Question 1

In the early days of the industrial revolution,indirect manufacturing costs:

Accepted Answer

A)  were a significant cost of producing most products. 
B)  were relatively large compared to the direct costs of producing a product. 
C)  were highly correlated with the use of labor. 
D)  were largely fixed. 
A)  were a significant cost of producing most products. 
B)  were relatively large compared to the direct costs of producing a product. 
C)  were highly correlated with the use of labor. 
D)  were largely fixed.

Question 2

The minimum amount of total quality costs is achieved when the:

Accepted Answer

A)  marginal voluntary expenditures exceed marginal failure costs. 
B)  marginal voluntary expenditures equal the marginal savings on failure costs. 
C)  marginal voluntary expenditures are less than the marginal savings on failure costs. 
D)  none of the other answers are correct. 
A)  marginal voluntary expenditures exceed marginal failure costs. 
B)  marginal voluntary expenditures equal the marginal savings on failure costs. 
C)  marginal voluntary expenditures are less than the marginal savings on failure costs. 
D)  none of the other answers are correct.

Question 3

Select the term from the list provided that best matches each of the following descriptions.

Accepted Answer

Answers wi

Question 4

Most companies allocate facility-level activity costs directly to products for decision-making purposes.

Accepted Answer

A) True 
 B)False

Question 5

Indicate whether each of the following statements is

Accepted Answer

If a company-wide overhead rate undercos

Question 6

Benitez Company makes wicker and wooden slat picnic baskets.It requires approximately 1 hour of labor to make one basket of either type.Wicker baskets are produced in batches of 100 units and require 0.5 machine hours per basket.Wooden slat baskets are produced in batches of 50 units and require 0.75 machine hours per basket.Setup is required for each batch.During the most recent accounting period,the company made 8,000 wicker baskets and 2,000 wooden slat baskets.Setup costs amounted to $24,000 for the baskets produced during the period.If activity-based costing is used to allocate overhead costs to the two products,the amount of setup cost assigned to the wicker baskets will be:

Accepted Answer

A)  $17,455. 
B)  $19,200. 
C)  $12,000. 
D)  $16,000. 
A)  $17,455. 
B)  $19,200. 
C)  $12,000. 
D)  $16,000.

Question 7

Sales commissions are an example of:

Accepted Answer

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

Question 8

Indicate whether each of the following statements is

Accepted Answer

In an activity-based costing system,the

Question 9

Miller Company makes two types of chairs.One of the chairs is a rocking chair.The other is a straight-back chair.Both chairs are made by hand.Miller Company uses a company-wide overhead rate that is based on direct labor hours to assign overhead costs to the two products.If Miller automates the production of straight-back chairs and continues to use direct labor hours as a company-wide allocation basis:

Accepted Answer

A)  rocking chairs will be overcosted. 
B)  straight back chairs will be overcosted. 
C)  rocking chairs will be undercosted. 
D)  there should be no impact on unit cost. 
A)  rocking chairs will be overcosted. 
B)  straight back chairs will be overcosted. 
C)  rocking chairs will be undercosted. 
D)  there should be no impact on unit cost.

Question 10

Supply Depot produces a variety of office products including two models (standard and deluxe)of a hand-held stapler.A number of the company's activity-related costs are described in the following table: $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Description of Cost } & \text { Lnit-Level } & \text { Bateh-Level } & \text { Product-Level } & \text { Facillty-Level } \
\hline \text { Factory rent } & & & & \
\hline \begin{array} { l } 
\text { Costs associated with setting up the machinery to } \
\text { produce a run of the deluxe stapler model }
\end{array} & & & \
\hline \text { Direct materials } & & & & \
\hline \text { Factory depreciation } & & & & \
\hline \text { Costs of supplies used in production } & & & \
\hline \begin{array} { l } 
\text { Costs of ordering materials for the standard stapler } \
\text { product }
\end{array} & & & & \
\hline \text { Direct labor } & & & & \
\hline \text { Inventory holding costs } & & & & \
\hline \text { Salary of the company CEO } & & & & \
\hline \text { Engineering support costs } & & & & \
\hline
\end{array}$$ Required:
Classify each of the above costs into unit,batch,product,or facility-level cost pools.

Accepted Answer

Answers will vary
Feedback: \[\begin{arr

Question 11

The first step in implementing an activity-based costing system is to trace overhead costs to one or more departments.

Accepted Answer

A) True 
 B)False

Question 12

When making a long-term cost plus pricing decision,a company should consider:

Accepted Answer

A)  the upstream research and development cost. 
B)  the allocated portion of facility-level cost. 
C)  the direct manufacturing cost. 
D)  All of these answers are correct. 
A)  the upstream research and development cost. 
B)  the allocated portion of facility-level cost. 
C)  the direct manufacturing cost. 
D)  All of these answers are correct.

Question 13

An increase in prevention costs will often reduce a firm's overall costs of quality.

Accepted Answer

A) True 
 B)False

Question 14

ABX Company produces two types of computer speakers.The Prestige line is made to provide excellent sound for the most demanding applications.The Standard line is geared toward workplace use and delivers average performance.During its most recent accounting period,the company incurred $50,000 of inspection costs.Its production activities were classified into four cost centers,unit-level,batch-level,product-level,and facility-level.The following cost and cost driver information is provided for the unit-level and batch-level cost centers: $$\begin{array} { | l | r | r | } 
\hline \text { Cost-Center: } & \text { Unit-Level } & \text { Batch-Level } \
\hline &  \
\hline \text { Cost Driver. } &\text { Number of direct labor hours } & \text { Number of batches } \
\hline \text { Prestige Product } & 4,000 & 15  \
\hline \text { Standard Product } &\underline { 6,000 } &5 \
\hline{ \text { Totals } } &  \underline { 10,000 } &20 \
\hline & &
\end{array}$$
 Required:
1)Allocate the inspection cost between the two products assuming the inspection cost is driven by a)only unit-level activities;b)only batch-level activities.
2)How should managers of the company determine which allocation is more appropriate?

Accepted Answer

Answers will vary
Feedback: 1)The two al

Question 15

Chastain Company recently implemented an activity-based-costing system.As a result of the ABC allocations,the cost of one of the company's products was determined to be above its current selling price.Due to competition,the company is unable to raise the price of this product.Which of the following options is most reasonable,assuming Chastain employs a target costing pricing strategy?

Accepted Answer

A)  Use less expensive materials to make the product. 
B)  Raise prices under the assumption that the company's competitors will follow suit. 
C)  Target advertising to high income customers. 
D)  Return to the old allocation method which produces a lower amount of estimated cost. 
A)  Use less expensive materials to make the product. 
B)  Raise prices under the assumption that the company's competitors will follow suit. 
C)  Target advertising to high income customers. 
D)  Return to the old allocation method which produces a lower amount of estimated cost.

Question 16

Actions or units of work undertaken by an organization to accomplish its mission are referred to as:

Accepted Answer

A)  costs. 
B)  work in process. 
C)  activities. 
D)  cost objects. 
A)  costs. 
B)  work in process. 
C)  activities. 
D)  cost objects.

Question 17

Costs incurred to avoid nonconforming products are:

Accepted Answer

A)  prevention costs. 
B)  appraisal costs. 
C)  failure costs. 
D)  voluntary costs. 
A)  prevention costs. 
B)  appraisal costs. 
C)  failure costs. 
D)  voluntary costs.

Question 18

Gavin Company has asked its management accountant to prepare a cost of quality report.Management is concerned that quality costs are too high relative to the company's sales.Sales in 2013 Year 1 totaled $400,000,while sales in 2014 Year 2 were $500,000.
Just a ?,Why do you have Year 1 listed first and then Year 1 and then in the tables you request that they be listed as Year 2 first and then Year 1? This is a little confusing when trying to transfer numbers.
Just another observation,here
I think a/c misunderstood ins

Accepted Answer

Answers will vary
Feedback: 1)Quality Co

Question 19

Which of the following is the most appropriate cost driver for maintaining parts inventory?

Accepted Answer

A)  Number of parts for a product 
B)  Direct labor hours 
C)  Sales dollars 
D)  Number of setups 
A)  Number of parts for a product 
B)  Direct labor hours 
C)  Sales dollars 
D)  Number of setups

Question 20

Select the incorrect statement from the following.

Accepted Answer

A)  If overhead costs are allocated on the basis of activities,the amount of overhead allocated to a particular product can be reduced by increasing the number of activities required by the product,thereby spreading the overhead costs over more units. 
B)  Activity costs are considered relevant for decision making because the cost of an activity will be avoided if the activity is eliminated. 
C)  In highly automated environments where companies produce many different products with varying levels of production,activity-based cost drivers are superior to volume-based drivers. 
D)  Activity-based cost drivers produce a better cost allocation than volume-based drivers because they distribute only relevant costs to the appropriate products. 
A)  If overhead costs are allocated on the basis of activities,the amount of overhead allocated to a particular product can be reduced by increasing the number of activities required by the product,thereby spreading the overhead costs over more units. 
B)  Activity costs are considered relevant for decision making because the cost of an activity will be avoided if the activity is eliminated. 
C)  In highly automated environments where companies produce many different products with varying levels of production,activity-based cost drivers are superior to volume-based drivers. 
D)  Activity-based cost drivers produce a better cost allocation than volume-based drivers because they distribute only relevant costs to the appropriate products.

In the early days of the industrial revolution,indirect manufacturing costs:

The minimum amount of total quality costs is achieved when the:

Select the term from the list provided that best matches each of the following descriptions.

Most companies allocate facility-level activity costs directly to products for decision-making purposes.

Indicate whether each of the following statements is

Sales commissions are an example of:

Indicate whether each of the following statements is

The first step in implementing an activity-based costing system is to trace overhead costs to one or more departments.

When making a long-term cost plus pricing decision,a company should consider:

An increase in prevention costs will often reduce a firm's overall costs of quality.

Actions or units of work undertaken by an organization to accomplish its mission are referred to as:

Costs incurred to avoid nonconforming products are:

Which of the following is the most appropriate cost driver for maintaining parts inventory?

Select the incorrect statement from the following.

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 5: Cost Management in an Automated Business Environment: ABC, ABM, and TQM

In the early days of the industrial revolution,indirect manufacturing costs:

The minimum amount of total quality costs is achieved when the:

Select the term from the list provided that best matches each of the following descriptions.

Most companies allocate facility-level activity costs directly to products for decision-making purposes.

Indicate whether each of the following statements is

Sales commissions are an example of:

Indicate whether each of the following statements is

The first step in implementing an activity-based costing system is to trace overhead costs to one or more departments.

When making a long-term cost plus pricing decision,a company should consider:

An increase in prevention costs will often reduce a firm's overall costs of quality.

Actions or units of work undertaken by an organization to accomplish its mission are referred to as:

Costs incurred to avoid nonconforming products are:

Which of the following is the most appropriate cost driver for maintaining parts inventory?

Select the incorrect statement from the following.

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters