Question 1

All of the following are differences between GPK and activity-based costing systems EXCEPT for ________.

Accepted Answer

A)  GPK applies only variable costs to products. Activity-based costing systems apply fixed and variable costs to products. 
B)  GPK focuses on cost centers. Activity-based costing systems focus on activities. 
C)  GPK may have thousands of cost centers. Activity-based costing systems may have only a few activities. 
D)  GPK uses many cost pools. Activity-based costing systems use one cost pool. 
A)  GPK applies only variable costs to products. Activity-based costing systems apply fixed and variable costs to products. 
B)  GPK focuses on cost centers. Activity-based costing systems focus on activities. 
C)  GPK may have thousands of cost centers. Activity-based costing systems may have only a few activities. 
D)  GPK uses many cost pools. Activity-based costing systems use one cost pool.

Question 2

Which of the following is NOT a valid step when designing an activity-based cost accounting system?

Accepted Answer

A)  Determine the key components of the system. 
B)  Determine the relationships between cost objects, activities, and resources. 
C)  Collect relevant data concerning costs and cost drivers. 
D)  Use a process map to identify areas for operational improvement. 
A)  Determine the key components of the system. 
B)  Determine the relationships between cost objects, activities, and resources. 
C)  Collect relevant data concerning costs and cost drivers. 
D)  Use a process map to identify areas for operational improvement.

Question 3

A century ago,a large proportion of labor costs were direct costs.

Accepted Answer

A) True 
 B)False

Question 4

When looking at a manufactured product,an example of an inventoriable cost is ________.

Accepted Answer

A)  depreciation expense on office equipment in corporate office 
B)  insurance expense on vehicles used by sales staff 
C)  wages of plant security guard 
D)  clerical salaries in corporate office 
A)  depreciation expense on office equipment in corporate office 
B)  insurance expense on vehicles used by sales staff 
C)  wages of plant security guard 
D)  clerical salaries in corporate office

Question 5

Costs can be classified as direct or indirect with respect to a particular cost object.

Accepted Answer

A) True 
 B)False

Question 6

Determining the key components of an Activity-Based Costing (ABC)system is the first step in the design of an ABC system.

Accepted Answer

A) True 
 B)False

Question 7

For both merchandising and manufacturing firms,selling and administrative costs are period costs.

Accepted Answer

A) True 
 B)False

Question 8

List and explain five reasons why more firms are adopting activity-based costing systems.

Accepted Answer

1.Fierce competitive pressure has result

Question 9

Which of the following costs is NOT an inventoriable cost for a manufacturing firm?

Accepted Answer

A)  Marketing Expense 
B)  Factory Supervisor's Salary Expense 
C)  Wages Expense for security guard in factory 
D)  Wages Expense for forklift operator in factory 
A)  Marketing Expense 
B)  Factory Supervisor's Salary Expense 
C)  Wages Expense for security guard in factory 
D)  Wages Expense for forklift operator in factory

Question 10

Activity-based costing systems should be used instead of traditional costing systems if ________.

Accepted Answer

A)  indirect production costs are a large percentage of production costs 
B)  different products consume resources at different rates 
C)  only one product is produced 
D)  A and B 
A)  indirect production costs are a large percentage of production costs 
B)  different products consume resources at different rates 
C)  only one product is produced 
D)  A and B

Question 11

When companies develop cost management systems,which of the following purposes of cost allocation usually dominates?

Accepted Answer

A)  to predict the economic effects of strategic and operational control decisions 
B)  to provide the desired motivation and to give feedback for performance evaluation 
C)  to compute income and asset valuations for financial reporting 
D)  to justify costs or obtain reimbursement 
A)  to predict the economic effects of strategic and operational control decisions 
B)  to provide the desired motivation and to give feedback for performance evaluation 
C)  to compute income and asset valuations for financial reporting 
D)  to justify costs or obtain reimbursement

Question 12

Accountants initially collect costs by some natural classification such as activities performed.

Accepted Answer

A) True 
 B)False

Question 13

To support managers' decisions,accountants develop cost management systems that are ________.

Accepted Answer

A)  also used by external users such as investors and lenders 
B)  computer programs with specialized accounting language 
C)  a collection of tools and techniques that identify how decisions affect costs 
D)  composed of at least 400 cost pools 
A)  also used by external users such as investors and lenders 
B)  computer programs with specialized accounting language 
C)  a collection of tools and techniques that identify how decisions affect costs 
D)  composed of at least 400 cost pools

Question 14

The following information was obtained from the accounting records of Stevenson Incorporated:
$\begin{array}{ll}
\text { Direct materials purchased } & \$ 80,000 \
\text { Direct materials used } & \$ 54,000 \
\text { Direct manufacturing labor costs } & \$ 12,000 \
\text { Indirect manufacturing labor costs } & \$ 11,000 \
\text { Selling expenses } & \$ 16,000 \
\text { Administrative expenses } & \$ 22,000 \
\text { Factory utilities costs } & \$ 20,000 \
\text { Rental cost of factory machines } & \$ 50,000\
 \text {Work in process inventory, beginning }&0 \
 \text {Work in process inventory, end }&0 \
 \text {Finished goods inventory, beginning }&\$10,000 \
 \text {Finished goods inventory, end }&\$30,000 \
\end{array}$
What is Cost of Goods Sold?

Accepted Answer

A)  $57,000 
B)  $77,000 
C)  $127,000 
D)  $147,000 
A)  $57,000 
B)  $77,000 
C)  $127,000 
D)  $147,000

Question 15

In a manufacturing firm,the Finished Goods Inventory account is only found on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

Which of these costs is a direct cost for a manufactured wood chair?

Accepted Answer

A)  Rent Expense for factory building 
B)  Depreciation Expense on factory equipment 
C)  Wood used to manufacture chair 
D)  Salary Expense of factory supervisor 
A)  Rent Expense for factory building 
B)  Depreciation Expense on factory equipment 
C)  Wood used to manufacture chair 
D)  Salary Expense of factory supervisor

Question 17

Goldman Company has identified the following activities related to indirect production costs:
$$\begin{array} { l l l } 
\text { Activity } & \text { Activity Costs } & \text { Cost Drivers } \
\text { Machine Setup } & \$ 180,000 & 1,500 \text { setup hours } \
\text { Materials Handling } & \$ 50,000 & 12,500 \text { pounds of materials } \
\text { Electric Power } & \$ 20,000 & 20,000 \text { kilowatt hours }
\end{array}$$
Goldman Company has obtained the following data concerning two products:
$\begin{array}{lll}&\text { Prodirct } A&\text { Prodirct } B\
\text { Number of units produced } & 4,000 & 20,000 \
\text { Direct materials cost } & \$ 20,000 & \$ 25,000 \
\text { Direct labor cost } & \$ 12,000 & \$ 20,000 \
\text { Number of setup hours } & 100 & 120 \
\text { Pounds of materials used } & 500 & 1,500 \
\text { Kilowatt-hours } & 1,000 & 2,000
\end{array}$
Using activity-based costing,what is the total production cost per unit for Product A?

Accepted Answer

A)  $8.00 per unit 
B)  $10.25 per unit 
C)  $11.75 per unit 
D)  $70.50 per unit 
A)  $8.00 per unit 
B)  $10.25 per unit 
C)  $11.75 per unit 
D)  $70.50 per unit

Question 18

A product such as Sure-Fine Graham Crackers,and a customer such as an Internet customer,are both examples of ________.

Accepted Answer

A)  cost accounting 
B)  cost management system 
C)  cost assignment 
D)  cost objects 
A)  cost accounting 
B)  cost management system 
C)  cost assignment 
D)  cost objects

Question 19

If fixed production costs are not allocated to manufactured products,this conveys the idea that ________.

Accepted Answer

A)  fixed costs are not necessary to manufacture a product. 
B)  fixed costs are necessary to manufacture a product. 
C)  variable costs are less important than fixed costs to manufacture a product. 
D)  fixed costs are more important than variable costs to manufacture a product. 
A)  fixed costs are not necessary to manufacture a product. 
B)  fixed costs are necessary to manufacture a product. 
C)  variable costs are less important than fixed costs to manufacture a product. 
D)  fixed costs are more important than variable costs to manufacture a product.

Question 20

Customers,departments and territories are examples of cost objects.

Accepted Answer

A) True 
 B)False

All of the following are differences between GPK and activity-based costing systems EXCEPT for ________.

Which of the following is NOT a valid step when designing an activity-based cost accounting system?

A century ago,a large proportion of labor costs were direct costs.

When looking at a manufactured product,an example of an inventoriable cost is ________.

Costs can be classified as direct or indirect with respect to a particular cost object.

Determining the key components of an Activity-Based Costing (ABC)system is the first step in the design of an ABC system.

For both merchandising and manufacturing firms,selling and administrative costs are period costs.

List and explain five reasons why more firms are adopting activity-based costing systems.

Which of the following costs is NOT an inventoriable cost for a manufacturing firm?

Activity-based costing systems should be used instead of traditional costing systems if ________.

When companies develop cost management systems,which of the following purposes of cost allocation usually dominates?

Accountants initially collect costs by some natural classification such as activities performed.

To support managers' decisions,accountants develop cost management systems that are ________.

In a manufacturing firm,the Finished Goods Inventory account is only found on the balance sheet.

Which of these costs is a direct cost for a manufactured wood chair?

A product such as Sure-Fine Graham Crackers,and a customer such as an Internet customer,are both examples of ________.

If fixed production costs are not allocated to manufactured products,this conveys the idea that ________.

Customers,departments and territories are examples of cost objects.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 4: Cost Management Systems and Activity-Based Costing

All of the following are differences between GPK and activity-based costing systems EXCEPT for ________.

Which of the following is NOT a valid step when designing an activity-based cost accounting system?

A century ago,a large proportion of labor costs were direct costs.

When looking at a manufactured product,an example of an inventoriable cost is ________.

Costs can be classified as direct or indirect with respect to a particular cost object.

Determining the key components of an Activity-Based Costing (ABC)system is the first step in the design of an ABC system.

For both merchandising and manufacturing firms,selling and administrative costs are period costs.

List and explain five reasons why more firms are adopting activity-based costing systems.

Which of the following costs is NOT an inventoriable cost for a manufacturing firm?

Activity-based costing systems should be used instead of traditional costing systems if ________.

When companies develop cost management systems,which of the following purposes of cost allocation usually dominates?

Accountants initially collect costs by some natural classification such as activities performed.

To support managers' decisions,accountants develop cost management systems that are ________.

In a manufacturing firm,the Finished Goods Inventory account is only found on the balance sheet.

Which of these costs is a direct cost for a manufactured wood chair?

A product such as Sure-Fine Graham Crackers,and a customer such as an Internet customer,are both examples of ________.

If fixed production costs are not allocated to manufactured products,this conveys the idea that ________.

Customers,departments and territories are examples of cost objects.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Flexible Budgets and Variance Analysis

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters