Exam 7: Activity-Based Costing and Management

Which is not a component of process value analysis?

____ activities are performed in response to poor quality.

____ is concerned with doing the activity right the first time it is performed.

Resource drivers are factors that measure the consumption of resources by product.

A volume-based costing system emphasizes direct tracing and driver tracing.

____ is present whenever products have different consumption ratios for different overhead activities.

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 the total overhead assigned to the 35mm cameras using only machine hours to calculate a plantwide rate.

Activity attributes are financial and nonfinancial information items that describe individual activities.

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 a consumption ratio for setups on the digital cameras.

A defective product is one that does conform to specifications.

Zero defects means that most products conform to specifications.

A(n)____ ratio measures the proportion of an activity consumed by a product.

The Thompson Company uses activity-based costing to determine product cost.Three activities and their rates have been calculated as shown below. Thompson provided the following data from the job order cost sheet for Job #345

Appraisal costs are incurred to determine whether products and services are conforming to their requirements or customer needs.

Environmental costs which the firm is not financially responsible are called ____ costs.

Figure 7-7. Armstrong Company produces a variety of bicycles.One of its plants produces two bicycles: a mountain model and a racing model.At the beginning of the year,the following data were prepared for this plant: In addition,the following information was provided so that overhead costs could be assigned to each product: Refer to Figure 7-7.Armstrong Company uses activity-based costing to calculate product costs.

Randy Company produces candy sticks (hooked and straight).Both products pass through two producing departments.The hooked sticks's production is much more labor-intensive than the straight sticks.The straight stick is also more popular.The following data have been gathered for the two products: Randy has decided to use activity-based costing and has developed two types of activities,machine related (based on machine hours),and other overhead (based on packing orders).Machine-related costs equal $160,000.Other overhead costs equal $240,000.

Charlotte Company produces folding chairs.It takes the company 18,000 hours to produce 90,000 chairs. Required: A.What is the velocity in hours? B.What is the cycle time in hours?

____________________ are financial and nonfinancial information items that describe individual activities.

Tracing ________________ costs to suppliers can enable managers to choose the true low-cost supplier.