Exam 7: Activity-Based Costing and Management

The process of choosing among different sets of activities caused by competing strategies refers to

Activity analysis is the effort expended to identify those factors that are the root causes of activity costs.

Activities necessary to remain in business are known as _____________________.

Stinler Corporation manufactures curtains for retail stores and for individual customers.The retail chain buys 70% of the curtains produced.The individual customers purchase curtains in approximately equal quantities,where the orders are about the same size.Data concerning Stinler's customer activity are as follows: Currently customer-driven costs are assigned to customers based on units sold,a unit-level driver. Required: A.Assign costs to customers by using an ABC approach. B.Determine cost per unit sold for each type of customer.

The consumption ratio is the amount of each activity consumed by a product.

____ focuses on the relationship of activity inputs to activity outputs.

One of the three major dimensions of measuring activity performance is quality.

Environmental internal failure costs are the costs of activities performed after discharging contaminants and waste into the environment.

You decide The Tilman Corporation has seen a significant increase in the amount spent on such items as warranty and recall repairs.They would like to be able to reduce these costs and have asked you,the cost accountant,for some advice.What would be your recommendation?

A plant produces 75 different electronic products.Each product requires an average of six components that are purchased externally.By redesigning the products,it is possible to produce the 75 products so that they all have three components in common.This will reduce the demand for purchasing,receiving,and paying bills.Estimated savings from the reduced demand are $1,200,000 per year.Calculate the nonvalue-added cost of purchasing,receiving and paying bills.

Activities necessary to remain in business are called valuable activities.

A factory produces 124,000 televisions per quarter.A total of 8,000 production hours are used within the factory per quarter.Compute the velocity in units per hour.

Discretionary activities are necessary to comply with legal mandates.

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.

Cleaning up a polluted lake or an oil spill are examples of __________________ costs.

The ___________________ is calculated by taking the amount of the activity driver per product and dividing it by total driver quantity.

A manual process takes 18 minutes of direct labor time and six pounds of material to produce a product.Automating the process requires 12 minutes of machine time and 5 pounds of material.The cost per labor hour is $9,the cost per machine hour is $7,and the cost per pound of materials is $11. Find the nonvalue-added cost for the above situation.

Activity inputs are the resources consumed by the activity in producing its output.

Reinspection and design changes are examples of _____________________ costs.

Factors that measure the consumption of activities by products and other cost objects are value-added costs.