Question 1

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would most likely be treated as an activity in an activity-based costing system?

Accepted Answer

A)  direct labor cost 
B)  machine processing 
C)  direct materials cost 
D)  sales revenues

Question 3

How do just-in-time production systems differ from traditional production systems in their approach to raw materials and labor?

Accepted Answer

The answer of How do just-in-time production systems differ from...

Question 4

What is a quality management system? What is the common factor in all quality management systems?

Accepted Answer

The answer of What is a quality management system? What...

Question 5

A modification of the overhead allocation method which uses a single plantwide rate, is to use multiple predetermined overhead allocation rates that have a single allocation base.

Accepted Answer

A) True 
 B)False

Question 6

Quality costs are easy to measure.

Accepted Answer

A) True 
 B)False

Question 7

Since quality improvement programs are always needed, there is no reason to compare the costs of undertaking a quality improvement program to the costs of continuing without the quality improvement program.

Accepted Answer

A) True 
 B)False

Question 8

________ in just-in-time management systems is completed in self-contained work cells.

Accepted Answer

A)  Selling 
B)  Production 
C)  Administration 
D)  Purchasing

Question 9

Activity-based management focuses on making decisions that improve customers' satisfaction while also increasing profits.

Accepted Answer

A) True 
 B)False

Question 10

Skipper Company manufactures toy boats and uses an activity-based costing system. The following information is provided for the month of May: $$\begin{array} { | l | c | c | c | } 
\hline \text { Activity } & \begin{array} { c } 
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { c } 
\text { Estimated } \
\text { Quantity of } \
\text { Allocation Base }
\end{array} \
\hline \text { Materials handling } & \$ 3000 & \text { Number of parts } & 3000 \text { parts } \
\hline \text { Assembling } & \$ 5200 & \text { Number of parts } & 3000 \text { parts } \
\hline \text { Packaging } & \$ 5650 & \text { Number of boats } & 1200 \text { boats } \
\hline
\end{array}$$ Each boat consists of four parts, and the direct materials cost per boat is $7.21. There is no direct labor. What is the total manufacturing cost per boat? (Round any intermediate calculations and your final answer to the nearest cent.)

Accepted Answer

A)  $15.63 
B)  $22.84 
C)  $4.43 
D)  $18.13

Question 11

Cellular Connections, Inc. sold 2,500 cell phones on account for $700 each. The standard direct materials and conversion costs of each unit are $173.85 and $57.95, respectively. The company uses the perpetual inventory system. Record the journal entries for this transaction under the just-in-time costing system. Omit explanation.

Accepted Answer

The answer of Cellular Connections, Inc. sold 2,500 cell phones...

Question 12

Bag Ladies, Inc. manufactures two kinds of bags-totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $25,500. Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 33 & \$ 40 \
\hline \text { Direct labor cost per unit } & \$ 53 & \$ 61 \
\hline \text { Number of units } & 530 & 360 \
\hline
\end{array}$$ Calculate the amount of overhead to be allocated to Totes. (Round any percentages to two decimal places and your final answer to the nearest dollar.)

Accepted Answer

A)  $481 
B)  $327 
C)  $11,189 
D)  $14,312

Question 13

A company is most likely to use value engineering ________.

Accepted Answer

A)  to allocate manufacturing overhead to departments 
B)  to reduce costs in order to achieve target costs 
C)  to determine accurate product costs for pricing 
D)  to make product mix decisions

Question 14

The just-in-time costing system waits until the units are completed to record the cost of production.

Accepted Answer

A) True 
 B)False

Question 15

Activity-based costing refines the cost allocation process even more than traditional allocation costing systems.

Accepted Answer

A) True 
 B)False

Question 16

Moretti Corporation has adopted a JIT management system and has the following transactions in March:
 Mar 5 Incurred labor and overhead costs, $95,000
Mar 31 Completed 650 units with standard costs of $\$ 94$ for direct materials and $\$ 128$ for conversion costs Open a T-account for Conversion Costs. Post appropriate entries to determine the amount of underallocated or overallocated overhead. Record the adjusting entry on March 31. Omit explanation.

Accepted Answer

The answer of Moretti Corporation has adopted a JIT management...

Question 17

Mendburg, Inc. is a consulting firm that offers optimal legal solutions. It allocates indirect costs using a single predetermined overhead allocation rate with direct labor hours as the allocation base. The estimated indirect costs for this year amount to $100,000. The company is expected to work 5000 direct labor hours during the year. The direct labor rate is $250 per hour. Clients are billed at 130% of direct labor cost. Last month, Mendburg's consultants spent 175 hours on Curelli, Inc. Calculate the operating income from Curelli.

Accepted Answer

A)  $43,945 
B)  $43,750 
C)  $113,750 
D)  $9625

Question 18

Match each of the following activities to its most appropriate allocation base.
-Machine usage

Accepted Answer

A) Square footage for each department 
B) Number of new employees 
C) Number of machine hours 
D) Number of batches 
E) Number of inspections
F)Number of purchase orders
G)Number of service calls

Question 19

A cost management system in which a company produces just in time to satisfy customer needs is known as just-in-time management.

Accepted Answer

A) True 
 B)False

Question 20

Managers can use activity-based management to make what two kinds of decisions?

Accepted Answer

The answer of Managers can use activity-based management to make...

Exam 19: Cost Management Systems: Activity-Based Just-In-Time

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Which of the following would most likely be treated as an activity in an activity-based costing system?

How do just-in-time production systems differ from traditional production systems in their approach to raw materials and labor?

What is a quality management system? What is the common factor in all quality management systems?

A modification of the overhead allocation method which uses a single plantwide rate, is to use multiple predetermined overhead allocation rates that have a single allocation base.

Quality costs are easy to measure.

Since quality improvement programs are always needed, there is no reason to compare the costs of undertaking a quality improvement program to the costs of continuing without the quality improvement program.

________ in just-in-time management systems is completed in self-contained work cells.

Activity-based management focuses on making decisions that improve customers' satisfaction while also increasing profits.

A company is most likely to use value engineering ________.

The just-in-time costing system waits until the units are completed to record the cost of production.

Activity-based costing refines the cost allocation process even more than traditional allocation costing systems.

Match each of the following activities to its most appropriate allocation base. -Machine usage

A cost management system in which a company produces just in time to satisfy customer needs is known as just-in-time management.

Managers can use activity-based management to make what two kinds of decisions?