Question 1

Output unit-level costs cannot be determined unless you know how many units are in a given batch.

Accepted Answer

A) True 
 B)False

Question 2

Cecelia Schell is taking four clients (who are not related)on a tour of her retirement development.The clients incurred the following expenses while on the tour.All tour expenses are paid by Cecelia because she has business discounts for most of her business dealings.These expenses will be billed to the clients by Cecelia.   Required:
Compute the total average cost per client showing average indirect (overhead)and average direct (other)charges separately.

Accepted Answer

Average direct costs = ($320 +

Question 3

Companies use activity-based management to

Accepted Answer

A) allocate the cost of activities to cost objects. 
B) forecast customer demand. 
C) develop systems for direct cost tracing and indirect cost allocation. 
D) plan and organize the implementation of activity-based costing. 
E) eliminate non-value added activities. 
A) allocate the cost of activities to cost objects. 
B) forecast customer demand. 
C) develop systems for direct cost tracing and indirect cost allocation. 
D) plan and organize the implementation of activity-based costing. 
E) eliminate non-value added activities.

Question 4

A costing system which focuses on individual event or tasks as the cost pool to be allocated is called

Accepted Answer

A) activity-based costing. 
B) direct costing. 
C) job costing. 
D) process costing. 
E) normal costing. 
A) activity-based costing. 
B) direct costing. 
C) job costing. 
D) process costing. 
E) normal costing.

Question 5

The Celestial Group (CG)provides financial advice to individuals and corporations.CG charges clients for (a)direct professional time, and (b)support services.The three professionals in CG and their rates per professional hour are as follows:
   Monthly support service costs are as follows:
   Clients are charged a standard support service fee of $200 per month.There is one receptionist who covers the office and spends her time equally on each of the companies sixty clients.The three associate advisors work together on client files.They work a total of 500 hours per month on client accounts.During June they worked a total of 0 hours on the XB Corp file; and, 18 hours on the JN Corp file.The associates provide support for the professional advisors and give advice to clients on matters that do not require a securities license.CG has just prepared the June bills for two client corporations owned by the same person.:
   The owner of the two corporations has questioned the June bill.She is wondering why support services is the same amount when XB Corp required no support service for the month.Required:
Prepare more appropriate bills for June using the activity-based costing approach.

Accepted Answer

@#IMG-DLM& *Associate billing

Question 6

Activity-based costing relies heavily on broad averages to assign costs to jobs, products, and services.

Accepted Answer

A) True 
 B)False

Question 7

ABC provides a cost-benefit analysis of the unequally shared benefits of a support activity.The technique also discloses the scope of business functions where cost control will have a positive effect.Required:
Provide three benefits that the identification of the scope of cost control focused on different activity levels should lead to.

Accepted Answer

Any three of:
Increased reliability of t

Question 8

Determining what activities add customer value is an example of what facet of activity-based management?

Accepted Answer

A) increase effective coordination among business function activities 
B) reduce costs of non-value-added activities 
C) improve selection of process activities to enhance profit 
D) match the company's use of resources to customer demand 
E) achieve planned growth 
A) increase effective coordination among business function activities 
B) reduce costs of non-value-added activities 
C) improve selection of process activities to enhance profit 
D) match the company's use of resources to customer demand 
E) achieve planned growth

Question 9

Activity-based management describes management decisions that use activity-based costing information to

Accepted Answer

A) improve product pricing, cost reduction and design. 
B) identify potential customers. 
C) smooth indirect costs. 
D) eliminate activities that add value but are not cost drivers. 
E) anticipate changes in the market. 
A) improve product pricing, cost reduction and design. 
B) identify potential customers. 
C) smooth indirect costs. 
D) eliminate activities that add value but are not cost drivers. 
E) anticipate changes in the market.

Question 10

Simple cost systems distort product costs because

Accepted Answer

A) they do not know how to identify the appropriate units. 
B) competitive pricing is ignored. 
C) they emphasize financial accounting requirements. 
D) they apply average support costs to each unit of product. 
E) they assign direct costs using direct cost tracing. 
A) they do not know how to identify the appropriate units. 
B) competitive pricing is ignored. 
C) they emphasize financial accounting requirements. 
D) they apply average support costs to each unit of product. 
E) they assign direct costs using direct cost tracing.

Question 11

Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system.

Accepted Answer

A) True 
 B)False

Question 12

At Deutschland Electronics, product lines are charged for call centre support costs based on sales revenue.Last year's summary of call centre operations revealed the following:
   Deutschland Electronics currently allocates call centre support costs using a rate of 0.5% of sales revenue.Required:
a.Compute the amount of call centre support costs allocated to each product line under the current system.
b.Assume Deutschland decides to use the average call length for information to assign last year's support costs.Does this allocation method seem more appropriate than percentage of sales? Why or why not?
c.Assume Deutschland decides to use the numbers of calls for information and for warranties to assign last year's support costs of $65,000.Compute the amount of call centre support costs assigned to each product line under this revised ABC system.
d.Deutschland Electronics assigns bonuses based on departmental profits.How might the Specialty Products manager try to obtain higher profits for next year if support costs are assigned based on the average call length for information?
e.Discuss the barriers for implementing ABC for this call centre.

Accepted Answer

a.Call centre support costs allocated to

Question 13

Answer the following question(s)using the information below.Wallace Printing has contracts to complete weekly supplements required by forty-six customers.For the year 2019, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 10 million pages.For 2019 Wallace Printing decided to evaluate the use of additional cost pools.After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers.The following information was gathered during the analysis:
   During 2019, two customers, Wayward Insurance and Hapless Systems, are expected to use the following printing services:
  
-When selling prices are based on costs assigned using the single cost driver, number of pages printed, then Hapless Systems

Accepted Answer

A) is fairly billed because resources are allocated uniformly to all jobs. 
B) is grossly under billed for the job, while other jobs will be unfairly over billed. 
C) will be pleased because all customers will be under billed for their jobs. 
D) will contribute too little to profits, and Wallace Printing will not want to accept additional work.from the company 
E) will likely seek to do business with competitors. 
A) is fairly billed because resources are allocated uniformly to all jobs. 
B) is grossly under billed for the job, while other jobs will be unfairly over billed. 
C) will be pleased because all customers will be under billed for their jobs. 
D) will contribute too little to profits, and Wallace Printing will not want to accept additional work.from the company 
E) will likely seek to do business with competitors.

Question 14

Come-On-In Manufacturing produces two types of entry doors: Deluxe and Standard.The assignment basis for support costs has been direct labour dollars.For 2012, Come-On-In compiled the following data for the two products:
     Last year, Come-On-In Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line.The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign.She obtained the following ABC information:
   Required:
a.Using the current traditional (simple)costing system, determine the estimated:
   c.Review the machine related costs above.What is a likely explanation for machine related costs being so high? What might explain why total machining hours for the deluxe doors (300,000 hours)are the same as for the standard doors (300,000 hours)?
d.Using the activity-based costing data presented above,
   e.Is the deluxe door as profitable as the original data estimated? Why or why not?

Accepted Answer

a.Currently estimated deluxe-entry door

Question 15

Product-sustaining (service-sustaining),and facility-sustaining costs are equivalent terms in ABC systems.

Accepted Answer

A) True 
 B)False

Question 16

Match the cost driver in the right column below to the appropriate function in the left column.
A)Number of shipments
B)Number of purchase orders
C)Number of employees
D)Number of customers
E)Number of desktop computers
F)Number of invoices
-Personnel

Accepted Answer

The answer of Match the cost driver in the right...

Question 17

Match the cost driver in the right column below to the appropriate function in the left column.
A)Number of shipments
B)Number of purchase orders
C)Number of employees
D)Number of customers
E)Number of desktop computers
F)Number of invoices
-Computer Support

Accepted Answer

The answer of Match the cost driver in the right...

Question 18

A four-part cost hierarchy includes

Accepted Answer

A) market-sustaining costs. 
B) research and development costs. 
C) manufacturing-level costs. 
D) output unit-level costs. 
E) period costs. 
A) market-sustaining costs. 
B) research and development costs. 
C) manufacturing-level costs. 
D) output unit-level costs. 
E) period costs.

Question 19

Inaccurate product costs can expose a company to the risk of losing market share to competitors.

Accepted Answer

A) True 
 B)False

Question 20

When using activity-based costing in a manufacturing setting, its distinctive feature is the focus on

Accepted Answer

A) activities as the fundamental cost objects. 
B) minimizing the number of journal entries related to the manufacturing process. 
C) minimizing manufacturing costs. 
D) materials handling. 
E) materials sorting. 
A) activities as the fundamental cost objects. 
B) minimizing the number of journal entries related to the manufacturing process. 
C) minimizing manufacturing costs. 
D) materials handling. 
E) materials sorting.

Output unit-level costs cannot be determined unless you know how many units are in a given batch.

Companies use activity-based management to

A costing system which focuses on individual event or tasks as the cost pool to be allocated is called

Activity-based costing relies heavily on broad averages to assign costs to jobs, products, and services.

Determining what activities add customer value is an example of what facet of activity-based management?

Activity-based management describes management decisions that use activity-based costing information to

Simple cost systems distort product costs because

Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system.

Product-sustaining (service-sustaining),and facility-sustaining costs are equivalent terms in ABC systems.

Match the cost driver in the right column below to the appropriate function in the left column. A)Number of shipments B)Number of purchase orders C)Number of employees D)Number of customers E)Number of desktop computers F)Number of invoices -Personnel

Match the cost driver in the right column below to the appropriate function in the left column. A)Number of shipments B)Number of purchase orders C)Number of employees D)Number of customers E)Number of desktop computers F)Number of invoices -Computer Support

A four-part cost hierarchy includes

Inaccurate product costs can expose a company to the risk of losing market share to competitors.

When using activity-based costing in a manufacturing setting, its distinctive feature is the focus on

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 5: Activity-Based Costing and Management

Output unit-level costs cannot be determined unless you know how many units are in a given batch.

Companies use activity-based management to

A costing system which focuses on individual event or tasks as the cost pool to be allocated is called

Activity-based costing relies heavily on broad averages to assign costs to jobs, products, and services.

Determining what activities add customer value is an example of what facet of activity-based management?

Activity-based management describes management decisions that use activity-based costing information to

Simple cost systems distort product costs because

Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system.

Product-sustaining (service-sustaining),and facility-sustaining costs are equivalent terms in ABC systems.

Match the cost driver in the right column below to the appropriate function in the left column. A)Number of shipments B)Number of purchase orders C)Number of employees D)Number of customers E)Number of desktop computers F)Number of invoices -Personnel

Match the cost driver in the right column below to the appropriate function in the left column. A)Number of shipments B)Number of purchase orders C)Number of employees D)Number of customers E)Number of desktop computers F)Number of invoices -Computer Support

A four-part cost hierarchy includes

Inaccurate product costs can expose a company to the risk of losing market share to competitors.

When using activity-based costing in a manufacturing setting, its distinctive feature is the focus on

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters