Exam 10: Activity Analysis: Costing and Management

Activity based costing focuses on the activities that cause costs to be incurred.

Aslowas Ltd is a large merchandiser that employs numerous accounts payable clerks. Their jobs involve processing invoices and paying invoices at regular intervals. Which of the following is the most likely cost driver for the accounts payable activity cost pool?

The process of using ABC information to evaluate the costs and benefits of production and to identify opportunities for improvements in profitability and efficiency is called:

Activity-based management and activity-based costing are the same thing.

Batch level costs are determined by the number of units in the batch.

Activity based costing relies on information from activity based management.

ABC are proven to be successful in all types of businesses.

When applying ABC concepts to the determination of product costs, the total costs will be greater than under a traditional costing approach.

Symphonix Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines. Budgeted inspection costs are $12,000. Additional information is as follows: Small Pumps Large Pumps Units inspected 120 120 Hours spent inspecting 2.5 17.5 Direct labor hours per unit 2 2 Under activity-based costing (ABC), the inspection cost assigned to one large pump would be:

The standardized cost per time unit of capacity _______________ differentiate the expertise of the employee performing the activity:

There is little evidence to suggest that ABC systems improve return on assets in entities that use it.

The costs of designing and implementing an ABC system include training and consulting fees.

In time-driven ABC the cost driver rate is calculated as cost per time unit of capacity multiplied by unit times of activity.

Which category of the ABC hierarchy has activities that need to be performed for every unit of good or service?

Which of the following is not a feature of time driven ABC:

To identify activities in an organisation it may be necessary to use accounting records and employee estimates.

Skyfire Manufacturing has two departments, Assembly and Testing. You are given the following information about the costs of 4 activities that occur at the manufacturing plant monthly: Material handling Supervision on of direct labor Maintenance and cleaning Machining Total costs \ 100,000 105,000 150,000 200,000 parts 70 employees 3,000 hours 6,000 machine hours The above activities are used by the two departments as follows: Material handling 150,000 parts 50,000 parts Supervision of direct labor 30 employees 40 employees Time spent cleaning 2,000 hours 1,000 hours Number of machine hours 4,000 machine hours 2,000 machine hours How much of the maintenance and cleaning costs will be allocated to Assembly?

Which statement about costing systems is true?

Century Point is a modern business club in the inner city of Brisbane. It is owned by Silvera Property Holdings, which operates additional properties in Auckland, Christchurch and Singapore. Century Point has 6 separate areas each with corporate facilities for various membership groups. Also on premises is a gymnasium, restaurant, and pool. The business club is organised in 5 departments: front desk, housekeeping, food & beverage, and customer relations. As part of its operation, Century Point regularly incurs the following costs: General Manager's salary Cleaning and maintenance costs Utility costs Depreciation on gym equipment Advertising Food and beverage costs Depreciation on restaurant equipment From the perspective of Silvera, advertising specifically for Century Point is best described as a(n):

Greyt Expectations is a greyhound sanctuary for retired dogs after their racing career finishes. Dogs are housed here until permanent homes can be found for them. The shelter relies on grants from the racing industry and private donations for funding. One of the shelter's cost pools is animal recordkeeping, which involves maintaining a database with details about the race career of each greyhound in the shelter. Which of the following is the most appropriate cost driver for the recordkeeping cost pool?