Question 1

Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent) :

Accepted Answer

A)  $4.60.
B)  $9.45.
C)  $13.44.
D)  $15.12.
E)  $42.61.F) B) and C)
G) B) and D)

Question 2

Which of the following would be the most appropriate cost driver to allocate factory electricity costs to products?

Accepted Answer

A)  Machinery depreciation expense.
B)  Machinery maintenance work orders.
C)  Machinery down-time.
D)  Machine hours.
E)  Machine productivity.F) C) and D)
G) All of the above

Question 3

Successful activity-based costing (ABC)  implementation depends upon the firm:

Accepted Answer

A)  Having support of consultants with needed expertise.
B)  Having a thorough activity analysis.
C)  Starting with a relatively simple system.
D)  Having well-trained managers.
E)  Having adequate computer resources.F) A) and B)
G) A) and C)

Question 4

A measure of frequency and intensity of demands placed on activities by cost objects is:

Accepted Answer

A)  Quantity driver.
B)  Resource consumption cost driver.
C)  Not a cost driver.
D)  Activity consumption cost driver.
E)  Consumption cost driver.F) D) and E)
G) C) and E)

Question 5

Using activity-based costing, applied engineering and design factory overhead for the High F model per unit is (rounded to the nearest cent) :

Accepted Answer

A)  $6.13.
B)  $11.86.
C)  $16.28.
D)  $32.46.
E)  $66.73.F) A) and D)
G) All of the above

Question 6

Activity-based costing (ABC)  differs from other costing approaches in that it more accurately measures the cost of activities:

Accepted Answer

A)  Not proportional to the volume of outputs produced.
B)  Directly proportional to the volume of outputs produced.
C)  Inversely proportional to the volume of outputs produced.
D)  That are non-value adding.
E)  At a significantly lower cost in time and money.F) None of the above
G) B) and D)

Question 7

In an organization that makes furniture, which of the following is a high value-added activity?

Accepted Answer

A)  Using direct materials in production.
B)  Inspecting production.
C)  Storing finished goods inventory.
D)  Moving work-in-process inventory between work stations.
E)  Reworking the product to repair defects.F) B) and E)
G) D) and E)

Question 8

In regard to selling activities, which one of the following would be a cost driver for selling expense?

Accepted Answer

A)  Number of invoices.
B)  Number of sales calls.
C)  Number of production runs.
D)  Number of shipments.
E)  All of the above.F) A) and B)
G) C) and D)

Question 9

Skateline Inc. designs and manufactures roller skates. The following data pertain to two of its major
customers: FantasticSkates and SkateToday.  Required: Compare the net proceeds from each customer to Skateline Inc. 30 days after sale. (rounded to nearest dollar for each step where applicable).

Accepted Answer

Answer may...

Question 10

Swenson Company manufactures 4,000 units of Deluxe Product and 20,000 units of Regular Product each year. The company currently uses direct labor-hours to assign overhead cost to products. The pre-determined overhead rate is:   Suppose, however, that factory overhead costs are actually caused by the five activities listed below:  Also suppose the following transaction data has been collected:  Required:
Using the activity-based costing method to calculate unit costs of Deluxe and Regular products, and compare them with the current direct labor hours-based costing system.

Accepted Answer

Answer may vary
Feedback: Overhead rates...

Question 11

What is the total manufacturing overhead for the current product order if the firm assigns overhead costs based on machine hours?

Accepted Answer

A)  $9,960.
B)  $30,240.
C)  $43,741.
D)  $44,268.
E)  $109,352.F) D) and E)
G) A) and D)

Question 12

Which of the following is a benefit of activity-based costing?

Accepted Answer

A)  Reduced overhead costs.
B)  More accurate measures of production volume.
C)  Facilitate better product pricing decisions.
D)  Having fewer cost drivers than volume-based costing systems.
E)  More streamlined manufacturing processes.F) A) and D)
G) None of the above

Question 13

Volume-based rates produce inaccurate product cost when:

Accepted Answer

A)  A large share of factory overhead cost is not volume-based.
B)  Firms produce a diverse mix of products.
C)  Large volumes of a product are manufactured.
D)  Both answer A and answer B are correct.
E)  None of the answers above is correct.F) A) and B)
G) A) and E)

Question 14

Using activity-based costing, total overhead per unit of Great P model is (rounded to the nearest cent) :

Accepted Answer

A)  $42.61.
B)  $45.99.
C)  $61.32.
D)  $66.73.
E)  $168.00.F) B) and C)
G) A) and B)

Question 15

The use of activity-based costing is most appropriate for:

Accepted Answer

A)  Firms that manufacture multiple product lines.
B)  Firms that have very low manufacturing overhead costs relative to other costs of production.
C)  Firms with high levels of production activity.
D)  Firms that are labor intensive.
E)  Firms that manufacture a small number of product lines.F) C) and D)
G) B) and C)

Question 16

Using activity-based costing, applied machine repetition overhead for the 1,000 laser printers order is:

Accepted Answer

A)  $7,800.
B)  $10,000.
C)  $10,500.
D)  $150.
E)  $21,600.F) A) and B)
G) A) and C)

Question 17

Castenet Company uses a volume-based costing system that applies overhead cost based on direct labor hours at $250 per direct labor hour.
The company is considering adopting an activity-based costing system with the following data:  The two jobs processed in the month of June had the following characteristics:  Required:
1. Compute the unit manufacturing cost of each job under the firm's current volume-based costing system.
2. Compute the unit manufacturing cost of each job under the activity-based costing system.
3. Compare the unit manufacturing cost for Jobs A and B computed in requirements 1 and 2.
(a) Why do the two cost systems differ in their total cost for each job?
(b) Why might these differences be important to the Company?

Accepted Answer

Answer may vary
Feedback: 1. Per unit ma...

Question 18

Procurement costs such as costs of placing orders for materials and paying suppliers are usually classified as:

Accepted Answer

A)  Output-unit-level costs.
B)  Batch-level costs.
C)  Product-level costs.
D)  Facility-level costs.
E)  Vendor costs.F) A) and D)
G) B) and D)

Question 19

Volume-based overhead rates may cause undesirable strategic effects such as:

Accepted Answer

A)  Incorrect decisions.
B)  Unprofitable cross-subsidization of products.
C)  Ineffective management of operations for process improvement.
D)  Answers A, B and C are all correct.
E)  None of the answers above is correct.F) A) and B)
G) A) and C)

Question 20

Time-driven ABC provides a direct way to measure:

Accepted Answer

A)  Production efficiency.
B)  Unused capacity.
C)  Product line profitability.
D)  Value-adding activities.
E)  Customer value.F) B) and D)
G) B) and E)

Exam 5: Activity-Based Costing and Customer Profitability Analysis

The use of activity-based costing is most appropriate for:

Correct Answer
verified

Using activity-based costing, applied machine repetition overhead for the 1,000 laser printers order is:

Correct Answer
verified

In an organization that makes furniture, which of the following is a high value-added activity?

Correct Answer
verified

A measure of frequency and intensity of demands placed on activities by cost objects is:

Correct Answer
verified

Which of the following would be the most appropriate cost driver to allocate factory electricity costs to products?

Correct Answer
verified

Using activity-based costing, total overhead per unit of Great P model is (rounded to the nearest cent) :

Correct Answer
verified

Using activity-based costing, applied engineering and design factory overhead for the High F model per unit is (rounded to the nearest cent) :

Correct Answer
verified

Correct Answer
verified
Answer may vary
Feedback: Overhead rates...
View Answer

Which of the following is a benefit of activity-based costing?

Correct Answer
verified

Correct Answer
verified
Answer may vary
Feedback: 1. Per unit ma...
View Answer

Procurement costs such as costs of placing orders for materials and paying suppliers are usually classified as:

Correct Answer
verified

Activity-based costing (ABC) differs from other costing approaches in that it more accurately measures the cost of activities:

Correct Answer
verified

What is the total manufacturing overhead for the current product order if the firm assigns overhead costs based on machine hours?

Correct Answer
verified

Successful activity-based costing (ABC) implementation depends upon the firm:

Correct Answer
verified

Skateline Inc. designs and manufactures roller skates. The following data pertain to two of its major customers: FantasticSkates and SkateToday. Required: Compare the net proceeds from each customer to Skateline Inc. 30 days after sale. (rounded to nearest dollar for each step where applicable).

Correct Answer
verified
Answer may...
View Answer

Volume-based rates produce inaccurate product cost when:

Correct Answer
verified

Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent) :

Correct Answer
verified

In regard to selling activities, which one of the following would be a cost driver for selling expense?

Correct Answer
verified

Time-driven ABC provides a direct way to measure:

Correct Answer
verified

Volume-based overhead rates may cause undesirable strategic effects such as:

Correct Answer
verified

Exam 5: Activity-Based Costing and Customer Profitability Analysis

The use of activity-based costing is most appropriate for:

Correct AnswerverifiedShow Answer

Using activity-based costing, applied machine repetition overhead for the 1,000 laser printers order is:

Correct AnswerverifiedShow Answer

In an organization that makes furniture, which of the following is a high value-added activity?

Correct AnswerverifiedShow Answer

A measure of frequency and intensity of demands placed on activities by cost objects is:

Correct AnswerverifiedShow Answer

Which of the following would be the most appropriate cost driver to allocate factory electricity costs to products?

Correct AnswerverifiedShow Answer

Using activity-based costing, total overhead per unit of Great P model is (rounded to the nearest cent) :

Correct AnswerverifiedShow Answer

Using activity-based costing, applied engineering and design factory overhead for the High F model per unit is (rounded to the nearest cent) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAnswer may varyFeedback: Overhead rates...View AnswerShow Answer

Which of the following is a benefit of activity-based costing?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAnswer may varyFeedback: 1. Per unit ma...View AnswerShow Answer

Procurement costs such as costs of placing orders for materials and paying suppliers are usually classified as:

Correct AnswerverifiedShow Answer

Activity-based costing (ABC) differs from other costing approaches in that it more accurately measures the cost of activities:

Correct AnswerverifiedShow Answer

What is the total manufacturing overhead for the current product order if the firm assigns overhead costs based on machine hours?

Correct AnswerverifiedShow Answer

Successful activity-based costing (ABC) implementation depends upon the firm:

Correct AnswerverifiedShow Answer

Skateline Inc. designs and manufactures roller skates. The following data pertain to two of its major customers: FantasticSkates and SkateToday. Required: Compare the net proceeds from each customer to Skateline Inc. 30 days after sale. (rounded to nearest dollar for each step where applicable).

Correct AnswerverifiedAnswer may...View AnswerShow Answer

Volume-based rates produce inaccurate product cost when:

Correct AnswerverifiedShow Answer

Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent) :

Correct AnswerverifiedShow Answer

In regard to selling activities, which one of the following would be a cost driver for selling expense?

Correct AnswerverifiedShow Answer

Time-driven ABC provides a direct way to measure:

Correct AnswerverifiedShow Answer

Volume-based overhead rates may cause undesirable strategic effects such as:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Answer may vary
Feedback: Overhead rates...
View Answer

Correct Answer
verified

Correct Answer
verified
Answer may vary
Feedback: 1. Per unit ma...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Answer may...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified