Question 1

To calculate an activity rate,the practical capacity of each activity must be determined.

Accepted Answer

A) True 
 B)False

Question 2

A product currently requires 5 moves.By changing the plant layout,the number of moves can be reduced to 1.The cost per move is $30.Calculate the reduction in nonvalue-added cost of the moving activity.

Accepted Answer

A) $7.50 
B) $30 
C) $0 
D) $120 
E) $150 
A) $7.50 
B) $30 
C) $0 
D) $120 
E) $150

Question 3

Activity drivers can be classified as either ____ or ____.

Accepted Answer

A) unit-level; nonunit-level 
B) exact; inexact 
C) inputs; outputs 
D) right; wrong 
A) unit-level; nonunit-level 
B) exact; inexact 
C) inputs; outputs 
D) right; wrong

Question 4

Costs incurred to determine whether products and services are conforming to their requirements or customer needs are

Accepted Answer

A) prevention costs. 
B) appraisal costs. 
C) internal failure costs. 
D) external failure costs. 
E) a different category of quality related costs. 
A) prevention costs. 
B) appraisal costs. 
C) internal failure costs. 
D) external failure costs. 
E) a different category of quality related costs.

Question 5

All of the following are supplier-driven activities except

Accepted Answer

A) receiving. 
B) purchasing. 
C) efficiency. 
D) inspection of incoming components. 
A) receiving. 
B) purchasing. 
C) efficiency. 
D) inspection of incoming components.

Question 6

Packaging inspection and process acceptance are examples of ____.

Accepted Answer

A) external failure costs 
B) prevention costs 
C) internal failure costs 
D) value costs 
E) appraisal costs 
A) external failure costs 
B) prevention costs 
C) internal failure costs 
D) value costs 
E) appraisal costs

Question 7

A company takes 8,000 hours to produce 24,000 units of a product.What is the velocity?

Accepted Answer

A) 1 units per hour 
B) 3.5 units per hour 
C) 2 units per hour 
D) 3 unit per hour 
E) 2.5 units per hour 
A) 1 units per hour 
B) 3.5 units per hour 
C) 2 units per hour 
D) 3 unit per hour 
E) 2.5 units per hour

Question 8

Which is not defined as a category of quality-related costs?

Accepted Answer

A) prevention 
B) appraisal 
C) internal failure 
D) external failure costs 
E) all of these are categories of quality-related costs 
A) prevention 
B) appraisal 
C) internal failure 
D) external failure costs 
E) all of these are categories of quality-related costs

Question 9

Which is defined as a category of quality-related costs?

Accepted Answer

A) invention 
B) controller 
C) internal control 
D) external failure 
E) none of these 
A) invention 
B) controller 
C) internal control 
D) external failure 
E) none of these

Question 10

The moving activity has an expected cost of $160,000.Expected direct labor hours are 40,000,and the expected number of moves is 80,000.The best activity rate for moving is

Accepted Answer

A) $4 per move. 
B) $1.33 per hour-move. 
C) $4 per hour. 
D) $2 per move. 
A) $4 per move. 
B) $1.33 per hour-move. 
C) $4 per hour. 
D) $2 per move.

Question 11

Figure 7-1. The receiving department of Owen has three activities: unloading,counting goods,and inspecting.Unloading requires a forklift that is leased for $15,000 per year.The forklift is used only for unloading.The fuel for the forklift is $2,000 per year.Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year.Receiving has four employees who each have an average salary of $35,000 per year.The work distribution matrix for the receiving personnel is as follows:
  Refer to Figure 7-1.Calculate the cost for inspection.

Accepted Answer

A) $56,000 
B) $54,000 
C) $50,500 
D) $52,000 
A) $56,000 
B) $54,000 
C) $50,500 
D) $52,000

Question 12

Figure 7-8.
Sallisaw Savings & Loan has requested an analysis of checking account profitability by customer type.Customers are categorized according to size of their account: low balances,medium balances,and high balances.The activities associated with the three different customer categories and their associated annual costs are as follows:
   Additional data concerning the usage of the activities by the various customers are also provided:
   Refer to Figure 7-8.Sallisaw uses an activity-based costing system.The activity rate for opening and closing statements is based on the number of accounts opened and closed.The activity rate for issuing monthly statements is based on the number of statements issued.The activity rate for processing transactions is based on the number of transactions processed.The activity rate for customer inquiries is based on the number of telephone minutes.The rate for ATM services is based on the number of ATM transactions.

Accepted Answer

The answer of Figure 7-8.
Sallisaw Savings & Loan has requested...

Question 13

___________________ are performed each time a unit is produced.

Accepted Answer

Unit-level

Question 14

_____________________ are factors that measure the consumption of activities by products and other cost objects and can be classified as either unit-level or nonunit-level.

Accepted Answer

The answer of _____________________ are factors that measure the consumption...

Question 15

Consider the following two activities: (1)performing warranty work,cost: $60,000.The warranty cost of the most efficient competitor is $10,000.(2)Purchasing components,cost: $100,000 (5,000 purchase orders).A study reveals that the most efficient level would use 2,500 purchase orders and entail a cost of $55,000. What is the total nonvalue-added cost?

Accepted Answer

A) $55,000 
B) $60,000 
C) $105,000 
D) $100,000 
A) $55,000 
B) $60,000 
C) $105,000 
D) $100,000

Question 16

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Accepted Answer

A) True 
 B)False

Question 17

Scrap and retesting are examples of ____ failure costs.

Accepted Answer

A) detection 
B) external 
C) internal 
D) appraisal 
E) prevention 
A) detection 
B) external 
C) internal 
D) appraisal 
E) prevention

Question 18

The identification and elimination of activities that fail to add value refers to

Accepted Answer

A) external failures. 
B) activity reduction. 
C) internal failures. 
D) activity elimination. 
A) external failures. 
B) activity reduction. 
C) internal failures. 
D) activity elimination.

Question 19

Russell Company uses Beltran Company and Southern Express Inc.to buy the electronic chip used in the manufacturing of its GPS device.Russell Co.has been using these two companies for several years and would like to cut down to only one supplier to purchase the 1,200,000 chips needed per year.In order to determine which supplier is the most cost effective Russell Co.compiled the following data:
   Required: 
A.Calculate the activity rate for each activity.Round your answer to two decimal places.
B.Calculate the cost per chip for each supplier.
C.Which supplier should Russell Company choose?

Accepted Answer

A. @#IMG-DLM& @#IMG-DLM& B. @#IMG-DLM& @#IMG-DLM& C.Russell Co.should

Question 20

Figure 7-3. Hamilton Company manufactures engines.Hamilton produces all the parts necessary for its engines except for one electronic component,which is purchased from two local suppliers: Traynor Inc.and Bello Company.Both suppliers are reliable and rarely deliver late; however,Traynor sells the component for $10.00 per unit and Bello sells the same component for $8.95.Hamilton purchases 70 percent of its components from Bello,because of the lower price.The total annual demand is 75,000 units.
    Refer to Figure 7-3.Calculate the total cost per component associated with using Bello Company as the supplier.

Accepted Answer

A) $12.00 
B) $8.95 
C) $84.26 
D) $15.74 
E) $86.25 
A) $12.00 
B) $8.95 
C) $84.26 
D) $15.74 
E) $86.25

To calculate an activity rate,the practical capacity of each activity must be determined.

A product currently requires 5 moves.By changing the plant layout,the number of moves can be reduced to 1.The cost per move is $30.Calculate the reduction in nonvalue-added cost of the moving activity.

Activity drivers can be classified as either or .

Costs incurred to determine whether products and services are conforming to their requirements or customer needs are

All of the following are supplier-driven activities except

Packaging inspection and process acceptance are examples of ____.

A company takes 8,000 hours to produce 24,000 units of a product.What is the velocity?

Which is not defined as a category of quality-related costs?

Which is defined as a category of quality-related costs?

The moving activity has an expected cost of $160,000.Expected direct labor hours are 40,000,and the expected number of moves is 80,000.The best activity rate for moving is

___________________ are performed each time a unit is produced.

_____________________ are factors that measure the consumption of activities by products and other cost objects and can be classified as either unit-level or nonunit-level.

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Scrap and retesting are examples of ____ failure costs.

The identification and elimination of activities that fail to add value refers to

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 7: Activity-Based Costing and Management

To calculate an activity rate,the practical capacity of each activity must be determined.

A product currently requires 5 moves.By changing the plant layout,the number of moves can be reduced to 1.The cost per move is $30.Calculate the reduction in nonvalue-added cost of the moving activity.

Activity drivers can be classified as either ____ or ____.

Costs incurred to determine whether products and services are conforming to their requirements or customer needs are

All of the following are supplier-driven activities except

Packaging inspection and process acceptance are examples of ____.

A company takes 8,000 hours to produce 24,000 units of a product.What is the velocity?

Which is not defined as a category of quality-related costs?

Which is defined as a category of quality-related costs?

The moving activity has an expected cost of $160,000.Expected direct labor hours are 40,000,and the expected number of moves is 80,000.The best activity rate for moving is

___________________ are performed each time a unit is produced.

_____________________ are factors that measure the consumption of activities by products and other cost objects and can be classified as either unit-level or nonunit-level.

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Scrap and retesting are examples of ____ failure costs.

The identification and elimination of activities that fail to add value refers to

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behavior

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Absorption and Variable Costing,and Inventory Management

Profit Planning

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Statement of Cash Flows

Financial Statement Analysis

Filters

Activity drivers can be classified as either or .