Question 1

Consumption ratios are useful in determining the existence of product-line diversity.

Accepted Answer

A) True 
 B)False

Question 2

Factory Oak produces various wooden bookcases,tables,storage units,and chairs.Which of the following would be included in a listing of the company's non-value-added activities?

Accepted Answer

A) Assembly of tables. 
B) Staining of storage units. 
C) Transfer of chairs from the assembly line to the staining facility. 
D) Storage of completed bookcases in inventory. 
E) Both "C" and "D." 
A) Assembly of tables. 
B) Staining of storage units. 
C) Transfer of chairs from the assembly line to the staining facility. 
D) Storage of completed bookcases in inventory. 
E) Both "C" and "D."

Question 3

Consider the following statements:
I.Product diversity creates costing problems because diverse products tend to utilize manufacturing activities in different ways.
II.Overhead costs that are not incurred at the unit level create costing problems because such costs do not vary with traditional application bases such as direct labor hours or machine hours.
III.Product diversity typically exists when a single product (e.g. ,a ballpoint pen)is made in different colors.
Which of the above statements is (are)true?

Accepted Answer

A) I only. 
B) II only. 
C) I and II. 
D) I and III. 
E) II and III. 
A) I only. 
B) II only. 
C) I and II. 
D) I and III. 
E) II and III.

Question 4

Consider the nine activities that follow.
1.Microsoft: Developing computer coding for a new spreadsheet package.
2.General Mills: Painting the office of a maintenance supervisor at a plant that produces cereal.
3.Mayo Clinic: Examining a new patient.
4.American Airlines: The 90 minutes that a Boeing 757 sits idle on the ground between flights.
5.Office Depot: Moving cases of paper from one location to another in the same warehouse.
6.Rolex: Attaching a watch band to the watch's face.
7.United States Postal Service: Reprocessing mail that had been sorted incorrectly on a malfunctioning sorting machine.
8.Fidelity Investments: Correcting errors made by company personnel in customer accounts.
9.Marriott: Upgrading the quality of bedding used at hotels in very competitive marketplaces.
Required:
Categorize each of the activities as either value-added or non-value-added for the
companies noted.

Accepted Answer

The answer of Consider the nine activities that follow.
1.Microsoft: Developing...

Question 5

The salaries of a manufacturing plant's management are said to arise from:

Accepted Answer

A) unit-level activities. 
B) batch-level activities. 
C) product-sustaining activities. 
D) facility-level activities. 
E) direct-cost activities. 
A) unit-level activities. 
B) batch-level activities. 
C) product-sustaining activities. 
D) facility-level activities. 
E) direct-cost activities.

Question 6

Which of the following choices correctly depicts a cost that arises from a batch-level activity and one that arises from a facility-level activity?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Question 7

Customer profitability analysis is tied closely to:

Accepted Answer

A) just-in-time systems. 
B) activity-based costing. 
C) job costing. 
D) process costing. 
E) operation costing. 
A) just-in-time systems. 
B) activity-based costing. 
C) job costing. 
D) process costing. 
E) operation costing.

Question 8

When a company adopts a just-in-time inventory system,it would expect:

Accepted Answer

A) higher inventories and less frequent purchases. 
B) higher inventories and more frequent purchases. 
C) lower inventories and less frequent purchases. 
D) lower inventories and more frequent purchases. 
E) lower inventories and more units purchased on a given order. 
A) higher inventories and less frequent purchases. 
B) higher inventories and more frequent purchases. 
C) lower inventories and less frequent purchases. 
D) lower inventories and more frequent purchases. 
E) lower inventories and more units purchased on a given order.

Question 9

Alaina's customer service department follows up on customer complaints by telephone inquiry.During a recent period,the department initiated 10,000 calls and incurred costs of $312,000.Of these calls,3,800 were for the company's wholesale operation;the remainder were for the retail division.Costs allocated to the wholesale operation are:

Accepted Answer

A) $0. 
B) $31,200. 
C) $118,560. 
D) $193,440. 
E) $203,000. 
A) $0. 
B) $31,200. 
C) $118,560. 
D) $193,440. 
E) $203,000.

Question 10

A company that adopts a just-in-time production system would attempt to reduce and/or eliminate:

Accepted Answer

A) raw-material inventory. 
B) raw-material inventory and work-in-process inventory. 
C) raw-material inventory,work-in-process inventory,and finished-goods inventory. 
D) work-in-process inventory. 
E) finished-goods inventory. 
A) raw-material inventory. 
B) raw-material inventory and work-in-process inventory. 
C) raw-material inventory,work-in-process inventory,and finished-goods inventory. 
D) work-in-process inventory. 
E) finished-goods inventory.

Question 11

Many traditional costing systems:

Accepted Answer

A) trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates. 
B) write off manufacturing overhead as an expense of the current period. 
C) combine widely varying elements of overhead into a single cost pool. 
D) use a host of different cost drivers (e.g. ,number of production setups,inspection hours,orders processed)to improve the accuracy of product costing. 
E) produce results far superior to those achieved with activity-based costing. 
A) trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates. 
B) write off manufacturing overhead as an expense of the current period. 
C) combine widely varying elements of overhead into a single cost pool. 
D) use a host of different cost drivers (e.g. ,number of production setups,inspection hours,orders processed)to improve the accuracy of product costing. 
E) produce results far superior to those achieved with activity-based costing.

Question 12

Which of the following is the proper sequence of events in an activity-based costing system?

Accepted Answer

A) Identification of cost drivers,identification of cost pools,calculation of pool rates,assignment of cost to products. 
B) Identification of cost pools,identification of cost drivers,calculation of pool rates,assignment of cost to products. 
C) Assignment of cost to products,identification of cost pools,identification of cost drivers,calculation of pool rates. 
D) Calculation of pool rates,identification of cost drivers,identification of cost pools,assignment of cost to products. 
E) Some other sequence of the four activities listed abovE. 
A) Identification of cost drivers,identification of cost pools,calculation of pool rates,assignment of cost to products. 
B) Identification of cost pools,identification of cost drivers,calculation of pool rates,assignment of cost to products. 
C) Assignment of cost to products,identification of cost pools,identification of cost drivers,calculation of pool rates. 
D) Calculation of pool rates,identification of cost drivers,identification of cost pools,assignment of cost to products. 
E) Some other sequence of the four activities listed abovE.

Question 13

Under an activity-based costing system,what is the per-unit overhead cost of Economy?

Accepted Answer

A) $141. 
B) $164. 
C) $225. 
D) $228. 
E) An amount other than those listed abovE. 
A) $141. 
B) $164. 
C) $225. 
D) $228. 
E) An amount other than those listed abovE.

Question 14

Dreyson Manufacturing sells a number of goods whose selling price is heavily influenced by cost.A recent study of product no.519 revealed a traditionally-derived total cost of $1,019,a selling price of $1,850 based on that figure,and a newly computed activity-based total cost of $1,215.Which of the following statements is true?

Accepted Answer

A) All other things being equal,the company should consider a drop in its sales price. 
B) The company may have been extremely competitive in the marketplace from a price perspective. 
C) Product no.519 could be labeled as being overcosted by the firm's traditional costing procedures. 
D) If product no.519 is undercosted by traditional accounting procedures,then all of the company's other products must be undercosted as well. 
E) Generally speaking,the activity-based cost figure is "less accurate" than the traditionally-derived cost figurE. 
A) All other things being equal,the company should consider a drop in its sales price. 
B) The company may have been extremely competitive in the marketplace from a price perspective. 
C) Product no.519 could be labeled as being overcosted by the firm's traditional costing procedures. 
D) If product no.519 is undercosted by traditional accounting procedures,then all of the company's other products must be undercosted as well. 
E) Generally speaking,the activity-based cost figure is "less accurate" than the traditionally-derived cost figurE.

Question 15

Generally speaking,companies prefer doing business with customers who:

Accepted Answer

A) order small quantities rather than large quantities. 
B) often change their orders. 
C) require special packaging or handling. 
D) request normal delivery times. 
E) need specialized engineering design changes. 
A) order small quantities rather than large quantities. 
B) often change their orders. 
C) require special packaging or handling. 
D) request normal delivery times. 
E) need specialized engineering design changes.

Question 16

An example of a customer-value-added activity is:

Accepted Answer

A) final painting and polishing of the product. 
B) installation of a computerized human resource management module. 
C) shortening the customers' billing cycle. 
D) addition of an employee hotline for workplace complaints. 
E) maintenance of an adequate safety stock. 
A) final painting and polishing of the product. 
B) installation of a computerized human resource management module. 
C) shortening the customers' billing cycle. 
D) addition of an employee hotline for workplace complaints. 
E) maintenance of an adequate safety stock.

Question 17

Storch Corporation takes eight hours to complete the setup process for a certain electrical component,with the setup cost averaging $150 per hour.If the company's competitor can accomplish the same process in six hours,Stanley's non-value-added cost would be:

Accepted Answer

A) $0. 
B) $150. 
C) $300. 
D) $900. 
E) $1,200. 
A) $0. 
B) $150. 
C) $300. 
D) $900. 
E) $1,200.

Question 18

Which of the following is least likely to be classified as a batch-level activity in an activity-based costing system?

Accepted Answer

A) Shipping. 
B) Receiving and inspection. 
C) Production setup. 
D) Property taxes. 
E) Quality assurancE. 
A) Shipping. 
B) Receiving and inspection. 
C) Production setup. 
D) Property taxes. 
E) Quality assurancE.

Question 19

Successful adoptions of activity-based costing typically occur when companies rely heavily on:

Accepted Answer

A) finance personnel. 
B) accounting personnel. 
C) manufacturing personnel. 
D) office personnel. 
E) multidisciplinary project teams. 
A) finance personnel. 
B) accounting personnel. 
C) manufacturing personnel. 
D) office personnel. 
E) multidisciplinary project teams.

Question 20

When a company switches from a traditional system to a just-in-time production and inventory system,what often happens to the quality of raw material purchased and the number of vendors that supply the firm?

Accepted Answer

A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E 
A) Choice A 
B) Choice B 
C) Choice C 
D) Choice D 
E) Choice E

Consumption ratios are useful in determining the existence of product-line diversity.

Factory Oak produces various wooden bookcases,tables,storage units,and chairs.Which of the following would be included in a listing of the company's non-value-added activities?

The salaries of a manufacturing plant's management are said to arise from:

Which of the following choices correctly depicts a cost that arises from a batch-level activity and one that arises from a facility-level activity?

Customer profitability analysis is tied closely to:

When a company adopts a just-in-time inventory system,it would expect:

A company that adopts a just-in-time production system would attempt to reduce and/or eliminate:

Many traditional costing systems:

Which of the following is the proper sequence of events in an activity-based costing system?

Under an activity-based costing system,what is the per-unit overhead cost of Economy?

Generally speaking,companies prefer doing business with customers who:

An example of a customer-value-added activity is:

Storch Corporation takes eight hours to complete the setup process for a certain electrical component,with the setup cost averaging $150 per hour.If the company's competitor can accomplish the same process in six hours,Stanley's non-value-added cost would be:

Which of the following is least likely to be classified as a batch-level activity in an activity-based costing system?

Successful adoptions of activity-based costing typically occur when companies rely heavily on:

When a company switches from a traditional system to a just-in-time production and inventory system,what often happens to the quality of raw material purchased and the number of vendors that supply the firm?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters

Exam 5: Activity-Based Costing and Management

Consumption ratios are useful in determining the existence of product-line diversity.

Factory Oak produces various wooden bookcases,tables,storage units,and chairs.Which of the following would be included in a listing of the company's non-value-added activities?

The salaries of a manufacturing plant's management are said to arise from:

Which of the following choices correctly depicts a cost that arises from a batch-level activity and one that arises from a facility-level activity?

Customer profitability analysis is tied closely to:

When a company adopts a just-in-time inventory system,it would expect:

A company that adopts a just-in-time production system would attempt to reduce and/or eliminate:

Many traditional costing systems:

Which of the following is the proper sequence of events in an activity-based costing system?

Under an activity-based costing system,what is the per-unit overhead cost of Economy?

Generally speaking,companies prefer doing business with customers who:

An example of a customer-value-added activity is:

Storch Corporation takes eight hours to complete the setup process for a certain electrical component,with the setup cost averaging $150 per hour.If the company's competitor can accomplish the same process in six hours,Stanley's non-value-added cost would be:

Which of the following is least likely to be classified as a batch-level activity in an activity-based costing system?

Successful adoptions of activity-based costing typically occur when companies rely heavily on:

When a company switches from a traditional system to a just-in-time production and inventory system,what often happens to the quality of raw material purchased and the number of vendors that supply the firm?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts and Accounting for Mass Customization Operations

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity Analysis,cost Behavior,and Cost Estimation

Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Cost-Volume-Profit Analysis

Absorption and Variable Costing

Profit Planning and Activity-Based Budgeting

Standard Costing,Operational Performance Measures,and the Balanced Scorecard

Flexible Budgeting and the Management of Overhead and Support Activity Costs

Responsibility Accounting, Quality Control, and Environmental Cost Management

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

compound Interest and the Concept of Present Value

Inventory Management

Filters