities
D) Is easy to prepare

Question 16

Which of the following is a weakness of activity-based budgeting?

A) Budget allocations are independent of work performed
B) Institutionalizes past spending patterns
C) Requires voluminous data to create
D) Does not encourage efficiency
E) Allocation of overhead costs

Question 17

One of the primary lessons of the activity-based costing project at Cleveland Clinic was

A) Success requires mapping a large number of processes
B) Accurate mapping of processes required personnel experienced in mapping and finance
C) Healthcare costs can be reduced by identifying redundant activities
D) All of the above were noted in the case

Question 18

Which budgeting system focuses on the use of inputs?

A) Incremental budgeting
B) Flexible budgeting
C) Zero-base budgeting
D) Program budgeting
E) Activity-based budgeting

Question 19

Which budgeting system relies on the marginal cost of output for budget allocation decisions?

A) Incremental budgeting
B) Flexible budgeting
C) Zero-base budgeting
D) Program budgeting
E) Activity-based budgeting

Question 20

Which budgeting systems are primarily concerned with output and the cost of output?

A) Incremental and flexible budgeting
B) Flexible and program budgeting
C) Flexible and zero-base budgeting
D) Zero-base and program budgeting
E) Activity-based and incremental budgeting

Question 21

Activity-based budgeting focuses on how products are produced rather than what inputs are purchased and how much output is produced.

Question 22

Activity-based budgeting is driven by the cost per output.

Question 23

Traditional activity-based costing relies on time estimates to calculate cost per output.

Question 24

The primary weakness with traditional activity-based costing that relies on time estimates to determine cost per output is employees routinely over-estimate the percentage of time they spend on productive activities.

Question 25

Absorption costing assumes all outputs are identical and thus have the same cost.