Question 1

Activity elimination focuses on nonvalue-added activities.

Accepted Answer

A) True 
 B)False

Question 2

Heedy Company makes a product using two departments - Department 1 and Department 2.Information on these departments is as follows:

Accepted Answer

The answer of Heedy Company makes a product using two...

Question 3

____ are assigned using direct tracing and resource drivers.

Accepted Answer

A) Resources 
B) Costs 
C) Profits 
D) Materials 
E) Products 
A) Resources 
B) Costs 
C) Profits 
D) Materials 
E) Products

Question 4

Control activities are performed by an organization to prevent or detect poor quality.

Accepted Answer

A) True 
 B)False

Question 5

Interviews and surveys are used to identify

Accepted Answer

A) cycle time. 
B) velocity. 
C) control costs. 
D) costs. 
E) activities. 
A) cycle time. 
B) velocity. 
C) control costs. 
D) costs. 
E) activities.

Question 6

Which of the following is not an example of a nonvalue-added activity?

Accepted Answer

A) Inspecting 
B) Scheduling 
C) Moving 
D) Waiting 
E) Supervising 
A) Inspecting 
B) Scheduling 
C) Moving 
D) Waiting 
E) Supervising

Question 7

Using the original design,a machine requires 12 hours of setup time.By redesigning the machine,the setup time is reduced by 25 percent.The cost per setup hour is $225.Calculate the reduction in nonvalue-added cost per setup.

Accepted Answer

A) $675 per setup 
B) $225 per setup 
C) $450 per setup 
D) $800 per setup 
E) $2,025 
A) $675 per setup 
B) $225 per setup 
C) $450 per setup 
D) $800 per setup 
E) $2,025

Question 8

Field trials and quality engineering are examples of ____.

Accepted Answer

A) prevention costs 
B) appraisal costs 
C) failure costs 
D) quality costs 
E) value costs 
A) prevention costs 
B) appraisal costs 
C) failure costs 
D) quality costs 
E) value costs

Question 9

Costs incurred to prevent poor quality in the products or services being produced 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 10

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers 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 11

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 activity rate for inspecting components based on sampling hours.

Accepted Answer

A) $78 per hour 
B) $72 per hour 
C) $77.25 per hour 
D) $80 per hour 
E) $76 per hour 
A) $78 per hour 
B) $72 per hour 
C) $77.25 per hour 
D) $80 per hour 
E) $76 per hour

Question 12

____ is the length of time required to produce one product; ____ is the number of units that can be produced in a given period of time.

Accepted Answer

A) Cycle time; velocity 
B) Velocity; cycle time 
C) Activity time; cycle production 
D) Cycle time; activity output 
E) Velocity; cycle production 
A) Cycle time; velocity 
B) Velocity; cycle time 
C) Activity time; cycle production 
D) Cycle time; activity output 
E) Velocity; cycle production

Question 13

Assume that the accounts payable department of a company has 5 clerks; each one is paid $25,000 per year ($125,000 total clerical salaries).On average,the clerks spend:
20% of their time on processing payments
30% of their time matching invoices,receiving documents,and billing statement
50% of their time correcting errors in the various documents
In addition,long distance telephone costs of $1,700 are directly traced to the activity "correcting errors."

Accepted Answer

The answer of Assume that the accounts payable department of...

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.Calculate the activity rate for warranty work based on warranty hours.Round to the nearest whole dollar.

Accepted Answer

A) $268 per hour 
B) $266 per hour 
C) $264 per hour 
D) $262 per hour 
E) $287 per hour 
A) $268 per hour 
B) $266 per hour 
C) $264 per hour 
D) $262 per hour 
E) $287 per hour

Question 15

Figure 7-5. Rizzo Manufacturing produces two types of cameras: 35mm and digital.The cameras are produced using one continuous process.Four activities have been identified: machining,setups,receiving,and packing.Resource drivers have been used to assign costs to each activity.The overhead activities,their costs,and the other related data are as follows:
  Refer to Figure 7-5.Calculate an activity rate for packing based on packing orders.

Accepted Answer

A) $9.00 per packing order 
B) $10.00 per packing order 
C) $8.00 per packing order 
D) $60.00 per packing order 
E) $1.20 per packing order 
A) $9.00 per packing order 
B) $10.00 per packing order 
C) $8.00 per packing order 
D) $60.00 per packing order 
E) $1.20 per packing order

Question 16

Costs incurred when products and services prior to being delivered do not conform to specifications or customer needs are

Accepted Answer

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

Question 17

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 activity rate for servicing goods.

Accepted Answer

A) $1,089 per service call 
B) $750.10 per service call 
C) $675.50 per service call 
D) $1,000 per service call 
E) $711.54 per service call 
A) $1,089 per service call 
B) $750.10 per service call 
C) $675.50 per service call 
D) $1,000 per service call 
E) $711.54 per service call

Question 18

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 of unloading.

Accepted Answer

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

Question 19

The time required to produce one unit of a product is the

Accepted Answer

A) efficiency. 
B) velocity. 
C) speed. 
D) cycle time. 
A) efficiency. 
B) velocity. 
C) speed. 
D) cycle time.

Question 20

____ activities are unnecessary activities.

Accepted Answer

A) Frivolous 
B) Nonvalue-added 
C) Expensive 
D) Under-performing 
E) none of these 
A) Frivolous 
B) Nonvalue-added 
C) Expensive 
D) Under-performing 
E) none of these

Activity elimination focuses on nonvalue-added activities.

Heedy Company makes a product using two departments - Department 1 and Department 2.Information on these departments is as follows:

____ are assigned using direct tracing and resource drivers.

Control activities are performed by an organization to prevent or detect poor quality.

Interviews and surveys are used to identify

Which of the following is not an example of a nonvalue-added activity?

Using the original design,a machine requires 12 hours of setup time.By redesigning the machine,the setup time is reduced by 25 percent.The cost per setup hour is $225.Calculate the reduction in nonvalue-added cost per setup.

Field trials and quality engineering are examples of ____.

Costs incurred to prevent poor quality in the products or services being produced are

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are

is the length of time required to produce one product; is the number of units that can be produced in a given period of time.

Costs incurred when products and services prior to being delivered do not conform to specifications or customer needs are

The time required to produce one unit of a product is the

____ activities are unnecessary activities.

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

Activity elimination focuses on nonvalue-added activities.

Heedy Company makes a product using two departments - Department 1 and Department 2.Information on these departments is as follows:

____ are assigned using direct tracing and resource drivers.

Control activities are performed by an organization to prevent or detect poor quality.

Interviews and surveys are used to identify

Which of the following is not an example of a nonvalue-added activity?

Using the original design,a machine requires 12 hours of setup time.By redesigning the machine,the setup time is reduced by 25 percent.The cost per setup hour is $225.Calculate the reduction in nonvalue-added cost per setup.

Field trials and quality engineering are examples of ____.

Costs incurred to prevent poor quality in the products or services being produced are

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are

____ is the length of time required to produce one product; ____ is the number of units that can be produced in a given period of time.

Costs incurred when products and services prior to being delivered do not conform to specifications or customer needs are

The time required to produce one unit of a product is the

____ activities are unnecessary activities.

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

is the length of time required to produce one product; is the number of units that can be produced in a given period of time.