Question 1

Which of the following is a batch-level activity?

Accepted Answer

A) Assembling 
B) Product design 
C) Engineering changes 
D) Purchase ordering 
A) Assembling 
B) Product design 
C) Engineering changes 
D) Purchase ordering

Question 2

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: $$\begin{array} { l c r } 
& \text { Regular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Supreme 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 3

Under just-in-time processing, all of the following are received or completed "just in time" except

Accepted Answer

A) finished goods. 
B) raw materials. 
C) subassembly parts. 
D) supplies. 
A) finished goods. 
B) raw materials. 
C) subassembly parts. 
D) supplies.

Question 4

Just-in-time processing

Accepted Answer

A) results in the opposite of a just-in-case philosophy. 
B) results in a pull approach. 
C) minimizes inventory storage and waiting time. 
D) all of the above. 
A) results in the opposite of a just-in-case philosophy. 
B) results in a pull approach. 
C) minimizes inventory storage and waiting time. 
D) all of the above.

Question 5

ABC usually results in less appropriate management decisions.

Accepted Answer

A) True 
 B)False

Question 6

The use of activity-based costing in service industries

Accepted Answer

A) has the same objective as in manufacturing. 
B) results in improved costing of services provided. 
C) uses cost pools to assign overhead. 
D) all of these. 
A) has the same objective as in manufacturing. 
B) results in improved costing of services provided. 
C) uses cost pools to assign overhead. 
D) all of these.

Question 7

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 8

Activities required to support or sustain an entire production process are called

Accepted Answer

A) unit-level activities. 
B) batch-level activities. 
C) product-level activities. 
D) facility-level activities. 
A) unit-level activities. 
B) batch-level activities. 
C) product-level activities. 
D) facility-level activities.

Question 9

Which of the following is a non-value-added activity?

Accepted Answer

A) Engineering design 
B) Machining 
C) Inspection 
D) Packaging 
A) Engineering design 
B) Machining 
C) Inspection 
D) Packaging

Question 10

The last step in activity-based costing is to

Accepted Answer

A) assign overhead costs to products, using overhead rates determined for each cost pool. 
B) compute the activity-based overhead rate per cost driver. 
C) identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. 
D) identify the cost driver that has a strong correlation to the activity cost pool. 
A) assign overhead costs to products, using overhead rates determined for each cost pool. 
B) compute the activity-based overhead rate per cost driver. 
C) identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. 
D) identify the cost driver that has a strong correlation to the activity cost pool.

Question 11

Assigning overhead using ABC will usually

Accepted Answer

A) decrease the cost per unit for low volume products as compared to a traditional overhead allocation. 
B) increase the cost per unit for low volume products as compared to a traditional overhead allocation. 
C) provide less accurate cost per unit for low volume products than will traditional costing. 
D) result in the same cost per unit for low volume products as does traditional costing. 
A) decrease the cost per unit for low volume products as compared to a traditional overhead allocation. 
B) increase the cost per unit for low volume products as compared to a traditional overhead allocation. 
C) provide less accurate cost per unit for low volume products than will traditional costing. 
D) result in the same cost per unit for low volume products as does traditional costing.

Question 12

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 13

Companies that switch to ABC often find they have

Accepted Answer

A) been overpricing some products. 
B) possibly losing market share to competitors. 
C) been sacrificing profitability by underpricing some products. 
D) All of the these answers are correct. 
A) been overpricing some products. 
B) possibly losing market share to competitors. 
C) been sacrificing profitability by underpricing some products. 
D) All of the these answers are correct.

Question 14

Which best describes the flow of overhead costs in an activity-based costing system?

Accepted Answer

A) Overhead costs $\rightarrow$ direct labor cost or hours $\rightarrow$ products 
B) Overhead costs $\rightarrow$ products 
C) Overhead costs $\rightarrow$ activity cost pools $\rightarrow$ cost drivers $\rightarrow$ products 
D) Overhead costs $\rightarrow$ machine hours $\rightarrow$ products 
A) Overhead costs $\rightarrow$ direct labor cost or hours $\rightarrow$ products 
B) Overhead costs $\rightarrow$ products 
C) Overhead costs $\rightarrow$ activity cost pools $\rightarrow$ cost drivers $\rightarrow$ products 
D) Overhead costs $\rightarrow$ machine hours $\rightarrow$ products

Question 15

The presence of any of the following factors would suggest a switch to ABC except when

Accepted Answer

A) product lines differ greatly in volume. 
B) overhead costs constitute a minor portion of total costs. 
C) the manufacturing process has changed significantly. 
D) production managers are ignoring data provided by the existing system. 
A) product lines differ greatly in volume. 
B) overhead costs constitute a minor portion of total costs. 
C) the manufacturing process has changed significantly. 
D) production managers are ignoring data provided by the existing system.

Question 16

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 17

Value-added activities

Accepted Answer

A) should be minimized or eliminated. 
B) involve those activities that are essential to a company's operations. 
C) add cost to a product without affecting selling price. 
D) cannot be differentiated from non-value-added activities. 
A) should be minimized or eliminated. 
B) involve those activities that are essential to a company's operations. 
C) add cost to a product without affecting selling price. 
D) cannot be differentiated from non-value-added activities.

Question 18

An example of a cost which would not be assigned to an overhead cost pool is

Accepted Answer

A) indirect salaries. 
B) freight-out. 
C) depreciation. 
D) supplies. 
A) indirect salaries. 
B) freight-out. 
C) depreciation. 
D) supplies.

Question 19

When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products.

Accepted Answer

A) True 
 B)False

Question 20

In traditional costing systems, overhead is generally applied based on

Accepted Answer

A) direct labor. 
B) machine hours. 
C) direct material dollars. 
D) units of production. 
A) direct labor. 
B) machine hours. 
C) direct material dollars. 
D) units of production.

Which of the following is a batch-level activity?

Under just-in-time processing, all of the following are received or completed "just in time" except

Just-in-time processing

ABC usually results in less appropriate management decisions.

The use of activity-based costing in service industries

Which of the following is a value-added activity?

Activities required to support or sustain an entire production process are called

Which of the following is a non-value-added activity?

The last step in activity-based costing is to

Assigning overhead using ABC will usually

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

Companies that switch to ABC often find they have

Which best describes the flow of overhead costs in an activity-based costing system?

The presence of any of the following factors would suggest a switch to ABC except when

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

Value-added activities

An example of a cost which would not be assigned to an overhead cost pool is

When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products.

In traditional costing systems, overhead is generally applied based on

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

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Exam 4: Accrual Accounting Concepts

Which of the following is a batch-level activity?

Under just-in-time processing, all of the following are received or completed "just in time" except

Just-in-time processing

ABC usually results in less appropriate management decisions.

The use of activity-based costing in service industries

Which of the following is a value-added activity?

Activities required to support or sustain an entire production process are called

Which of the following is a non-value-added activity?

The last step in activity-based costing is to

Assigning overhead using ABC will usually

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

Companies that switch to ABC often find they have

Which best describes the flow of overhead costs in an activity-based costing system?

The presence of any of the following factors would suggest a switch to ABC except when

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

Value-added activities

An example of a cost which would not be assigned to an overhead cost pool is

When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products.

In traditional costing systems, overhead is generally applied based on

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