Question 1

A bill of activities is used to compute both the costs assigned to activities and the product unit cost.

Accepted Answer

A) True 
 B)False

Question 2

Value-based systems are information systems that provide only customer-related information but not activity-based information.

Accepted Answer

A) True 
 B)False

Question 3

The repair of machines is an example of a nonvalue-adding activity.

Accepted Answer

A) True 
 B)False

Question 4

Activity-based management includes all of the following except identifying

Accepted Answer

A)  customer satisfaction with a product or service. 
B)  the resources that are consumed by each activity. 
C)  activities as value-adding. 
D)  how resources are consumed by each activity.

Question 5

The just-in-time operating environment typically is characterized by the positioning of all similar machines together on the factory floor.

Accepted Answer

A) True 
 B)False

Question 6

Only value-adding activities are included in the cost hierarchy.

Accepted Answer

A) True 
 B)False

Question 7

Nonproduction costs are not included in full product cost.

Accepted Answer

A) True 
 B)False

Question 8

Nonvalue-adding activities

Accepted Answer

A)  are unnecessary activities. 
B)  are included in the value chain of activities. 
C)  are all wasteful and targeted for elimination. 
D)  add cost to a product or service but does not increase its market value

Question 9

The customer's perspective governs whether an activity adds value to a product or service.

Accepted Answer

A) True 
 B)False

Question 10

Listed below are a number of common manufacturing costs. For each cost, state whether the cost would be considered a direct (D) or indirect (I) cost in a traditional manufacturing environment and in a JIT manufacturing environment.
 $\begin{array}{|l|c|c|}
\hline \text { Cost Element } & \begin{array}{l}
\text { Traditional Manufacturing } \
\text { Envirounent }
\end{array} & \begin{array}{|l}
\text { JTT } \
\text { Manufacturing Environument }
\end{array} \
\hline \text { Insurance } & & \
\hline \text { Property taxes: } & & \
\hline \text { Equipment depreciation } & & \
\hline \text { Raw materials } & & \
\hline \text { Materials handling } & & \
\hline \text { Operating supplies } & & \
\hline \text { Power } & & \
\hline \text { Heat and light } & & \
\hline \text { Labor of equipment operators } & & \
\hline \text { President's salary } & & \
\hline
\end{array}$

Accepted Answer

The answer of Listed below are a number of common...

Question 11

A work cell is an autonomous production line that can perform only one required operation efficiently at a time.

Accepted Answer

A) True 
 B)False

Question 12

Shifting to a just-in-time approach in a manufacturing environment usually requires a new approach in evaluating costs.

Accepted Answer

A) True 
 B)False

Question 13

Activity costs per unit equal total activity costs divided by total volume.

Accepted Answer

A) True 
 B)False

Question 14

President/CEO to her Controller:
"On the golf course yesterday I overheard John Jeffers, the CEO for Octal, say that the problem with many manufacturing companies today is their antiquated manufacturing cost accounting systems. It appears to me that our cost accounting system has served us well as our company has grown and should continue to serve us well as we move into JIT production with our new flexible manufacturing system."

Accepted Answer

The answer of President/CEO to her Controller:
"On the golf course...

Question 15

The JIT operating philosophy must be adopted by everyone in a company before its total benefits can be realized.

Accepted Answer

A) True 
 B)False

Question 16

Engineering design is an activity vital to the success of any motor vehicle manufacturer. Identify the level at which engineering design would be classified in the cost hierarchy used with ABC for a maker of a line of automobiles sold throughout the world.

Accepted Answer

A)  Batch-level activity 
B)  Product-level activity 
C)  Facility-level activity 
D)  Unit-level activity

Question 17

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management to design a pattern for a new dress style?

Accepted Answer

A)  Unit-level activity 
B)  Batch-level activity 
C)  Product-level activity 
D)  Facility-level activity

Question 18

In a just-in-time operating environment, the key measure of cost incurred is

Accepted Answer

A)  direct labor hours. 
B)  push-through time. 
C)  throughput time. 
D)  indirect costs.

Question 19

A manufacturer of audio equipment employing an activity-based cost hierarchy uses the unit, batch, product, and facility levels to classify its activities. A batch-level activity is

Accepted Answer

A)  testing products. 
B)  inspection. 
C)  implementation of engineering changes. 
D)  maintenance of the building.

Question 20

Unit level, batch level, and service level are examples of cost drivers.

Accepted Answer

A) True 
 B)False

Exam 4: Value-Based Systems- Abm and Lean

A bill of activities is used to compute both the costs assigned to activities and the product unit cost.

Value-based systems are information systems that provide only customer-related information but not activity-based information.

The repair of machines is an example of a nonvalue-adding activity.

Activity-based management includes all of the following except identifying

The just-in-time operating environment typically is characterized by the positioning of all similar machines together on the factory floor.

Only value-adding activities are included in the cost hierarchy.

Nonproduction costs are not included in full product cost.

Nonvalue-adding activities

The customer's perspective governs whether an activity adds value to a product or service.

A work cell is an autonomous production line that can perform only one required operation efficiently at a time.

Shifting to a just-in-time approach in a manufacturing environment usually requires a new approach in evaluating costs.

Activity costs per unit equal total activity costs divided by total volume.

The JIT operating philosophy must be adopted by everyone in a company before its total benefits can be realized.

Engineering design is an activity vital to the success of any motor vehicle manufacturer. Identify the level at which engineering design would be classified in the cost hierarchy used with ABC for a maker of a line of automobiles sold throughout the world.

Which one of the four levels of the cost hierarchy would be used by a dress manufacturer that uses activity-based management to design a pattern for a new dress style?

In a just-in-time operating environment, the key measure of cost incurred is

A manufacturer of audio equipment employing an activity-based cost hierarchy uses the unit, batch, product, and facility levels to classify its activities. A batch-level activity is

Unit level, batch level, and service level are examples of cost drivers.