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Activity Based Costing divides activities into two categories: unit-level activities and facility level activities.Activity Based Costing divides activities into four categories.

A) True
B) False

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A just-in-time (JIT)system is a demand-push system.JIT is a demand-pull system in which materials and products are pulled through the manufacturing system based on customer demand.

A) True
B) False

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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.Usage of the activity drivers are as follows: What is the amount of Machining cost assigned to Product X? 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.Usage of the activity drivers are 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


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

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

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Calverton,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 is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Machining activity is used by Standard?


A) 30%
B) 33%
C) 67%
D) 75%

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

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The approach to cost management that calls for setting cost reduction goals across numerous stages such as product introduction,growth,maturity,and decline is


A) Life cycle cost management.
B) Total quality management.
C) Target costing.
D) Just-in-time inventory.

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

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The cost of quality training is an example of what type of quality cost?


A) Prevention costs
B) Appraisal or inspection costs
C) Internal failure costs
D) External failure costs

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

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Life cycle cost management involves analyzing the functionality of the product to determine which functions add value to the customer and then finding ways to deliver those functions while meeting the target cost.Value engineering involves analyzing the functionality of the product to determine which functions add value to the customer and then finding ways to deliver those functions while meeting the target cost.

A) True
B) False

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External failure costs are costs that


A) are incurred to prevent quality problems from occurring in the first place.
B) are incurred to identify defective products before products are shipped to the customer.
C) result from defects that are caught before the product is shipped to the customer.
D) occur when a defective product makes its way into the hands of the customer.

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

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The gross margin is calculated by subtracting total nonmanufacturing cost per unit from the unit sales price.The gross margin is calculated by subtracting the total manufacturing cost per unit from the unit sales price.

A) True
B) False

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Which of the following best defines a product-level activity?


A) An activity that is performed for a specific customer
B) An activity that is performed to support a specific product line
C) An activity that is performed for each individual unit
D) An activity that is performed for a group of units all at once

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

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Using non-volume-based activity drivers allows activity based costing to


A) assign more indirect costs to products whose production volume is higher.
B) assign more direct costs to products whose production volume is higher.
C) assign more indirect costs to products whose complexity is higher.
D) assign more direct costs to products whose complexity is higher.

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

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Sonora,Inc.is launching a new product that it estimates will sell for $25 per unit.Annual demand is estimated to be 70,000 units.Sonora estimates that using its current manufacturing technology,it can manufacture the units for $23 per unit,but if it purchases a new machine,the units can be manufactured for $22 per unit.Sonora has a target profit of 20% return on sales.Under target costing,what is the target cost for the new product?


A) $20
B) $22
C) $23
D) $25

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

Correct Answer

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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.Usage of the activity drivers are as follows: What is the amount of Inspection cost assigned to Product A? 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.Usage of the activity drivers are as follows: What is the amount of Inspection cost assigned to Product A? A) $7,500 B) $22,500 C) $30,000 D) $125,000


A) $7,500
B) $22,500
C) $30,000
D) $125,000

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

Correct Answer

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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.Usage of the activity drivers are as follows: What is the amount of Machining cost assigned to Product A? 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.Usage of the activity drivers are as follows: What is the amount of Machining cost assigned to Product A? A) $7,500 B) $125,000 C) $375,000 D) $500,000


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

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

Correct Answer

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When forming activity cost pools,the goal is to create as few cost pools as possible,while still capturing major activities.Minimizing cost pools while still capturing major activities keeps the cost system manageable.

A) True
B) False

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Calverton,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 is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Machining activity is used by Luxury?


A) 30%
B) 33%
C) 67%
D) 70%

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

Correct Answer

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Portland,Inc.has formed four activity cost pools: Product Design,Machining and Production,Machine Setup,and Inspection.Gina Taylor,Production Manager at Portland,oversees processes that are considered part of Machining and Production,Machine Setup,and Inspection.Taylor's salary should be


A) assigned to the activity she spends the most time on.
B) considered as a separate activity.
C) expensed in the period incurred.
D) allocated among Machining and Production,Machine Setup,and Inspection.

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

Correct Answer

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External failure costs occur before a defective product makes its way into the hands of the customer.External failure costs occur after a defective product makes its way into the hands of the customer.

A) True
B) False

Correct Answer

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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) All of the above
F) C) and D)

Correct Answer

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Internal failure costs are costs that


A) are incurred to prevent quality problems from occurring in the first place.
B) are incurred to identify defective products before products are shipped to the customer.
C) result from defects that are caught before the product is shipped to the customer.
D) occur when a defective product makes its way into the hands of the customer.

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

Correct Answer

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Showing 21 - 40 of 104

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