Question 1

Describe activity-based management.Compare activity-based management to activity-based costing.How does activity-based costing improve overhead allocation in a manufacturing environment?

Accepted Answer

The answer of Describe activity-based management.Compare activity-based management to activity-based...

Question 2

For which one of the following activities is it more difficult to obtain reasonable measures to allocate the costs?

Accepted Answer

A) Indirect labor 
B) Machine setups 
C) Plant administration 
D) Quality control inspections

Question 3

Use the following information to answer the following questions.Magnolia Company makes products B546 and C245.Information for overhead costs and for the two products appears below.The company makes 100,000 units of product B546 each year and 20,000 units of product C245.

Use the information from the Magnolia Company and assume that Activity Based Costing is used,with each activity in its own cost pool.What is the rate per setup that should be used to assign set up cost to the two products?

Accepted Answer

A) $900 per set up 
B) $400 per set up 
C) $100 per set up 
D) $200,000 per set up

Question 4

What is the firststep in the activity analysis process used to implement Activity Based Management?

Accepted Answer

A) Chart,from start to finish,the activities used to complete the product or service 
B) Classify activities as value-added or non-value-added 
C) Eliminate non-value-added activities 
D) Continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities

Question 5

Strategic uses of activity-based management include developing strategy and which of the following?

Accepted Answer

A) Long-range plans. 
B) Focusing attention on departments. 
C) Focusing attention on plants. 
D) Focusing attention on managers.

Question 6

Use the following information to answer the following questions.Magnolia Company makes products B546 and C245.Information for overhead costs and for the two products appears below.The company makes 100,000 units of product B546 each year and 20,000 units of product C245.

What will be the total overhead cost of product B546 if all overhead is assigned using ABC and each activity above is treated as a separate pool?

Accepted Answer

A) $8.60 per unit 
B) $18.00 per unit 
C) $15.00 per unit 
D) $47.00 per unit

Question 7

Which of the following are true regarding activity-based costing (ABC)?

Accepted Answer

A) ABC deals with learning about the cost of activities. 
B) ABC rests on the premise that products require activities. 
C) ABC rests on the premise that activities consume resources. 
D) All of the answers are correct.

Question 8

Which of the following statements is true concerning how companies benefit from using an activity-based accounting system?

Accepted Answer

A) They have had few changes in activities over time and few corresponding changes have been made in the accounting system. 
B) They have low overhead costs. 
C) They have a narrow range of products. 
D) They have wide variations in the volume of individual production runs and setups are costly (i.e. ,complex production methods).

Question 9

Which of the following statement accurately describes activity-based costing (ABC)?

Accepted Answer

A) ABC considers the entire plant to be one cost pool. 
B) ABC uses a separate cost pool for each department. 
C) ABC uses a cost pool for each activity center. 
D) ABC uses a cost pool for each industry.

Question 10

Which term refers to categorizing costs according to whether they are capacity,product,customer,batch,or unit costs?

Accepted Answer

A) The cost hierarchy. 
B) Activity-based costing. 
C) Traditional costing. 
D) None of the answers is correct.

Question 11

Which one of the following activities is appropriate as a cost driver for material handling costs?

Accepted Answer

A) Number of direct labor hours used 
B) Number of machine hours used 
C) Number of raw material moves 
D) Number of units produced

Question 12

Use the following information to answer the following questions.Magnolia Company makes products B546 and C245.Information for overhead costs and for the two products appears below.The company makes 100,000 units of product B546 each year and 20,000 units of product C245.

What will be the total overhead cost of product C245 if all overhead is assigned using ABC and each activity above is treated as a separate pool?

Accepted Answer

A) $8.60 per unit 
B) $90.00 per unit 
C) $15.00 per unit 
D) $47.00 per unit

Question 13

Which statement best describes an activity center?

Accepted Answer

A) An organizational command post from which management controls activity. 
B) A unit of the organization that performs a set of tasks. 
C) A think-tank where managers select value-added activities. 
D) A part of the organization that has been designated for in depth study of specific activities.

Question 14

Gem Systems
Gem Systems uses an activity-based costing system.The company has gathered the following information concerning various cost pools and activity drivers;

The following data was collected and is specific to Job 150.

Refer to Gem Systems.What is the amount of electricity cost allocated to Job 150?

Accepted Answer

A) $ 1,000 
B) $15,000 
C) $ 3,000 
D) $ 5,000

Question 15

Activity-based costing first assigns costs to activities,then to

Accepted Answer

A) the products based on each product's use of activities. 
B) the plant based on each plant's use of activities. 
C) the departments based on each department's use of activities. 
D) the industry based on each industry's use of activities.

Question 16

In traditional costing systems overhead costs are allocated on volume of production or sales,.This methodology fails to take into consideration that the demand for overhead activities is also driven by which of the following?

Accepted Answer

A) Outside contracting activities. 
B) Indirect labor activities. 
C) Short-term labor activities. 
D) Batch-related and product-sustaining activities.

Question 17

Explain how activity-based management can reduce customer response time at your local motor vehicle administration.

Accepted Answer

The answer of Explain how activity-based management can reduce customer...

Question 18

Resources used versus resources supplied.Here is information about resources for Business Unlimited,which produces trade publications for various industries:
  
Required:
a.Compute unused capacity for these items.
b.Management wants no more than 20 percent of total costs to be incurred for unused capacity.How well is Business Unlimited doing?
(Business Unlimited;Resources used versus resources supplied. )

Accepted Answer

The answer of Resources used versus resources supplied.Here is information...

Question 19

The cost hierarchy categorizes costs according to whether they are capacity,product,customer,batch,or unit costs.Management of an airline would most likely consider new flights using existing aircraft on established routes as being which of the following?

Accepted Answer

A) Capacity costs. 
B) Product costs. 
C) Batch costs. 
D) Unit costs.

Question 20

Gem Systems
Gem Systems uses an activity-based costing system.The company has gathered the following information concerning various cost pools and activity drivers;

The following data was collected and is specific to Job 150.

Refer to Gem Systems.Calculate the unit cost for the Electricity Costs activity cost pool.

Accepted Answer

A) $15.00 
B) $ 3.50 
C) $ 3.00 
D) $ 5.00

Exam 3: Activity-Based Management

Describe activity-based management.Compare activity-based management to activity-based costing.How does activity-based costing improve overhead allocation in a manufacturing environment?

For which one of the following activities is it more difficult to obtain reasonable measures to allocate the costs?

What is the firststep in the activity analysis process used to implement Activity Based Management?

Strategic uses of activity-based management include developing strategy and which of the following?

Which of the following are true regarding activity-based costing (ABC) ?

Which of the following statements is true concerning how companies benefit from using an activity-based accounting system?

Which of the following statement accurately describes activity-based costing (ABC) ?

Which term refers to categorizing costs according to whether they are capacity,product,customer,batch,or unit costs?

Which one of the following activities is appropriate as a cost driver for material handling costs?

Which statement best describes an activity center?

Activity-based costing first assigns costs to activities,then to

In traditional costing systems overhead costs are allocated on volume of production or sales,.This methodology fails to take into consideration that the demand for overhead activities is also driven by which of the following?

Explain how activity-based management can reduce customer response time at your local motor vehicle administration.

The cost hierarchy categorizes costs according to whether they are capacity,product,customer,batch,or unit costs.Management of an airline would most likely consider new flights using existing aircraft on established routes as being which of the following?