Question 1

Non-value-added activities

Accepted Answer

A) should be minimized or eliminated. 
B) involve those activities that are essential to a company's operations. 
C) increase both the cost and perceived value of a product. 
D) cannot be differentiated from value-added activities. 
A) should be minimized or eliminated. 
B) involve those activities that are essential to a company's operations. 
C) increase both the cost and perceived value of a product. 
D) cannot be differentiated from value-added activities.

Question 2

What sometimes makes implementation of activity-based costing difficult in service industries is

Accepted Answer

A) the labeling of activities as value-added. 
B) identifying activities, activity cost plus, and cost drivers. 
C) that a larger proportion of overhead costs are company-wide costs. 
D) attempting to reduce or eliminate non-value-added activities. 
A) the labeling of activities as value-added. 
B) identifying activities, activity cost plus, and cost drivers. 
C) that a larger proportion of overhead costs are company-wide costs. 
D) attempting to reduce or eliminate non-value-added activities.

Question 3

Which of the following is a limitation of activity-based costing?

Accepted Answer

A) More cost pools 
B) Less control over overhead costs 
C) ABC can be expensive to use 
D) Poorer management decisions 
A) More cost pools 
B) Less control over overhead costs 
C) ABC can be expensive to use 
D) Poorer management decisions

Question 4

Which of the following is not a unit-level activity?

Accepted Answer

A) Purchase ordering 
B) Assembling 
C) Painting 
D) Sewing 
A) Purchase ordering 
B) Assembling 
C) Painting 
D) Sewing

Question 5

Often the most difficult part of computing accurate unit costs is determining the proper amount of _________ to assign to each product, service, or job.

Accepted Answer

A) direct materials 
B) direct labor 
C) overhead 
D) direct materials and direct labor 
A) direct materials 
B) direct labor 
C) overhead 
D) direct materials and direct labor

Question 6

Which of the following is not a product-level activity?

Accepted Answer

A) Product design 
B) Engineering changes 
C) Inventory management 
D) Equipment setups 
A) Product design 
B) Engineering changes 
C) Inventory management 
D) Equipment setups

Question 7

Which of the following is not a batch-level activity?

Accepted Answer

A) Engineering changes 
B) Equipment setups 
C) Inspection 
D) Materials handling 
A) Engineering changes 
B) Equipment setups 
C) Inspection 
D) Materials handling

Question 8

ABC usually results in less appropriate management decisions.

Accepted Answer

A) True 
 B)False

Question 9

Gant Accounting performs two types of services, Audit and Tax. Gant's overhead costs consist of computer support, $300,000; and legal support, $150,000. Information on the two services is: $\begin{array}{lrr}&\text { Audit }& \text { Tax }\
\text { Direct labor cost } & \$ 50,000 & \$ 100,000 \
\text { CPU minutes } & 40,000 & 10,000 \
\text { Leqal hours used } & 200 & 800
\end{array}$ Gant Accounting performs tax services for Cathy Lane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Lane job using activity-based costing?

Accepted Answer

A) $3,600 
B) $3,750 
C) $5,400 
D) $4,950 
A) $3,600 
B) $3,750 
C) $5,400 
D) $4,950

Question 10

Gant Accounting performs two types of services, Audit and Tax. Gant's overhead costs consist of computer support, $300,000; and legal support, $150,000. Information on the two services is: $\begin{array}{lrr}&\text { Audit }& \text { Tax }\
\text { Direct labor cost } & \$ 50,000 & \$ 100,000 \
\text { CPU minutes } & 40,000 & 10,000 \
\text { Leqal hours used } & 200 & 800
\end{array}$ Overhead applied to tax services using activity-based costing is

Accepted Answer

A) $150,000. 
B) $180,000. 
C) $270,000. 
D) $300,000. 
A) $150,000. 
B) $180,000. 
C) $270,000. 
D) $300,000.

Question 11

In service industries

Accepted Answer

A) activities cannot be labeled as value-added or non-value-added. 
B) the overall objective of ABC is different than in manufacturing industries. 
C) a larger proportion of overhead costs are company-wide costs. 
D) activity cost pools cannot be identified. 
A) activities cannot be labeled as value-added or non-value-added. 
B) the overall objective of ABC is different than in manufacturing industries. 
C) a larger proportion of overhead costs are company-wide costs. 
D) activity cost pools cannot be identified.

Question 12

Which of the following is not a product-level activity?

Accepted Answer

A) Product design 
B) Engineering changes 
C) Material handling 
D) Inventory management 
A) Product design 
B) Engineering changes 
C) Material handling 
D) Inventory management

Question 13

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: $\begin{array}{lrr}&\text { Regular}&\text { Supreme }
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$ Overhead applied to Regular using traditional costing using direct labor hours is

Accepted Answer

A) $1,290,000. 
B) $1,800,000. 
C) $2,700,000. 
D) $3,210,000. 
A) $1,290,000. 
B) $1,800,000. 
C) $2,700,000. 
D) $3,210,000.

Question 14

Which of the following is a value-added activity?

Accepted Answer

A) Inventory storage 
B) Machining 
C) Building maintenance 
D) Bookkeeping 
A) Inventory storage 
B) Machining 
C) Building maintenance 
D) Bookkeeping

Question 15

Activity-based costing has been found to be useful in each of the following service industries except

Accepted Answer

A) banks. 
B) hospitals. 
C) telephone companies. 
D) ABC has been useful in any of these industries. 
A) banks. 
B) hospitals. 
C) telephone companies. 
D) ABC has been useful in any of these industries.

Question 16

To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.

Accepted Answer

A) True 
 B)False

Question 17

Predetermined overhead rates in traditional costing are often based on

Accepted Answer

A) direct labor cost for job order costing and machine hours for process costing. 
B) machine hours for job order costing and direct labor cost for process costing. 
C) multiple bases for job order costing and direct labor cost for process costing. 
D) multiple bases for both job order costing and process costing. 
A) direct labor cost for job order costing and machine hours for process costing. 
B) machine hours for job order costing and direct labor cost for process costing. 
C) multiple bases for job order costing and direct labor cost for process costing. 
D) multiple bases for both job order costing and process costing.

Question 18

Which would be a cost driver for a facility-level activity?

Accepted Answer

A) Number of setups 
B) Number of product designs 
C) Square footage 
D) Number of purchase orders 
A) Number of setups 
B) Number of product designs 
C) Square footage 
D) Number of purchase orders

Question 19

The costs that are easiest to trace directly to products are

Accepted Answer

A) direct materials and direct labor. 
B) direct labor and overhead. 
C) direct materials and overhead. 
D) none of the above; all three costs are equally easy to trace to the product. 
A) direct materials and direct labor. 
B) direct labor and overhead. 
C) direct materials and overhead. 
D) none of the above; all three costs are equally easy to trace to the product.

Question 20

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Accepted Answer

A) True 
 B)False

Non-value-added activities

What sometimes makes implementation of activity-based costing difficult in service industries is

Which of the following is a limitation of activity-based costing?

Which of the following is not a unit-level activity?

Often the most difficult part of computing accurate unit costs is determining the proper amount of _________ to assign to each product, service, or job.

Which of the following is not a product-level activity?

Which of the following is not a batch-level activity?

ABC usually results in less appropriate management decisions.

In service industries

Which of the following is not a product-level activity?

Which of the following is a value-added activity?

Activity-based costing has been found to be useful in each of the following service industries except

To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.

Predetermined overhead rates in traditional costing are often based on

Which would be a cost driver for a facility-level activity?

The costs that are easiest to trace directly to products are

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 16: Activity-Based Costing

Non-value-added activities

What sometimes makes implementation of activity-based costing difficult in service industries is

Which of the following is a limitation of activity-based costing?

Which of the following is not a unit-level activity?

Often the most difficult part of computing accurate unit costs is determining the proper amount of _________ to assign to each product, service, or job.

Which of the following is not a product-level activity?

Which of the following is not a batch-level activity?

ABC usually results in less appropriate management decisions.

In service industries

Which of the following is not a product-level activity?

Which of the following is a value-added activity?

Activity-based costing has been found to be useful in each of the following service industries except

To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.

Predetermined overhead rates in traditional costing are often based on

Which would be a cost driver for a facility-level activity?

The costs that are easiest to trace directly to products are

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters