Exam 8: Activity Analysis: Costing and Management

ABC systems differ from traditional costing systems because ABC systems use

When applying ABC concepts to the determination of product costs, the first step is to identify activities.

Costs assigned to an activity pool for teaching children to swim at the Leisure Centre are $2,700 per month. Number of students is chosen as the cost driver. On average, 300 students take swim lessons monthly. What is the ABC allocation rate for this activity?

Activity-based management can be used to manage both quality and constrained resources.

Quick Start Engines has two departments, Assembly and Testing. You are given the following information about the costs of 4 activities that occur at the manufacturing plant monthly: The above activities are used by the two departments as follows: What is the ABC allocation rate for supervision of direct labor?

Ideally, activity costs in an ABC system are allocated to cost objects using a driver that explains changes in those costs.

The best allocation base choice for an ABC cost pool is a(n)

Both activity-based costing and traditional costing allocate overhead costs to cost objects.

Tutors-R-Us provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 2010, the firm's information system produced the following data: Regardless of subject area, clients pay $50 per hour for tutoring services. Costs associated with the Tutors-R-Us operations for November 2010 included: Which of these groups of costs are most likely to have a common cost driver?

Accountants, on their own, normally can determine cost drivers for all cost pools without consulting other employees in the organisation.

The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 2010: Processing the juice into 3 final products involves the use of 2 machines, each of which incurred depreciation costs of $15,000 for the first half of 2010. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce orange juice for the next 2 weeks. Finally, workers set up the same machines to produce orange icey-poles during the last week of each month. During the first half of 2010, 20% of the oranges harvested were turned into orange juice concentrate, 50% were processed into orange juice, and 30% became orange icey-poles. The relative sales values of each product were: 75% for orange juice, 20% for orange juice concentrate, and 5% for icey-poles. The orange juice concentrate operation takes up 40% of FSOJ's total factory space. Regular orange juice and orange icey-poles occupy 35% and 25%, respectively. Which of the preceding costs would most likely have "number of setups" as its cost driver?

The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 2010: Processing the juice into 3 final products involves the use of 2 machines, each of which incurred depreciation costs of $15,000 for the first half of 2010. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce orange juice for the next 2 weeks. Finally, workers set up the same machines to produce orange icey-poles during the last week of each month. During the first half of 2010, 20% of the oranges harvested were turned into orange juice concentrate, 50% were processed into orange juice, and 30% became orange icey-poles. The relative sales values of each product were: 75% for orange juice, 20% for orange juice concentrate, and 5% for icey-poles. The orange juice concentrate operation takes up 40% of FSOJ's total factory space. Regular orange juice and orange icey-poles occupy 35% and 25%, respectively.If juice extraction costs are allocated to product lines based on relative sales values, that is, each product line's portion of total sales, the amount allocated to icey-poles will be

Phuong is a customer of PVL Ltd. She consistently orders low-margin products, but requires costly services from PVL. In employing ABM techniques to manage customer profitability, PVL's staff should

When implementing an ABC system, the accounting information system may require modifications to

The process of using ABC information to evaluate the costs and benefits of production and internal support activities is called

In an ABC system, a cost driver must be chosen for each

Unlike activity-based costing, traditional costing systems never use multiple cost pools for overhead allocation.

Managers are most likely to identify activities in an ABC system by

The FSOJ Company undertakes the following activities in its production operation and incurred the following costs during the first half of 2010: Processing the juice into 3 final products involves the use of 2 machines, each of which incurred depreciation costs of $15,000 for the first half of 2010. Each product requires a different set up on the processing machines, so FSOJ normally sets up the machines to produce concentrate for the first week of each month. The machine is then set up to produce orange juice for the next 2 weeks. Finally, workers set up the same machines to produce orange icey-poles during the last week of each month. During the first half of 2010, 20% of the oranges harvested were turned into orange juice concentrate, 50% were processed into orange juice, and 30% became orange icey-poles. The relative sales values of each product were: 75% for orange juice, 20% for orange juice concentrate, and 5% for icey-poles. The orange juice concentrate operation takes up 40% of FSOJ's total factory space. Regular orange juice and orange icey-poles occupy 35% and 25%, respectively. Which of the following activities is likely to be classified as product-level?

Which of these factors are associated with successful ABC implementations?