Question 1

Activity-based costing systems assume that:

Accepted Answer

A)  Products consume overhead costs 
B)  Activities consume overhead costs 
C)  Overhead costs are insignificant 
D)  All of these are correct 
A)  Products consume overhead costs 
B)  Activities consume overhead costs 
C)  Overhead costs are insignificant 
D)  All of these are correct

Question 2

If activity-based costing is used, receiving docks would be classified as a:

Accepted Answer

A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity 
A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity

Question 3

Exhibit 17-3 Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
  The following information relates to each size of bird cage and next year's anticipated manufacturing operations:
  
-Refer to Exhibit 17-3. What is Bird's Eye View cost per cost driver for inspections for next year (rounded)?

Accepted Answer

A)  $1.18 per part 
B)  $3.58 per part 
C)  $10.74 per part 
D)  $11.48 per part 
A)  $1.18 per part 
B)  $3.58 per part 
C)  $10.74 per part 
D)  $11.48 per part

Question 4

Exhibit 17-3 Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
  The following information relates to each size of bird cage and next year's anticipated manufacturing operations:
 
- Refer to Exhibit 17-3. Under an activity-based costing system, what is the per unit cost for manufacturing overhead of a small cage (rounded)?

Accepted Answer

A)  $100 
B)  $119 
C)  $120 
D)  $151 
A)  $100 
B)  $119 
C)  $120 
D)  $151

Question 5

If a cost activity does NOT have any production-related cost driver that matches up with changes in the amount of overhead cost associated with the activity then:

Accepted Answer

A)  Any basis can be selected as a cost driver 
B)  Direct labor hours should be used as the cost driver 
C)  No cost driver should be selected; the costs should be treated as common costs 
D)  Number of items produced should be the cost driver. 
A)  Any basis can be selected as a cost driver 
B)  Direct labor hours should be used as the cost driver 
C)  No cost driver should be selected; the costs should be treated as common costs 
D)  Number of items produced should be the cost driver.

Question 6

Historically, a plant-wide manufacturing overhead rate would usually be assigned on the basis of:

Accepted Answer

A)  Either direct tracing of overhead or direct labor hours 
B)  Either direct labor hours or number of products produced 
C)  Either cost pools or cost drivers 
D)  Either cost drivers or direct tracing of overhead 
A)  Either direct tracing of overhead or direct labor hours 
B)  Either direct labor hours or number of products produced 
C)  Either cost pools or cost drivers 
D)  Either cost drivers or direct tracing of overhead

Question 7

Which of the following is the correct sequence of the five steps of implementing and using an activity-based costing system?

Accepted Answer

A)  Identify overhead cost activities, identify measurable cost drivers, assign overhead, analyze individual overhead costs in terms of those cost activities, and use the cost data to make decisions 
B)  Use the cost data to make decisions, analyze individual overhead costs in terms of those cost activities, identify measurable cost drivers, assign overhead, and identify overhead cost activities 
C)  Identify overhead cost activities, analyze individual overhead costs in terms of those cost activities, identify measurable cost drivers, assign overhead, and use the cost data to make decisions 
D)  Identify measurable cost drivers, assign overhead, identify overhead cost activities, analyze individual overhead costs in terms of those cost activities, and use the cost data to make decisions 
A)  Identify overhead cost activities, identify measurable cost drivers, assign overhead, analyze individual overhead costs in terms of those cost activities, and use the cost data to make decisions 
B)  Use the cost data to make decisions, analyze individual overhead costs in terms of those cost activities, identify measurable cost drivers, assign overhead, and identify overhead cost activities 
C)  Identify overhead cost activities, analyze individual overhead costs in terms of those cost activities, identify measurable cost drivers, assign overhead, and use the cost data to make decisions 
D)  Identify measurable cost drivers, assign overhead, identify overhead cost activities, analyze individual overhead costs in terms of those cost activities, and use the cost data to make decisions

Question 8

Exhibit 17-1 Maggie's Motors manufactures boat motors. Maggie is shifting from a traditional costing system to an activity-based costing system. She has started by identifying four overhead cost activities. Listed below is the table that Maggie created identifying the cost activities and the percentage of time spent on each activity by various factory employees.
  Maggie also gathered the total overhead cost associated with each factory employee which is shown below:
  
-Refer to Exhibit 17-1. Using the information above, compute the amount of the cost pool associated with repairing equipment.

Accepted Answer

A)  $88,500 
B)  $69,750 
C)  $85,000 
D)  $66,500 
A)  $88,500 
B)  $69,750 
C)  $85,000 
D)  $66,500

Question 9

If activity-based costing is used, purchase orders would be classified as a:

Accepted Answer

A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity 
A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity

Question 10

Exhibit 17-4 The Dormir Company uses an activity-based costing system to account for its process of manufacturing camping tents. Each tent has $140 of direct materials, includes 15 parts, and requires 3 hours of machine time. Information on conversion costs, manufacturing activities, and cost drivers is listed below.
 
- Refer to Exhibit 17-4. The cost of sewing per tent is:

Accepted Answer

A)  $20.00 
B)  $60.00 
C)  $160.00 
D)  $300.00 
A)  $20.00 
B)  $60.00 
C)  $160.00 
D)  $300.00

Question 11

Which of the following products usually consumes the highest amount of overhead costs per unit?

Accepted Answer

A)  High-volume standard products 
B)  Low-volume standard products 
C)  High-volume unique products 
D)  Low-volume unique products 
A)  High-volume standard products 
B)  Low-volume standard products 
C)  High-volume unique products 
D)  Low-volume unique products

Question 12

Exhibit 17-2 BigView Monitors manufactures three different sizes of computer monitors: 15-inch, 17-inch, and 20-inch. The company has recently implemented an activity-based costing system. BigView has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
  The following information relates to each size of monitor and next year's anticipated manufacturing operations:
  
-Refer to Exhibit 17-2. What is BigView's cost per cost driver for parts handling for next year (rounded)?

Accepted Answer

A)  $0.17 per part 
B)  $0.53 per part 
C)  $9.00 per part 
D)  $15.00 per part 
A)  $0.17 per part 
B)  $0.53 per part 
C)  $9.00 per part 
D)  $15.00 per part

Question 13

Exhibit 17-5 The following information is available for Dakota Company:
  *allocated based on direct labor hours
Dakota Company has decided to allocate its manufacturing overhead cost using activity-based costing. Manufacturing overhead will be allocated based on batch-level and product line manufacturing as follows:
  
-Refer to Exhibit 17-5. What is Dakota Company's gross margin for Product 2 using activity based costing?

Accepted Answer

A)  $300,000 
B)  $350,000 
C)  $480,000 
D)  $30,000 
A)  $300,000 
B)  $350,000 
C)  $480,000 
D)  $30,000

Question 14

Exhibit 17-5 The following information is available for Dakota Company:
  *allocated based on direct labor hours
Dakota Company has decided to allocate its manufacturing overhead cost using activity-based costing. Manufacturing overhead will be allocated based on batch-level and product line manufacturing as follows:
  
-Refer to Exhibit 17-5. What is Dakota Company's gross margin for Product 1 using activity based costing?

Accepted Answer

A)  $400,000 
B)  $370,000 
C)  $450,000 
D)  $520,000 
A)  $400,000 
B)  $370,000 
C)  $450,000 
D)  $520,000

Question 15

Exhibit 17-3 Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
  The following information relates to each size of bird cage and next year's anticipated manufacturing operations:
  
-Refer to Exhibit 17-3. Under an activity-based costing system, what is the per unit cost for manufacturing overhead of a large cage (rounded)?

Accepted Answer

A)  $100 
B)  $119 
C)  $120 
D)  $151 
A)  $100 
B)  $119 
C)  $120 
D)  $151

Question 16

Which of the following would most likely NOT be considered a facility support activity?

Accepted Answer

A)  Property taxes 
B)  Factory equipment 
C)  Depreciation on headquarters building 
D)  Executive salaries 
A)  Property taxes 
B)  Factory equipment 
C)  Depreciation on headquarters building 
D)  Executive salaries

Question 17

Custom Woods Inc. makes three different door styles for kitchen cabinets: standard, flat panel, and raised panel. The following information is provided about the company's costs:

Accepted Answer

The answer of Custom Woods Inc. makes three different door...

Question 18

When assigning cost drivers to facility support activities, an appropriate cost driver would be:

Accepted Answer

A)  Production output 
B)  Labor hours 
C)  Floor space 
D)  No cost driver should be assigned 
A)  Production output 
B)  Labor hours 
C)  Floor space 
D)  No cost driver should be assigned

Question 19

Activity-based costing deals with the allocation of:

Accepted Answer

A)  Direct labor costs 
B)  Manufacturing overhead costs 
C)  Direct material costs 
D)  Indirect materials costs 
A)  Direct labor costs 
B)  Manufacturing overhead costs 
C)  Direct material costs 
D)  Indirect materials costs

Question 20

Usually activity-based costing would be significantly more accurate than traditional product costing in a:

Accepted Answer

A)  One-product firm 
B)  Multiple-product firm that has separate manufacturing facilities for each product 
C)  Multiple-product firm where products are quite similar 
D)  Multiple-product firm where products are quite different 
A)  One-product firm 
B)  Multiple-product firm that has separate manufacturing facilities for each product 
C)  Multiple-product firm where products are quite similar 
D)  Multiple-product firm where products are quite different

Activity-based costing systems assume that:

If activity-based costing is used, receiving docks would be classified as a:

If a cost activity does NOT have any production-related cost driver that matches up with changes in the amount of overhead cost associated with the activity then:

Historically, a plant-wide manufacturing overhead rate would usually be assigned on the basis of:

Which of the following is the correct sequence of the five steps of implementing and using an activity-based costing system?

If activity-based costing is used, purchase orders would be classified as a:

Which of the following products usually consumes the highest amount of overhead costs per unit?

Which of the following would most likely NOT be considered a facility support activity?

Custom Woods Inc. makes three different door styles for kitchen cabinets: standard, flat panel, and raised panel. The following information is provided about the company's costs:

When assigning cost drivers to facility support activities, an appropriate cost driver would be:

Activity-based costing deals with the allocation of:

Usually activity-based costing would be significantly more accurate than traditional product costing in a:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters

Exam 17: Activity-Based Costing

Activity-based costing systems assume that:

If activity-based costing is used, receiving docks would be classified as a:

If a cost activity does NOT have any production-related cost driver that matches up with changes in the amount of overhead cost associated with the activity then:

Historically, a plant-wide manufacturing overhead rate would usually be assigned on the basis of:

Which of the following is the correct sequence of the five steps of implementing and using an activity-based costing system?

If activity-based costing is used, purchase orders would be classified as a:

Which of the following products usually consumes the highest amount of overhead costs per unit?

Which of the following would most likely NOT be considered a facility support activity?

Custom Woods Inc. makes three different door styles for kitchen cabinets: standard, flat panel, and raised panel. The following information is provided about the company's costs:

When assigning cost drivers to facility support activities, an appropriate cost driver would be:

Activity-based costing deals with the allocation of:

Usually activity-based costing would be significantly more accurate than traditional product costing in a:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters