Question 1

Operating personnel manage costs by ________.

Accepted Answer

A) controlling physical cost drivers 
B) controlling nonphysical cost drivers 
C) establishing weekly meetings to train staff 
D) layoff nonessential personnel in various offices 
E) observing employees to ensure they manage time

Question 2

Activity-based costing attempts to identify the most relevant cause-and-effect relationships for each activity pool without restricting the cost driver to only units of output.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not a decision that managerial accountants seek when they use activity-based management?

Accepted Answer

A) Decisions about cost reduction. 
B) Decisions about process improvement. 
C) Decisions about pricing and product mix. 
D) Decisions about product and process design. 
E) Decisions about human resource department policies and procedures.

Question 4

Managers can choose the level of detail they choose to use in a costing system when they evaluate the expected costs of the system against the expected benefits that result from better decisions.

Accepted Answer

A) True 
 B)False

Question 5

Identifying the cost-allocation bases defines the number of activity pools into which costs must be grouped into the ABC system.

Accepted Answer

A) True 
 B)False

Question 6

The Lighting Factory produces two types of light fixtures to sell to consumers.Product A illuminates high-density lighting and Product B illuminates low-density lighting.The manager at the Lighting Factory reported the following information:

Required:
Compute the profit margin percentage for each product.

Accepted Answer

A) 5.47%;6.42% 
B) 5.95%;6.66% 
C) 6.05%;6.75% 
D) 6.42%;6.85% 
E) 6.80%;6.92%

Question 7

A group of coworkers went to lunch at the mall.Listed below is the total cost of each individual meal.

Required:
Compute the average cost per dinner.When the costs are averaged across all six dinners,is Marla overcosted or undercosted?

Accepted Answer

A) $30.10;undercosted. 
B) $42.16;undercosted. 
C) $45.25;overcosted. 
D) $58.19;undercosted. 
E) $62.19;overcosted.

Question 8

Manufacturing Mates produces special-order tiles for organizations.The company reported that they produced 250 batches of tile and the setup time per batch was 2 hours.Compute the total setup hours.

Accepted Answer

A) 300 setup hours 
B) 400 setup hours 
C) 500 setup hours 
D) 600 setup hours 
E) 700 setup hours

Question 9

Homogeneous cost pools and the choice of cost-allocation bases,when tied to the cost hierarchy,provide managers with less confidence when they assign the activity and product cost numbers from the activity-based costing system.

Accepted Answer

A) True 
 B)False

Question 10

The costing system that reduces the use of broad averages for assigning the cost of resources to cost objects is the ________.

Accepted Answer

A) job-costing system 
B) process-costing system 
C) product-costing system 
D) market-costing system 
E) refined-costing system

Question 11

In indirect cost pools,shipment setup costs are ________.

Accepted Answer

A) direct costs 
B) batch-level costs 
C) output unit-level costs 
D) product-sustaining costs 
E) facility-sustaining costs

Question 12

The Heartmore Organization uses a single cost allocation base.The management accountants group all budgeted indirect costs of $4,000,000 into a single overhead cost pool.They also reported a budget of 40,000 direct manufacturing labor-hours during the same period.
Required:
What is the rate per direct manufacturing labor-hour?

Accepted Answer

A) $50 per direct manufacturing labor-hour. 
B) $75 per direct manufacturing labor-hour. 
C) $100 per direct manufacturing labor-hour. 
D) $125 per direct manufacturing labor-hour. 
E) $150 per direct manufacturing labor-hour.

Question 13

Why do managers refine costing systems?

Accepted Answer

The answer of Why do managers refine costing systems?...

Question 14

We define second-stage allocation as ________.

Accepted Answer

A) the allocation of costs of activity cost pools to products 
B) the allocation of revenues from earning earned to losses 
C) the allocation of costs of losses to employee expenses 
D) the allocation of costs to earnings in the current quarter 
E) the allocation of costs to corporate profits

Question 15

In indirect cost pools,design costs are ________.

Accepted Answer

A) batch-level costs 
B) output unit-level costs 
C) product-sustaining costs 
D) direct costs 
E) facility-sustaining costs

Question 16

The more cost pools that managers develop the less allocations are necessary to calculate activity costs for each cost pool.

Accepted Answer

A) True 
 B)False

Exam 6: Activity-Based Costing and Activity-Based Management

Operating personnel manage costs by ________.

Activity-based costing attempts to identify the most relevant cause-and-effect relationships for each activity pool without restricting the cost driver to only units of output.

Which of the following is not a decision that managerial accountants seek when they use activity-based management?

Managers can choose the level of detail they choose to use in a costing system when they evaluate the expected costs of the system against the expected benefits that result from better decisions.

Identifying the cost-allocation bases defines the number of activity pools into which costs must be grouped into the ABC system.

A group of coworkers went to lunch at the mall.Listed below is the total cost of each individual meal. Required: Compute the average cost per dinner.When the costs are averaged across all six dinners,is Marla overcosted or undercosted?

Manufacturing Mates produces special-order tiles for organizations.The company reported that they produced 250 batches of tile and the setup time per batch was 2 hours.Compute the total setup hours.

Homogeneous cost pools and the choice of cost-allocation bases,when tied to the cost hierarchy,provide managers with less confidence when they assign the activity and product cost numbers from the activity-based costing system.

The costing system that reduces the use of broad averages for assigning the cost of resources to cost objects is the ________.

In indirect cost pools,shipment setup costs are ________.

Why do managers refine costing systems?

We define second-stage allocation as ________.

In indirect cost pools,design costs are ________.

The more cost pools that managers develop the less allocations are necessary to calculate activity costs for each cost pool.