Question 1

Which of the following is NOT an internal failure activity?

Accepted Answer

A)  treating and disposing of toxic waste 
B)  maintaining pollution equipment 
C)  licensing facilities for producing contaminants 
D)  cleaning up a polluted lake 
A)  treating and disposing of toxic waste 
B)  maintaining pollution equipment 
C)  licensing facilities for producing contaminants 
D)  cleaning up a polluted lake

Question 2

At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: For the current year, prevention costs are what percentage of sales?

Accepted Answer

A)  9.00% 
B)  8.25% 
C)  7.00% 
D)  2.00% 
A)  9.00% 
B)  8.25% 
C)  7.00% 
D)  2.00%

Question 3

Under what conditions would the activity capacity used be zero?

Accepted Answer

A)  if the activity is value-added 
B)  if the activity is nonvalue-added 
C)  if the activity is discretionary 
D)  It would never be set at zero. 
A)  if the activity is value-added 
B)  if the activity is nonvalue-added 
C)  if the activity is discretionary 
D)  It would never be set at zero.

Question 4

Grayson, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving.
Information is as follows:
The actual prices paid per unit of each activity driver were equal to the standard prices.
Required:
Complete the following cost report:

Accepted Answer

The answer of Grayson, SA., has developed ideal standards for...

Question 5

Product life-cycle costs do NOT include which of the following?

Accepted Answer

A)  development costs 
B)  production costs 
C)  costs of logistics support 
D)  All of the above are life-cycle costs. 
A)  development costs 
B)  production costs 
C)  costs of logistics support 
D)  All of the above are life-cycle costs.

Question 6

Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is

Accepted Answer

A)  £175,860. 
B)  £40,000. 
C)  £34,000. 
D)  £30,000. 
A)  £175,860. 
B)  £40,000. 
C)  £34,000. 
D)  £30,000.

Question 7

A target cost is

Accepted Answer

A)  the standard cost 
B)  the difference between the sales price needed to capture a predetermined market share and the desired per-unit profit 
C)  the long-run average cost over the life cycle of the product 
D)  none of the above 
A)  the standard cost 
B)  the difference between the sales price needed to capture a predetermined market share and the desired per-unit profit 
C)  the long-run average cost over the life cycle of the product 
D)  none of the above

Question 8

A company keeps 15 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £5,000 per day. A competitor keeps 12 days of inventory on hand, and the competitor's carrying costs average £3,000 per day. The value-added costs are

Accepted Answer

A)  £5,000. 
B)  £-0-. 
C)  £30,000. 
D)  £75,000. 
A)  £5,000. 
B)  £-0-. 
C)  £30,000. 
D)  £75,000.

Question 9

Figure 1
At the beginning of this year, Sammie Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products:
-Refer to Figure 1. Sammie's goal for defective units as a percentage of total units produced would be

Accepted Answer

A)  3.0% 
B)  2.5% 
C)  1.5% 
D)  0% 
A)  3.0% 
B)  2.5% 
C)  1.5% 
D)  0%

Question 10

Larry Ltd.has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The nonvalue-added costs for inspection are

Accepted Answer

A)  £420,000. 
B)  £60,000. 
C)  £480,000. 
D)  £40,000 
A)  £420,000. 
B)  £60,000. 
C)  £480,000. 
D)  £40,000

Question 11

At the end of the current year, Sugarbaker Ltd.collected the following data about its quality program:
Required:
Prepare a quality cost report by quality cost category.

Accepted Answer

The answer of At the end of the current year,...

Question 12

In the zero-defects view of quality,

Accepted Answer

A)  control costs do not increase without limit 
B)  control costs initially increase and then decrease as the firm approaches the robust start 
C)  failure costs can be driven to zero 
D)  all of the above are true 
A)  control costs do not increase without limit 
B)  control costs initially increase and then decrease as the firm approaches the robust start 
C)  failure costs can be driven to zero 
D)  all of the above are true

Question 13

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time by 1 hour. Setup labour is £20 per hour. If the company wants to reduce nonvalue-added costs by 40 percent next year, the currently attainable standard for setup time would be

Accepted Answer

A)  7.6 hours. 
B)  7.2 hours. 
C)  6.6 hours. 
D)  4.8 hours. 
A)  7.6 hours. 
B)  7.2 hours. 
C)  6.6 hours. 
D)  4.8 hours.

Question 14

Bobby, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving.
Information is as follows:
The actual prices paid per unit of each activity driver were equal to the standard prices.
Required:
Complete the following cost report.

Accepted Answer

The answer of Bobby, SA., has developed ideal standards for...

Question 15

Rainey, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving.
Information is as follows:
The actual prices paid per unit of each activity driver were equal to the standard prices.
Required:
Complete the following cost report:

Accepted Answer

The answer of Rainey, SA., has developed ideal standards for...

Question 16

Downtime attributed to quality problems is a(n)

Accepted Answer

A)  external failure cost. 
B)  internal failure cost. 
C)  appraisal cost. 
D)  prevention cost. 
A)  external failure cost. 
B)  internal failure cost. 
C)  appraisal cost. 
D)  prevention cost.

Question 17

At the beginning of the year, Grant Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years: For the current year, appraisal costs are what percentage of sales?

Accepted Answer

A)  1.40% 
B)  1.00% 
C)  0.14% 
D)  0.40% 
A)  1.40% 
B)  1.00% 
C)  0.14% 
D)  0.40%

Question 18

The just-in-time (JIT) approach to inventory management

Accepted Answer

A)  allows greater flexibility as to when products can be manufactured 
B)  results in higher inventory levels but reduces ordering and setup costs 
C)  results in lower inventory carrying costs 
D)  None of the above are correct. 
A)  allows greater flexibility as to when products can be manufactured 
B)  results in higher inventory levels but reduces ordering and setup costs 
C)  results in lower inventory carrying costs 
D)  None of the above are correct.

Question 19

Larry Ltd.has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The nonvalue-added costs for materials are

Accepted Answer

A)  £1,575,000. 
B)  £157,500. 
C)  £150,000. 
D)  £75,000. 
A)  £1,575,000. 
B)  £157,500. 
C)  £150,000. 
D)  £75,000.

Question 20

The purpose of trend reporting on nonvalue-added costs is to

Accepted Answer

A)  trace resources to cost objectives. 
B)  assess value content. 
C)  define root causes. 
D)  see if cost reductions occurred as expected. 
A)  trace resources to cost objectives. 
B)  assess value content. 
C)  define root causes. 
D)  see if cost reductions occurred as expected.

Which of the following is NOT an internal failure activity?

Under what conditions would the activity capacity used be zero?

Grayson, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Complete the following cost report:

Product life-cycle costs do NOT include which of the following?

Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is

A target cost is

A company keeps 15 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £5,000 per day. A competitor keeps 12 days of inventory on hand, and the competitor's carrying costs average £3,000 per day. The value-added costs are

Figure 1 At the beginning of this year, Sammie Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products: -Refer to Figure 1. Sammie's goal for defective units as a percentage of total units produced would be

Larry Ltd.has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The nonvalue-added costs for inspection are

At the end of the current year, Sugarbaker Ltd.collected the following data about its quality program: Required: Prepare a quality cost report by quality cost category.

In the zero-defects view of quality,

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time by 1 hour. Setup labour is £20 per hour. If the company wants to reduce nonvalue-added costs by 40 percent next year, the currently attainable standard for setup time would be

Bobby, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Complete the following cost report.

Rainey, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Complete the following cost report:

Downtime attributed to quality problems is a(n)

The just-in-time (JIT) approach to inventory management

Larry Ltd.has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The nonvalue-added costs for materials are

The purpose of trend reporting on nonvalue-added costs is to

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Strategic Performance Management

Filters

Exam 14: Cost Management

Which of the following is NOT an internal failure activity?

Under what conditions would the activity capacity used be zero?

Grayson, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Complete the following cost report:

Product life-cycle costs do NOT include which of the following?

Rollo Company has developed cost formulas for the drivers of the following production activities: The budgeted inspection cost for 20 setups is

A target cost is

A company keeps 15 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs average £5,000 per day. A competitor keeps 12 days of inventory on hand, and the competitor's carrying costs average £3,000 per day. The value-added costs are

Figure 1 At the beginning of this year, Sammie Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products: -Refer to Figure 1. Sammie's goal for defective units as a percentage of total units produced would be

Larry Ltd.has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The nonvalue-added costs for inspection are

At the end of the current year, Sugarbaker Ltd.collected the following data about its quality program: Required: Prepare a quality cost report by quality cost category.

In the zero-defects view of quality,

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time by 1 hour. Setup labour is £20 per hour. If the company wants to reduce nonvalue-added costs by 40 percent next year, the currently attainable standard for setup time would be

Bobby, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Complete the following cost report.

Rainey, SA., has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Complete the following cost report:

Downtime attributed to quality problems is a(n)

The just-in-time (JIT) approach to inventory management

Larry Ltd.has developed ideal standards for four activities: labour, materials, inspection, and receiving. Information is as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. The nonvalue-added costs for materials are

The purpose of trend reporting on nonvalue-added costs is to

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Strategic Performance Management

Filters