Question 1

What is the purpose of driver analysis?

Accepted Answer

A) to identify activities in a process 
B) to identify the number of processes 
C) to identify root causes of activity costs 
D) to identify the complexity of processes 
A) to identify activities in a process 
B) to identify the number of processes 
C) to identify root causes of activity costs 
D) to identify the complexity of processes

Question 2

What responsibility accounting system would be developed for operations in a continuous improvement environment?

Accepted Answer

A) financial-based responsibility accounting 
B) functional-based responsibility accounting 
C) activity-based responsibility accounting 
D) strategy-based responsibility accounting 
A) financial-based responsibility accounting 
B) functional-based responsibility accounting 
C) activity-based responsibility accounting 
D) strategy-based responsibility accounting

Question 3

A company has 20 days of finished goods inventory on hand to avoid stockouts.The carrying costs of the inventory average $5,000 per day.What are the non-value-added costs?

Accepted Answer

A) $100,000 
B) $10,000 
C) $5,000 
D) $250 
A) $100,000 
B) $10,000 
C) $5,000 
D) $250

Question 4

Nicolo Manufacturing has developed the following standards for its activities:
 $$\begin{array} { l c c c r } 
\text { Activity } & \text { Activity Driver } & \mathbf { S Q } & \mathbf { A Q } & \mathbf { S P } \
\text { Materials usage } & \text { Metres } & 48,000 & 50,000 & \$ 6 \
\text { Purchasing } & \text { Purchase orders } & 1,000 & 1,200 & \$ 50 \
\text { Inspection } & \text { Inspection hours } & 0 & 6,000 & \$ 12
\end{array}$$ Assume the materials usage and purchasing costs correspond to flexible resources that are acquired as needed and that inspections use resources that are acquired in blocks of 2,000 hours.The actual prices paid for inputs equal the standard prices. 
a.Assume that continuous improvement efforts reduce the demand for inspection by 30 percent during the year,which drops the actual activity usage by 30 percent.Calculate the volume and unused capacity variances for inspection activity,materials usage,and purchasing.Explain the meaning of these variances.
b.Prepare a cost report that shows the value- and non-value-added costs.
c.If Nicolo wants to reduce all non-value added costs by 30 percent,what kaizen standards would be used to evaluate the company's progress? What would be the savings in resource spending?

Accepted Answer

a.@#IMG-DLM& 
The activity volume variance is a no

Question 5

What are the results or products of an activity?

Accepted Answer

A) activity inputs 
B) activity outputs 
C) driver analyses 
D) value-added activities 
A) activity inputs 
B) activity outputs 
C) driver analyses 
D) value-added activities

Question 6

What is the term for resources consumed by the activity in producing its output?

Accepted Answer

A) activity input 
B) activity output 
C) driver analysis 
D) value-added activity 
A) activity input 
B) activity output 
C) driver analysis 
D) value-added activity

Question 7

What process dimension of the activity-based management model deals with "what"?

Accepted Answer

A) resources 
B) driver analysis 
C) activities 
D) performance measures 
A) resources 
B) driver analysis 
C) activities 
D) performance measures

Question 8

How are rewards assigned in financial-based reward systems?

Accepted Answer

A) Rewards are assigned based on multidimensional performance basis. 
B) Rewards are assigned based on team performance. 
C) Rewards are assigned based on individual rewards. 
D) Rewards are assigned based on gainsharing. 
A) Rewards are assigned based on multidimensional performance basis. 
B) Rewards are assigned based on team performance. 
C) Rewards are assigned based on individual rewards. 
D) Rewards are assigned based on gainsharing.

Question 9

Which of the following is the objective of responsibility accounting?

Accepted Answer

A) to redesign processes to be more effective 
B) to align individual and organizational goals 
C) to influence individuals to pursue their own agenda 
D) to increase divisional profitability 
A) to redesign processes to be more effective 
B) to align individual and organizational goals 
C) to influence individuals to pursue their own agenda 
D) to increase divisional profitability

Question 10

What is the term for increasing the efficiency of necessary activities by using economies of scale?

Accepted Answer

A) activity sharing 
B) activity elimination 
C) activity selection 
D) activity reduction 
A) activity sharing 
B) activity elimination 
C) activity selection 
D) activity reduction

Question 11

Froelech Company has developed capacity standards.Information about a non-value-added activity is as follows: $\begin{array}{llr}
  \text {Standard cost of the activity capacity acquired  } &\$50,000\
 \text { Standard cost of the activity capacity used  } &0\
 \text {  Standard cost of the actual activity used} &40,000
\end{array}$
 What is the volume variance?

Accepted Answer

A) $10,000 unfavourable 
B) $10,000 favourable 
C) $50,000 unfavourable 
D) $50,000 favourable 
A) $10,000 unfavourable 
B) $10,000 favourable 
C) $50,000 unfavourable 
D) $50,000 favourable

Question 12

Froelech Company has developed capacity standards. Information is as follows:
$\begin{array}{llr}
  \text {Standard cost of the activity capacity acquired  } &\$150,000\
 \text { Standard cost of the activity capacity used  } &100,000\
 \text {  Standard cost of the actual activity used} &120,000
\end{array}$

-Refer to the figure.What is the volume variance?

Accepted Answer

A) $20,000 unfavourable 
B) $30,000 unfavourable 
C) $35,000 unfavourable 
D) $50,000 unfavourable 
A) $20,000 unfavourable 
B) $30,000 unfavourable 
C) $35,000 unfavourable 
D) $50,000 unfavourable

Question 13

What is the definition of unused capacity variance?

Accepted Answer

A) the difference in costs between activity availability and activity usage 
B) the difference in costs between actual activity level acquired and the value-added standard quantity of activity that should have been used 
C) the difference in costs between practical capacity of activity and the standard capacity of the activity 
D) the difference in costs between practical capacity and actual capacity 
A) the difference in costs between activity availability and activity usage 
B) the difference in costs between actual activity level acquired and the value-added standard quantity of activity that should have been used 
C) the difference in costs between practical capacity of activity and the standard capacity of the activity 
D) the difference in costs between practical capacity and actual capacity

Question 14

Which of the following is a necessary essential element of activity-based responsibility accounting?

Accepted Answer

A) Process management requires significant group activity. 
B) Performance evaluation employs static standards. 
C) Performance evaluation uses only financial measures. 
D) Performance evaluation is based on practical standards. 
A) Process management requires significant group activity. 
B) Performance evaluation employs static standards. 
C) Performance evaluation uses only financial measures. 
D) Performance evaluation is based on practical standards.

Question 15

For each activity,determine the amount of value-added and non-value-added costs.
a.The company keeps 7 days of materials inventory on hand to avoid shutdowns due to materials shortages.Carrying costs are $50,000 per day.
b.A time-and-motion study revealed that it should take 10 minutes to produce a product that now takes 50 minutes to produce.Labour is $18 per hour.
c.Warranty work costs the firm $500,000 per year.Warranty costs for the industry average $100,000 per year.

Accepted Answer

a.Value-added costs = $0 
Non-value-adde

Question 16

What is the term for those activities necessary to remain in business?

Accepted Answer

A) activity inputs 
B) activity outputs 
C) activity drivers 
D) value-added activities 
A) activity inputs 
B) activity outputs 
C) activity drivers 
D) value-added activities

Question 17

Which of the following is a necessary condition for classification as a value-added activity?

Accepted Answer

A) The activity produces no change of state. 
B) The change of state was not achievable by preceding activities. 
C) Activity is the last activity to be performed. 
D) Activity is not necessary as part of the production process. 
A) The activity produces no change of state. 
B) The change of state was not achievable by preceding activities. 
C) Activity is the last activity to be performed. 
D) Activity is not necessary as part of the production process.

Question 18

What is the term for decreasing the time and resources required by different activities?

Accepted Answer

A) activity sharing 
B) activity elimination 
C) activity selection 
D) activity reduction 
A) activity sharing 
B) activity elimination 
C) activity selection 
D) activity reduction

Question 19

What is the term for the process of identifying,describing,and evaluating the activities an organization performs?

Accepted Answer

A) activity input 
B) activity analysis 
C) driver analysis 
D) value-added activity 
A) activity input 
B) activity analysis 
C) driver analysis 
D) value-added activity

Question 20

A company keeps 20 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average $4,000 per day. A competitor keeps 10 days of inventory on hand, and the competitor’s carrying costs average $2,000 per day.
-Refer to the figure..What would be the non-value-added costs?

Accepted Answer

A) $5,000 
B) $30,000 
C) $75,000 
D) $80,000 
A) $5,000 
B) $30,000 
C) $75,000 
D) $80,000

What is the purpose of driver analysis?

What responsibility accounting system would be developed for operations in a continuous improvement environment?

A company has 20 days of finished goods inventory on hand to avoid stockouts.The carrying costs of the inventory average $5,000 per day.What are the non-value-added costs?

What are the results or products of an activity?

What is the term for resources consumed by the activity in producing its output?

What process dimension of the activity-based management model deals with "what"?

How are rewards assigned in financial-based reward systems?

Which of the following is the objective of responsibility accounting?

What is the term for increasing the efficiency of necessary activities by using economies of scale?

Froelech Company has developed capacity standards.Information about a non-value-added activity is as follows: Standard cost of the activity capacity acquired \5 0,000 Standard cost of the activity capacity used 0 Standard cost of the actual activity used 40,000 What is the volume variance?

Froelech Company has developed capacity standards. Information is as follows: Standard cost of the activity capacity acquired \1 50,000 Standard cost of the activity capacity used 100,000 Standard cost of the actual activity used 120,000 -Refer to the figure.What is the volume variance?

What is the definition of unused capacity variance?

Which of the following is a necessary essential element of activity-based responsibility accounting?

What is the term for those activities necessary to remain in business?

Which of the following is a necessary condition for classification as a value-added activity?

What is the term for decreasing the time and resources required by different activities?

What is the term for the process of identifying,describing,and evaluating the activities an organization performs?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints

Filters

Exam 14: Activity-Based Management

What is the purpose of driver analysis?

What responsibility accounting system would be developed for operations in a continuous improvement environment?

A company has 20 days of finished goods inventory on hand to avoid stockouts.The carrying costs of the inventory average $5,000 per day.What are the non-value-added costs?

What are the results or products of an activity?

What is the term for resources consumed by the activity in producing its output?

What process dimension of the activity-based management model deals with "what"?

How are rewards assigned in financial-based reward systems?

Which of the following is the objective of responsibility accounting?

What is the term for increasing the efficiency of necessary activities by using economies of scale?

Froelech Company has developed capacity standards.Information about a non-value-added activity is as follows: Standard cost of the activity capacity acquired \5 0,000 Standard cost of the activity capacity used 0 Standard cost of the actual activity used 40,000 What is the volume variance?

Froelech Company has developed capacity standards. Information is as follows: Standard cost of the activity capacity acquired \1 50,000 Standard cost of the activity capacity used 100,000 Standard cost of the actual activity used 120,000 -Refer to the figure.What is the volume variance?

What is the definition of unused capacity variance?

Which of the following is a necessary essential element of activity-based responsibility accounting?

What is the term for those activities necessary to remain in business?

Which of the following is a necessary condition for classification as a value-added activity?

What is the term for decreasing the time and resources required by different activities?

What is the term for the process of identifying,describing,and evaluating the activities an organization performs?

A: Basic Cost Management Concepts

B: Basic Cost Management Concepts

Cost Behaviour

Cost-Volume-Profit Analysis

Job-Order Costing Systems

Process Costing

Activity-Based Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Responsibility Accounting,performance Evaluation,and Transfer Pricing

Tactical Decision Making

Pricing and Profitability Analysis

Strategic Cost Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints

Filters