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Jefferson,Inc.produces two different products (Product 5 and Product Z) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.The activity drivers are used as follows: Jefferson,Inc.produces two different products (Product 5 and Product Z) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.The activity drivers are used as follows: What proportion of Inspection activity is used by Product Z? A) 25% B) 33% C) 67% D) 75% What proportion of Inspection activity is used by Product Z?


A) 25%
B) 33%
C) 67%
D) 75%

E) A) and D)
F) A) and C)

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Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows: Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows: Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor. Required: a.Calculate the activity rate for Design. b.Calculate the activity rate for Machining. c.Calculate the activity rate for Inspection. d.Determine the indirect costs assigned to Product A. e.Determine the indirect costs assigned to Product B. f.Determine the manufacturing cost per unit for Product A. g.Determine the manufacturing cost per unit for Product B. h.Determine the gross profit per unit for Product A. i.Determine the gross profit per unit for Product B. Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor. Required: a.Calculate the activity rate for Design. b.Calculate the activity rate for Machining. c.Calculate the activity rate for Inspection. d.Determine the indirect costs assigned to Product A. e.Determine the indirect costs assigned to Product B. f.Determine the manufacturing cost per unit for Product A. g.Determine the manufacturing cost per unit for Product B. h.Determine the gross profit per unit for Product A. i.Determine the gross profit per unit for Product B.

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a.$300/Eng.hour = $150,000/(200 + 300)
b...

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Which of the following is not true of activity cost drivers?


A) They are measures of the underlying activity that occurs in each activity cost pool.
B) They ideally have a cause and effect relationship with underlying activities.
C) They are strictly volume-based allocation measures.
D) They are used in Stage 2 cost allocations.

E) A) and C)
F) B) and C)

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In a traditional volume-based cost system,total manufacturing costs are calculated by:


A) adding manufacturing overhead cost,direct materials cost,and direct labor cost.
B) subtracting manufacturing overhead from selling price.
C) adding direct material cost and direct labor cost.
D) adding activity cost,direct material cost,and direct labor cost.

E) B) and C)
F) A) and D)

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Total quality management aims to improve quality by doing all of the following except:


A) reducing and eliminating errors.
B) streamlining activities.
C) continuously improving the production process.
D) eliminating non-value-added costs.

E) A) and B)
F) All of the above

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Jackson,Inc.produces two different products (Product 5 and Product Z) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Product 5 uses 20% of total machine hours and 75% of total batches.What is the total Inspection cost assigned to Product Z?


A) $7,500
B) $22,500
C) $125,000
D) $375,000

E) None of the above
F) A) and C)

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How is the cost of a batch-level activity similar to the cost of a unit-level activity?


A) Both are incurred for each individual unit.
B) Both decrease as production volume increases.
C) Both increase as production volume increases.
D) Both are incurred for a group of units all at once.

E) A) and D)
F) B) and C)

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Which of the following statements is not correct about how an ABC system might be adapted to provide managers with sustainability-related information that would affect the triple bottom line?


A) The system could capture and report information about workplace safety,then allocate it to activities,then to various products produced.
B) The system could capture and report information about greenhouse gas emissions,then allocate it to activities,then services provided.
C) The system can only capture and report cost information,so it only affects the "profit" part of the triple bottom line.
D) The system can capture and report information about employee retention,particularly for diversity initiatives,then allocate it to activities,products,and services.

E) B) and C)
F) A) and B)

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Amy Andrews is a CPA who works as a managerial accounting consultant for a variety of firms.To determine her hourly rate,Amy uses a cost-plus pricing system,which she updates each year.The hourly cost of her assistant (including taxes and benefits) is $18,the hourly cost of her office space is $4,the hourly cost of her marketing and other overhead materials is $6,and Amy's own hourly salary (again,including taxes and benefits) is $62.Amy adds a 20% premium to her costs.What is her hourly rate using a cost-plus pricing strategy?


A) $90
B) $96
C) $108
D) $110

E) C) and D)
F) B) and C)

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Which of the following sets just-in-time systems apart from traditional manufacturing systems?


A) Cost of goods sold includes all manufacturing cost.
B) Materials are purchased only as they are needed to manufacture goods.
C) Cost of goods sold is not calculated.
D) It can be used in conjunction with activity based costing.

E) A) and D)
F) B) and C)

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In target costing,the target cost should be determined:


A) before manufacturing ever starts.
B) after initial manufacturing prototypes are created.
C) after customers provide feedback about critical features.
D) before goods are shipped to customers,but after manufacturing begins.

E) C) and D)
F) B) and D)

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Which of the following would be considered a non-volume-based cost driver?


A) Number of units produced
B) Number of batches
C) Number of machine hours
D) Direct materials cost

E) C) and D)
F) A) and B)

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Cottonwood,Inc.produces two different products (Standard and Luxury) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard uses 30% of total machine hours and 70% of total batches.What is the total activity cost assigned to Luxury?


A) $7,500
B) $171,000
C) $375,000
D) $359,000

E) C) and D)
F) A) and C)

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Which of the following would not be directly related to a volume-based allocation measure?


A) The number of activities.
B) The number of units produced.
C) The number of customers served.
D) Direct materials cost.

E) A) and C)
F) A) and B)

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Lynwood,Inc.produces two different products (Product A and Product X) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.The activity drivers are used as follows: Lynwood,Inc.produces two different products (Product A and Product X) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity rate for Machining is $125 per machine hour,and the activity rate for Inspection is $500 per batch.The activity drivers are used as follows: What is the amount of Machining cost assigned to Product X? A) $22,500 B) $125,000 C) $375,000 D) $500,000 What is the amount of Machining cost assigned to Product X?


A) $22,500
B) $125,000
C) $375,000
D) $500,000

E) C) and D)
F) B) and D)

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Culver,Inc.produces two different products (Product V3 and Product G8) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity drivers are used as follows: Culver,Inc.produces two different products (Product V3 and Product G8) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The activity drivers are used as follows: The activity rate for Inspection is $750 per batch.What is the total cost of Inspection? A) $11,250 B) $33,750 C) $45,000 D) $75,000 The activity rate for Inspection is $750 per batch.What is the total cost of Inspection?


A) $11,250
B) $33,750
C) $45,000
D) $75,000

E) A) and D)
F) All of the above

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Using the activity-proportion method results in:


A) higher cost allocations than the activity rate method.
B) lower cost allocations than the activity rate method.
C) the same cost allocations as the activity rate method.
D) higher or lower cost allocations than the activity rate method,depending on the circumstances.

E) A) and B)
F) All of the above

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Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows: Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows: Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor. Required: a.Calculate the Design activity proportions for Products A and B. b.Calculate the Machining activity proportions for Products A and B. c.Calculate the Inspection activity proportions for Products A and B. d.Determine the indirect costs assigned to Product A. e.Determine the indirect costs assigned to Product B. f.Determine the manufacturing cost per unit for Product A. g.Determine the manufacturing cost per unit for Product B. h.Determine the gross profit per unit for Product A. i.Determine the gross profit per unit for Product B. Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor. Required: a.Calculate the Design activity proportions for Products A and B. b.Calculate the Machining activity proportions for Products A and B. c.Calculate the Inspection activity proportions for Products A and B. d.Determine the indirect costs assigned to Product A. e.Determine the indirect costs assigned to Product B. f.Determine the manufacturing cost per unit for Product A. g.Determine the manufacturing cost per unit for Product B. h.Determine the gross profit per unit for Product A. i.Determine the gross profit per unit for Product B.

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a.Product A: 40% = 200/(200 + 300);Produ...

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Washington,Inc.produces two different products (Product C and Product 2) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $750,000,while the cost of Inspection is $90,000.The activity drivers are used as follows: Washington,Inc.produces two different products (Product C and Product 2) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $750,000,while the cost of Inspection is $90,000.The activity drivers are used as follows: What is the activity rate for Machining? A) $187.50 per machine hour B) $166.67 per machine hour C) $250.00 per machine hour D) $5750.00 per machine hour What is the activity rate for Machining?


A) $187.50 per machine hour
B) $166.67 per machine hour
C) $250.00 per machine hour
D) $5750.00 per machine hour

E) None of the above
F) C) and D)

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Which of the following should a manager using activity-based management attempt to reduce or eliminate?


A) Customer service in the warranty department
B) Sales team to respond to customer needs
C) Insurance division to process liability insurance payments
D) Professional development workshop for managers to improve customer service

E) A) and C)
F) B) and D)

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