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Exam 5: Activity-Based Costing and Activity-Based Management

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Question 81

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ABC systems identify ________ costs used by products.

A) all
B) short-term fixed
C) short-term variable
D) long-term fixed

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Question 82

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The use of a single indirect-cost rate is more likely to:

A) undercost high-volume simple products
B) undercost low-volume complex products
C) undercost lower-priced products
D) Both B and C are correct.

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Question 83

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Rachel's Pet Supply Corporation manufactures two models of grooming stations, a standard and a deluxe model. The following activity and cost information has been compiled: Assume a traditional costing system applies the $160,000 of overhead costs based on direct labor hours. a. What is the total amount of overhead costs assigned to the standard model? b. What is the total amount of overhead costs assigned to the deluxe model? Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead. c. What is the total amount of overhead costs assigned to the standard model? d. What is the total amount of overhead costs assigned to the deluxe model? e. Explain the difference between the costs obtained from the traditional costing system and the ABC system. Which system provides a better estimate of costs? Why?

Answer the following questions using the information below: Happy Valley Land and Snow Company provides the following ABC costing information: The above activities used by their three departments are: -How much of the total cost will be assigned to the Plowing Department?

Misleading cost numbers are most likely the result of misallocating:

Unit-level cost drivers are most appropriate as an overhead assignment base when:

Answer the following questions using the information below: Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year: The accounting records show the Mossman Job consumed the following resources: -Which of the following is NOT a sign that a "smoothing out" costing system exists?

Using multiple unit-level cost drivers generally constitutes an effective activity-based cost system.

Answer the following questions using the information below: Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours) , the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set. -The total amount of indirect cost assigned to produce chess pieces using the traditional method is ________ the total amount assigned using ABC.

Answer the following questions using the information below: Happy Valley Land and Snow Company provides the following ABC costing information: The above activities used by their three departments are: -How much of the gas cost will be assigned to the Lawn Department?

An accelerated need for refined cost systems is due to:

Which of the following statements about activity-based costing is NOT true?

Different products consume different proportions of manufacturing overhead costs because of differences in all of the following EXCEPT:

A cost-allocation base is a necessary element when using a strategy that will refine a costing system.

Answer the following questions using the information below: Happy Valley Land and Snow Company provides the following ABC costing information: The above activities used by their three departments are: -How much of the gas cost will be assigned to the Plowing Department?

ABC reveals opportunities to focus on value added activities.

ABC systems are a further refinement of department-costing systems.

ABC systems create heterogeneous cost pools linked to different activities.

Answer the following questions using the information below: Mertens Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: -Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?

Answer the following questions using the information below: Whitman Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages. For 2010 Whitman Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: During 2010, two customers, Money Managers and Hospital Systems, are expected to use the following printing services: -A primary reason for assigning selling and distribution costs to products for analytical purposes is: