Question 1

Which of the following is a value-added activity?

Accepted Answer

A) Inventory control 
B) Inspections 
C) Packaging 
D) Repair of machines 
A) Inventory control 
B) Inspections 
C) Packaging 
D) Repair of machines

Question 2

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 3

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 Case 165 using activity-based costing is

Accepted Answer

A) $3,840,000. 
B) $4,608,000. 
C) $4,992,000. 
D) $6,000,000. 
A) $3,840,000. 
B) $4,608,000. 
C) $4,992,000. 
D) $6,000,000.

Question 4

Which of the following statements is false?

Accepted Answer

A) ABC can weaken control over overhead costs. 
B) Under ABC, companies can trace many overhead costs directly to activities. 
C) ABC allows some indirect costs to be identified as direct costs. 
D) managers become more aware of their responsibility to control the activities that generate costs. 
A) ABC can weaken control over overhead costs. 
B) Under ABC, companies can trace many overhead costs directly to activities. 
C) ABC allows some indirect costs to be identified as direct costs. 
D) managers become more aware of their responsibility to control the activities that generate costs.

Question 5

All of the following statements are correct except that

Accepted Answer

A) activity-based costing has been widely adopted in service industries. 
B) the objective of installing ABC in service firms is different than it is in a manufacturing firm. 
C) a larger proportion of overhead costs are company-wide costs in service industries. 
D) the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company. 
A) activity-based costing has been widely adopted in service industries. 
B) the objective of installing ABC in service firms is different than it is in a manufacturing firm. 
C) a larger proportion of overhead costs are company-wide costs in service industries. 
D) the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company.

Question 6

Just-in-time processing

Accepted Answer

A) is based on a just-in-case philosophy. 
B) results in higher inventory amounts. 
C) eliminates the push approach. 
D) all of the above. 
A) is based on a just-in-case philosophy. 
B) results in higher inventory amounts. 
C) eliminates the push approach. 
D) all of the above.

Question 7

Current trends in manufacturing include less direct labor and more overhead.

Accepted Answer

A) True 
 B)False

Question 8

A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing.The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge.The following data are available: $$\begin{array}{l}
\begin{array} { l c r } 
\text { Department } & \text { Expected Use of Driver } &  { \text { Cost } } \
\text { Processing } & 800 & \$ 1,500,000 \
\text { Packaging } & 200,000 & 1,500,000 \
\text { Testing } & 2,000 & 600,000
\end{array}\
\text { Production information for the two products is as follows: }\\
\begin{array}{ll}
&\text { Oil }&\text { Sludae }\\text { Department }&\text { Expected Use of Driver }&\text { Expected Use of Driver }\\hline \text { Processing } & 300 & 500 \
\text { Packaging } & 120,000 & 80,000 \
\text { Testing } & 1,600 & 400
\end{array}
\end{array}$$ The amount of overhead assigned to Oil using ABC is

Accepted Answer

A) $1,800,000. 
B) $1,942,500. 
C) $1,657,500. 
D) $1,380,000. 
A) $1,800,000. 
B) $1,942,500. 
C) $1,657,500. 
D) $1,380,000.

Question 9

Activity-based costing

Accepted Answer

A) allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers. 
B) accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. 
C) assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. 
D) allocates overhead directly to products and services based on activity levels. 
A) allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers. 
B) accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. 
C) assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. 
D) allocates overhead directly to products and services based on activity levels.

Question 10

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

Accepted Answer

A) More cost pools 
B) Less control over overhead costs 
C) Poorer management decisions 
D) Some arbitrary allocations continue 
A) More cost pools 
B) Less control over overhead costs 
C) Poorer management decisions 
D) Some arbitrary allocations continue

Question 11

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

Question 12

One of Matheny Company's activity cost pools is inspecting, with estimated overhead of $200,000.Matheny produces throw rugs (700 inspections) and area rugs (1,300 inspections).How much of the inspecting cost pool should be assigned to throw rugs?

Accepted Answer

A) $70,000. 
B) $100,000. 
C) $107,692. 
D) $200,000. 
A) $70,000. 
B) $100,000. 
C) $107,692. 
D) $200,000.

Question 13

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:

Accepted Answer

A) machine hours. 
B) number of setups. 
C) number of purchase orders. 
D) number of inspection tests. 
A) machine hours. 
B) number of setups. 
C) number of purchase orders. 
D) number of inspection tests.

Question 14

As compared to a high-volume product, a low-volume product

Accepted Answer

A) usually requires less special handling. 
B) is usually responsible for more overhead costs per unit. 
C) requires relatively fewer machine setups. 
D) requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead. 
A) usually requires less special handling. 
B) is usually responsible for more overhead costs per unit. 
C) requires relatively fewer machine setups. 
D) requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead.

Question 15

Which of the following is a limitation of just-in-time processing?

Accepted Answer

A) Significant reduction of manufacturing inventories 
B) Less emphasis on product quality 
C) Higher production costs 
D) None of the above 
A) Significant reduction of manufacturing inventories 
B) Less emphasis on product quality 
C) Higher production costs 
D) None of the above

Question 16

Value-added activities

Accepted Answer

A) increase the perceived worth of a product or service to customers. 
B) involve those activities that are essential to a company's operations. 
C) include engineering design, machining, and assembly. 
D) all of the above. 
A) increase the perceived worth of a product or service to customers. 
B) involve those activities that are essential to a company's operations. 
C) include engineering design, machining, and assembly. 
D) all of the above.

Question 17

Younger, Inc.manufactures recliners for the hotel industry.It has two products, the Heater and the Massager, and total overhead is $3,160,000.The company plans to manufacture 400 Heaters and 100 Massagers this year.In manufacturing the recliners, the company must perform 600 material moves for the Heater and 400 for the Massager; it processes 900 purchase orders for the Heater and 700 for the Massager; and the company's employees work 1,400 direct labor hours on the Heater product and 3,400 on the Massager.Younger's total material handling costs are $2,000,000 and its total processing costs are $1,160,000.Using ABC, how much overhead would be assigned to the Heater product?

Accepted Answer

A) $1,580,000 
B) $1,852,500 
C) $1,307,500 
D) $2,238,332 
A) $1,580,000 
B) $1,852,500 
C) $1,307,500 
D) $2,238,332

Question 18

Which of the following is a batch-level activity?

Accepted Answer

A) Plant management 
B) Product design 
C) Equipment setups 
D) Assembling 
A) Plant management 
B) Product design 
C) Equipment setups 
D) Assembling

Question 19

Which of the following is true about activity-based costing?

Accepted Answer

A) Less cost pools 
B) Same base as traditional costing 
C) More costly to use 
D) Eliminates arbitrary allocations 
A) Less cost pools 
B) Same base as traditional costing 
C) More costly to use 
D) Eliminates arbitrary allocations

Question 20

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

Accepted Answer

A) True 
 B)False

Which of the following is a value-added activity?

Predetermined overhead rates in traditional costing are often based on

Which of the following statements is false?

All of the following statements are correct except that

Just-in-time processing

Current trends in manufacturing include less direct labor and more overhead.

Activity-based costing

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

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.

One of Matheny Company's activity cost pools is inspecting, with estimated overhead of $200,000.Matheny produces throw rugs (700 inspections) and area rugs (1,300 inspections).How much of the inspecting cost pool should be assigned to throw rugs?

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:

As compared to a high-volume product, a low-volume product

Which of the following is a limitation of just-in-time processing?

Value-added activities

Which of the following is a batch-level activity?

Which of the following is true about activity-based costing?

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

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 value-added activity?

Predetermined overhead rates in traditional costing are often based on

Which of the following statements is false?

All of the following statements are correct except that

Just-in-time processing

Current trends in manufacturing include less direct labor and more overhead.

Activity-based costing

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

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.

One of Matheny Company's activity cost pools is inspecting, with estimated overhead of $200,000.Matheny produces throw rugs (700 inspections) and area rugs (1,300 inspections).How much of the inspecting cost pool should be assigned to throw rugs?

An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:

As compared to a high-volume product, a low-volume product

Which of the following is a limitation of just-in-time processing?

Value-added activities

Which of the following is a batch-level activity?

Which of the following is true about activity-based costing?

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

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