Question 1

In an activity-based costing system, which of the following is not a category in which activities are classified?

Accepted Answer

A) Unit-level 
B) Batch-level 
C) Product-level 
D) Factory-level

Question 2

For unit-level activities, the total level of activity performed varies proportionately with the number of units produced.

Accepted Answer

A) True 
 B)False

Question 3

In the activity identification stage of implementing an activity-based costing system, defining activities in greater detail will

Accepted Answer

A) require more monitoring. 
B) increase the effect of misclassifying some costs and activities. 
C) cause fewer variances. 
D) enable all costs to be unit-costs.

Question 4

In an activity-based costing system, the greater the level of detail the company wants to collect, the greater the chance of misclassifying some costs and activities.

Accepted Answer

A) True 
 B)False

Question 5

In an activity-based costing system, the benefits of defining more detailed activities will always outweigh the effort needed to monitor activity performance, and the resulting potential for error.

Accepted Answer

A) True 
 B)False

Question 6

A characteristic of non-value-added activities is that they

Accepted Answer

A) can always be eliminated. 
B) can never be eliminated. 
C) are always related to fixed costs. 
D) are sometimes essential to production or business operations.

Question 7

Austin Company manufactures 2 products, Flacca and Gordo.Overhead costs are comprised of machine set-ups $1,600,000; machining $3,600,000; and inspecting $1,200,000.Recent data are shown below:  Overhead assigned to Gordo using a single overhead rate based on direct labor hours and using ABC, respectively, will be

Accepted Answer

A) $4,000,000 and $2,400,000. 
B) $4,000,000 and $3,072,000. 
C) $2,400,000 and $3,328,000. 
D) $2,400,000 and $3,072,000.

Question 8

The activity rate for each cost pool is

Accepted Answer

A) computed as Total activity driver volume ÷ Total activity cost pool resources. 
B) similar to the predetermined overhead rate calculation under traditional job order costing. 
C) computed as part of the last step in the preparation of activity-based costing data. 
D) similar to process costing.

Question 9

Which of the following is considered a unit-level activity?

Accepted Answer

A) Preparing purchase orders 
B) Machine set-up 
C) Quality tests 
D) Running a production machine

Question 10

Activity-based costing is a costing technique that assigns costs to cost objects such as products or customers, based on the activities those cost objects require.

Accepted Answer

A) True 
 B)False

Question 11

Calculating the activity rate is similar to the calculation of the

Accepted Answer

A) activity pools. 
B) predetermined overhead rate. 
C) overhead leverage rate. 
D) contribution margin rate.

Question 12

Place an "X" in the column that corresponds to the type of activity-level referred to in each scenario.

Accepted Answer

The answer of Place an "X" in the column that...

Question 13

The first step in implementing an activity-based costing system begins with

Accepted Answer

A) developing activity cost pools. 
B) identifying activities. 
C) calculating activity cost pool rates. 
D) calculate the unit product cost.

Question 14

Organizational-level activities provide identifiable benefits to specific products or services.

Accepted Answer

A) True 
 B)False

Question 15

Activities that are required to provide productive capacity and to keep the business in operation are

Accepted Answer

A) batch-level activities. 
B) product-level activities. 
C) customer-level activities. 
D) organization-level activities.

Question 16

Identifying activities performed in the organization is the first step in developing activity-based product costs.Which of the following is a way to identify these activities?

Accepted Answer

A) Asking managers about product profitability 
B) Observe what employees do 
C) Separate costs into cost pools 
D) Perform first-stage allocation

Question 17

Activity-based management focuses on using the costs of performing the activities required to produce and sell products to identify activities that are non-value added.

Accepted Answer

A) True 
 B)False

Question 18

Those activities that consume resources but do not contribute to the value of the product are referred as

Accepted Answer

A) contribution activities. 
B) non-value-added activities. 
C) negative activities. 
D) period costs.

Question 19

In an activity-based costing system, which of the following is not a category in which activities are classified?

Accepted Answer

A) Variable-level 
B) Batch-level 
C) Product-level 
D) Organization-level

Question 20

Which of the following is not a reason that managers use activity-based costing information?

Accepted Answer

A) Pricing decisions 
B) Distribution channel profitability decisions 
C) Product costing 
D) Variance analysis

Exam 7: Activity-Based Costing and Activity-Based Management

In an activity-based costing system, which of the following is not a category in which activities are classified?

For unit-level activities, the total level of activity performed varies proportionately with the number of units produced.

In the activity identification stage of implementing an activity-based costing system, defining activities in greater detail will

In an activity-based costing system, the greater the level of detail the company wants to collect, the greater the chance of misclassifying some costs and activities.

In an activity-based costing system, the benefits of defining more detailed activities will always outweigh the effort needed to monitor activity performance, and the resulting potential for error.

A characteristic of non-value-added activities is that they

The activity rate for each cost pool is

Which of the following is considered a unit-level activity?

Activity-based costing is a costing technique that assigns costs to cost objects such as products or customers, based on the activities those cost objects require.

Calculating the activity rate is similar to the calculation of the

Place an "X" in the column that corresponds to the type of activity-level referred to in each scenario.

The first step in implementing an activity-based costing system begins with

Organizational-level activities provide identifiable benefits to specific products or services.

Activities that are required to provide productive capacity and to keep the business in operation are

Identifying activities performed in the organization is the first step in developing activity-based product costs.Which of the following is a way to identify these activities?

Activity-based management focuses on using the costs of performing the activities required to produce and sell products to identify activities that are non-value added.

Those activities that consume resources but do not contribute to the value of the product are referred as

In an activity-based costing system, which of the following is not a category in which activities are classified?

Which of the following is not a reason that managers use activity-based costing information?