Exam 8: Activity Analysis: Costing and Management

The cost of implementing an ABC system is likely to be lower if the number of times an activity is performed

ABC systems are similar to traditional costing systems in the way they

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 the following is the most logical allocation base for facility rent if the relevant cost object is a subject area (product line)?

As the number of activities in an ABC system increases, measurement error tends to

Activity-based costing information can be used to identify the relative cost of maintaining different customers. Managers can use that information, coupled with activity-based management techniques, to manage

The availability of activity costs is inversely related to the cost of implementing an ABC system.

Which of the steps listed below normally occurs first when assigning costs in an ABC system?

Lookin' for a Home is an animal shelter in Parramatta, New South Wales. The shelter relies on government grants and private donations for funding. It takes in homeless dogs and cats and keeps them until they are adopted by qualified individuals. One of the shelter's cost pools is animal recordkeeping, which involves maintaining a database with details about each animal in the shelter. Which of the following is the most appropriate cost driver for the animal recordkeeping cost pool?

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: If the number of tutors in each area is the cost driver for custodial services, the total custodial services cost allocated to history would be:

ABC systems are typically associated with

The costs of designing and implementing an ABC system include employee time and training.

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: How much of the material handling cost will be allocated to Assembly?

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. Preparing oranges for processing involves peeling and removing seeds. The best cost driver for the cost of preparing oranges for processing would be

At least one cost driver is required for each ABC cost

Le Pavilion is a historic hotel just outside of Melbourne. It is owned by Refined Hotels, which operates additional properties in Sydney, Brisbane and Perth. Le Pavilion has 9 floors, with approximately 20 rooms per floor. Facilities also include a workout room, restaurant, and pool. The hotel is organised in 5 departments: front desk, engineering, housekeeping, food & beverage, and customer relations. As part of its operation, Le Pavilion regularly incurs the following costs: General manager's salary Housekeeping supplies Utility costs Depreciation on workout room equipment Advertising Food and beverage costs Depreciation on restaurant equipment From the perspective of Refined Hotels, advertising specifically for Le Pavilion is best described as a(n)

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: How much of the total activity costs will be allocated to Assembly?

FNG employs 4 purchasing agents. Rick processes purchase orders for vendors starting with the letters A through H, while Merrill does the same task for vendors from I through N. Phillip deals with vendors in the O through R range, and Kathy handles the rest of the alphabet. The most likely cost driver for the purchasing agents' salaries is the

Which of the following statements is true?

Uncertainties associated with ABC and ABM include I The appropriate choice of activities II The appropriate choice of cost drivers III Employee response to the system

All organisations that use activity-based costing also use activity-based management.