Question 1

To use activity-based costing, it is necessary to know the

Accepted Answer

A) cost driver for each activity cost pool. 
B) expected use of cost drivers per activity. 
C) expected use of cost drivers per product. 
D) all of the above. 
A) cost driver for each activity cost pool. 
B) expected use of cost drivers per activity. 
C) expected use of cost drivers per product. 
D) all of the above.

Question 2

A non-value-added activity in a service enterprise is

Accepted Answer

A) providing legal research. 
B) delivering packages. 
C) consulting. 
D) bookkeeping. 
A) providing legal research. 
B) delivering packages. 
C) consulting. 
D) bookkeeping.

Question 3

Activity-based management focuses on reducing costs and improving processes.

Accepted Answer

A) True 
 B)False

Question 4

A cost driver does not generally have a direct cause-effect relationship with the resources consumed.

Accepted Answer

A) True 
 B)False

Question 5

Zimmerman Company manufactures two products, Board 12 and Case 165.Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000.Information on the two products is: $$\begin{array} { l r r } 
& \text { Board 12 } & \text { Case 165 } \
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$$ Overhead applied to Board 12 using traditional costing using direct labor hours is

Accepted Answer

A) $3,600,000. 
B) $4,608,000. 
C) $5,010,000. 
D) $5,760,000. 
A) $3,600,000. 
B) $4,608,000. 
C) $5,010,000. 
D) $5,760,000.

Question 6

Zimmerman Company manufactures two products, Board 12 and Case 165.Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000.Information on the two products is: Overhead applied to Case 165 using traditional costing using direct labor hours is

Accepted Answer

A) $3,840,000. 
B) $4,608,000. 
C) $5,010,000. 
D) $6,000,000. 
A) $3,840,000. 
B) $4,608,000. 
C) $5,010,000. 
D) $6,000,000.

Question 7

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 8

An important element of just-in-time processing is

Accepted Answer

A) dependable suppliers who are willing to deliver on short notice. 
B) a specialized workforce. 
C) less emphasis on a quality control system. 
D) all of the above. 
A) dependable suppliers who are willing to deliver on short notice. 
B) a specialized workforce. 
C) less emphasis on a quality control system. 
D) all of the above.

Question 9

Which of the following is not a benefit of activity-based costing?

Accepted Answer

A) More accurate product costing 
B) Enhanced control over overhead costs 
C) Better management decisions 
D) Less costly to use 
A) More accurate product costing 
B) Enhanced control over overhead costs 
C) Better management decisions 
D) Less costly to use

Question 10

Any activity that increases the cost of producing a product is a value-added activity.

Accepted Answer

A) True 
 B)False

Question 11

Each of the following is a limitation of activity-based costing except that

Accepted Answer

A) it can be expensive to use. 
B) it decreases control over overhead costs 
C) it is complex and can be difficult to understand 
D) some arbitrary allocations continue. 
A) it can be expensive to use. 
B) it decreases control over overhead costs 
C) it is complex and can be difficult to understand 
D) some arbitrary allocations continue.

Question 12

All of the following are examples of a value-added activity in a service company except

Accepted Answer

A) delivering packages by a delivery service. 
B) ordering supplies. 
C) performing surgery. 
D) providing legal research for legal services. 
A) delivering packages by a delivery service. 
B) ordering supplies. 
C) performing surgery. 
D) providing legal research for legal services.

Question 13

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: $$\begin{array} { l r r } 
& { \text { Audit } } &{ \text { Tax } } \
\text { Direct labor cost } & \$ 50,000 & \$ 100,000 \
\text { CPU minutes } & 40,000 & 10,000 \
\text { Legal hours used } & 200 & 800
\end{array}$$ 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 14

Zimmerman Company manufactures two products, Board 12 and Case 165.Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000.Information on the two products is: $$\begin{array} { l r r } 
& \text { Board 12 } & \text { Case 165 } \
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$$ Overhead applied to Board 12 using activity-based costing is

Accepted Answer

A) $3,600,000. 
B) $4,608,000. 
C) $4,992,000. 
D) $5,760,000. 
A) $3,600,000. 
B) $4,608,000. 
C) $4,992,000. 
D) $5,760,000.

Question 15

Traditionally, overhead is allocated based on direct labor cost or direct labor hours.

Accepted Answer

A) True 
 B)False

Question 16

A well-designed activity-based costing system starts with

Accepted Answer

A) identifying the activity-cost pools. 
B) computing the activity-based overhead rate. 
C) assigning overhead costs to products. 
D) analyzing the activities performed to manufacture a product. 
A) identifying the activity-cost pools. 
B) computing the activity-based overhead rate. 
C) assigning overhead costs to products. 
D) analyzing the activities performed to manufacture a product.

Question 17

Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by

Accepted Answer

A) increasing direct labor costs and increasing overhead costs. 
B) increasing direct labor costs and decreasing overhead costs. 
C) decreasing direct labor costs and decreasing overhead costs. 
D) decreasing direct labor costs and increasing overhead costs. 
A) increasing direct labor costs and increasing overhead costs. 
B) increasing direct labor costs and decreasing overhead costs. 
C) decreasing direct labor costs and decreasing overhead costs. 
D) decreasing direct labor costs and increasing overhead costs.

Question 18

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 19

Which of the following is not a benefit of just-in-time processing?

Accepted Answer

A) Control of significant inventory balances 
B) Enhanced product quality 
C) Reduction of rework costs 
D) Production cost savings 
A) Control of significant inventory balances 
B) Enhanced product quality 
C) Reduction of rework costs 
D) Production cost savings

Question 20

Foxx Company incurs $480,000 overhead costs each year in its three main departments, setup ($30,000), machining ($330,000), and packing ($120,000).The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year.Information about Foxx's two products is as follows: If machining hours are used as a base under traditional casting, how much overhead is assigned to Product A1 each year?

Accepted Answer

A) $96,000 
B) $240,000 
C) $165,000 
D) $144,000 
A) $96,000 
B) $240,000 
C) $165,000 
D) $144,000

To use activity-based costing, it is necessary to know the

A non-value-added activity in a service enterprise is

Activity-based management focuses on reducing costs and improving processes.

A cost driver does not generally have a direct cause-effect relationship with the resources consumed.

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

An important element of just-in-time processing is

Which of the following is not a benefit of activity-based costing?

Any activity that increases the cost of producing a product is a value-added activity.

Each of the following is a limitation of activity-based costing except that

All of the following are examples of a value-added activity in a service company except

Traditionally, overhead is allocated based on direct labor cost or direct labor hours.

A well-designed activity-based costing system starts with

Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by

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

Which of the following is not a benefit of just-in-time processing?

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

Time Value of Money

Filters

Exam 4: Accrual Accounting Concepts

To use activity-based costing, it is necessary to know the

A non-value-added activity in a service enterprise is

Activity-based management focuses on reducing costs and improving processes.

A cost driver does not generally have a direct cause-effect relationship with the resources consumed.

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

An important element of just-in-time processing is

Which of the following is not a benefit of activity-based costing?

Any activity that increases the cost of producing a product is a value-added activity.

Each of the following is a limitation of activity-based costing except that

All of the following are examples of a value-added activity in a service company except

Traditionally, overhead is allocated based on direct labor cost or direct labor hours.

A well-designed activity-based costing system starts with

Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by

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

Which of the following is not a benefit of just-in-time processing?

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

Time Value of Money

Filters