Question 1

A costing system that first assigns costs to activities and then to products is

Accepted Answer

A) activity-based costing. 
B) job-order costing. 
C) activity-based management. 
D) volume based costing. 
E) nonunit-level costing. 
A) activity-based costing. 
B) job-order costing. 
C) activity-based management. 
D) volume based costing. 
E) nonunit-level costing.

Question 2

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

Accepted Answer

A) practical capacity 
B) expenditure level 
C) processing ratio 
D) Value 
A) practical capacity 
B) expenditure level 
C) processing ratio 
D) Value

Question 3

A company has two inspectors,each earning a salary of $75,000.One inspector works exclusively on inspecting parts received from outside suppliers,while the other spends 30 percent of her time inspecting parts and 70 percent of her time inspecting final products.How much labor cost should be assigned to the activity,inspecting parts?

Accepted Answer

A) $100,000 
B) $95,000 
C) $75,000 
D) $96,275 
E) $97,500 
A) $100,000 
B) $95,000 
C) $75,000 
D) $96,275 
E) $97,500

Question 4

Lorimer Company had sales of $2,500,000 for last year.Data on quality-related costs for last year are as follows:

Accepted Answer

The answer of Lorimer Company had sales of $2,500,000 for...

Question 5

Rollo Company has developed cost formulas for the drivers of the following production activities:   The budgeted inspection cost for 20 setups is

Accepted Answer

A) $175,860. 
B) $40,000. 
C) $34,000. 
D) $30,000. 
A) $175,860. 
B) $40,000. 
C) $34,000. 
D) $30,000.

Question 6

Each unit of a product requires four components.The average number of components is 4.25 due to component failure.Purchasing higher quality components can reduce the average number of components to four per unit.The cost per component is $350.Calculate the reduction in failure costs per unit due to purchasing higher quality components.

Accepted Answer

A) $43.75 
B) $350 
C) $175 
D) $87.50 
E) $372 
A) $43.75 
B) $350 
C) $175 
D) $87.50 
E) $372

Question 7

Figure 7-2. Steller Manufacturing has two classes of distributors: JIT distributors and non-JIT distributors.The JIT distributor places small,frequent orders and the non-JIT distributor tends to place larger,less frequent orders.Both types of distributors purchase the same product.The customer activities and costs for the previous quarter are found below:
  Refer to Figure 7-2.Calculate the total customer cost for the JIT distributor.

Accepted Answer

A) $487,500 
B) $341,753 
C) $600,000 
D) $250,050 
E) $448,791 
A) $487,500 
B) $341,753 
C) $600,000 
D) $250,050 
E) $448,791

Question 8

Activity-based management attempts to

Accepted Answer

A) identify and eliminate all unnecessary activities. 
B) increase the efficiency of necessary activities. 
C) add new activities that increase value. 
D) do all of these. 
A) identify and eliminate all unnecessary activities. 
B) increase the efficiency of necessary activities. 
C) add new activities that increase value. 
D) do all of these.

Question 9

Which of the following is a value-added activity?

Accepted Answer

A) Moving 
B) Inspection 
C) Processing 
D) Waiting 
A) Moving 
B) Inspection 
C) Processing 
D) Waiting

Question 10

Figure 7-4. Honeydew Company produces two products,a high end laptop computer under the label Bunsen Laptops,and an inexpensive desktop computer under the label Beaker Computers.The two products use two overhead activities,with the following costs:
  The controller has collected the expected annual prime costs for each product,the machine hours,the setup hours,and the expected production.
  Refer to Figure 7-4.Calculate the overhead cost per unit for Bunsen Laptops,using a plantwide rate based on direct labor costs.

Accepted Answer

A) $9.63 per laptop 
B) $22.45 per laptop 
C) $5.60 per laptop 
D) $7.22 per laptop 
E) $7.50 per laptop 
A) $9.63 per laptop 
B) $22.45 per laptop 
C) $5.60 per laptop 
D) $7.22 per laptop 
E) $7.50 per laptop

Question 11

Last year,Stevita Inc.shipped 3,000,000 kilograms of goods to customers at a cost of $2,400,000.If an individual customer orders 20,000 kilograms and produces $400,000 of revenue (total revenue is $40 million),the amount of shipping cost assigned to the customer using activity-based costing would be:

Accepted Answer

A) $16,000 
B) $8,000 
C) $24,000 
D) $4,000 
E) $60,000 
A) $16,000 
B) $8,000 
C) $24,000 
D) $4,000 
E) $60,000

Question 12

Assume that a company takes 3,500 hours to produce 10,000 units of a product.What is the cycle time?

Accepted Answer

A) 0.45 hour 
B) 1 hour 
C) 0.5 hour 
D) 3 hours 
E) 0.35 hour 
A) 0.45 hour 
B) 1 hour 
C) 0.5 hour 
D) 3 hours 
E) 0.35 hour

Question 13

Accurate ___________________ allow managers to make better pricing decisions,customer-mix decisions,and other customer-related decisions that improve profitability.

Accepted Answer

The answer of Accurate ___________________ allow managers to make better...

Question 14

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.Suppose that Hamilton loses $2,500,000 in sales per year because of its reputation for defective units attributable to failed components.Using warranty hours,assign the proportional cost of lost sales to Bello Company.Then determine what effect this would have on the cost per component.

Accepted Answer

A) $20.00 per unit 
B) $11.34 per unit 
C) $55.00 per unit 
D) $44.11 per unit 
A) $20.00 per unit 
B) $11.34 per unit 
C) $55.00 per unit 
D) $44.11 per unit

Question 15

Browning Manufacturing Company uses activity-based costing.The overhead budget for the coming period is $1,053,000,consisting of the following:
   The potential allocation bases and their estimated amounts were as follows:

Accepted Answer

The answer of Browning Manufacturing Company uses activity-based costing.The overhead...

Question 16

Using only unit-based activity drivers to assign nonunit-related overhead costs can cause

Accepted Answer

A) product diversity. 
B) distorted product costs. 
C) efficiency. 
D) activity sharing. 
E) none of these 
A) product diversity. 
B) distorted product costs. 
C) efficiency. 
D) activity sharing. 
E) none of these

Question 17

_________________________ is a system-wide,integrated approach that focuses management's attention on activities with the objective of improving customer value and profit achieved by providing this value.

Accepted Answer

Activity-b

Question 18

Velocity is the length of time that it takes to produce a unit o output from the time raw materials are received until the good is delivered.

Accepted Answer

A) True 
 B)False

Question 19

A list of activities accompanied by information that describes each activity is an activity ____.

Accepted Answer

A) manifesto 
B) diary 
C) journal 
D) dictionary 
E) note 
A) manifesto 
B) diary 
C) journal 
D) dictionary 
E) note

Question 20

One of the questions answered by activity analysis should be "What activities are done?"

Accepted Answer

A) True 
 B)False

A costing system that first assigns costs to activities and then to products is

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

Lorimer Company had sales of $2,500,000 for last year.Data on quality-related costs for last year are as follows:

Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is

Activity-based management attempts to

Which of the following is a value-added activity?

Assume that a company takes 3,500 hours to produce 10,000 units of a product.What is the cycle time?

Accurate ___________________ allow managers to make better pricing decisions,customer-mix decisions,and other customer-related decisions that improve profitability.

Browning Manufacturing Company uses activity-based costing.The overhead budget for the coming period is $1,053,000,consisting of the following: The potential allocation bases and their estimated amounts were as follows:

Using only unit-based activity drivers to assign nonunit-related overhead costs can cause

_________________________ is a system-wide,integrated approach that focuses management's attention on activities with the objective of improving customer value and profit achieved by providing this value.

Velocity is the length of time that it takes to produce a unit o output from the time raw materials are received until the good is delivered.

A list of activities accompanied by information that describes each activity is an activity ____.

One of the questions answered by activity analysis should be "What activities are done?"

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

A costing system that first assigns costs to activities and then to products is

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

Lorimer Company had sales of $2,500,000 for last year.Data on quality-related costs for last year are as follows:

Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is

Activity-based management attempts to

Which of the following is a value-added activity?

Assume that a company takes 3,500 hours to produce 10,000 units of a product.What is the cycle time?

Accurate ___________________ allow managers to make better pricing decisions,customer-mix decisions,and other customer-related decisions that improve profitability.

Browning Manufacturing Company uses activity-based costing.The overhead budget for the coming period is $1,053,000,consisting of the following: The potential allocation bases and their estimated amounts were as follows:

Using only unit-based activity drivers to assign nonunit-related overhead costs can cause

_________________________ is a system-wide,integrated approach that focuses management's attention on activities with the objective of improving customer value and profit achieved by providing this value.

Velocity is the length of time that it takes to produce a unit o output from the time raw materials are received until the good is delivered.

A list of activities accompanied by information that describes each activity is an activity ____.

One of the questions answered by activity analysis should be "What activities are done?"

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