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Exam 4: Activity-Based Costing and Cost Management

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Question 51

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A volume-based allocation measure would vary proportionately with

A) the number of activities.
B) nonmanufacturing costs.
C) the number of units produced.
D) the number of cost drivers.

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

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Question 52

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Yallow,Inc.manufactures teddy bears and dolls.Currently,Yallow makes 2,000 teddy bears each month.Each teddy bear uses $2.00 in direct materials and $0.50 in direct labor.Yallow uses two activities in manufacturing the teddy bears: Sewing and Processing.The cost associated with Sewing is $15,000 a month,allocated on the basis of direct labor hours.The cost associated with Processing is $10,000 a month,allocated on the basis of batches.Usage of the activity drivers are as follows: What is the total manufacturing cost for one teddy bear?

A) $2.50
B) $4.50
C) $7.00
D) $8.00

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

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Question 53

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How is activity based management related to activity based costing?

The activity-rate method involves

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.Usage of the activity drivers are as follows: What proportion of Inspection activity is used by Product 5?

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.Usage of the activity drivers are as follows: What proportion of Machining activity is used by Product Z?

Volume-based cost systems tend to

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?

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

When target costing is used,the target cost is determined by

Parker Woodworks manufactures baseball bats and wooden tops.Currently,Parker makes 5,000 baseball bats each month.Each bat uses $1.00 in direct materials and $0.50 in direct labor.Parker uses two activities in manufacturing the baseball bats: Cutting and Finishing.The cost associated with Cutting is $7,500 a month,allocated on the basis of direct labor hours.The cost associated with Finishing is $12,000 a month,allocated on the basis of batches.Usage of the activity drivers are as follows: What is the total manufacturing cost for one baseball bat?

Which type of quality cost would a firm most want to eliminate or reduce as much as possible?

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 Machining cost assigned to Product 5?

Activity based costing systems include non-volume-based cost drivers.ABC systems should also include measures that capture factors other than volume,or non-volume based cost drivers.

The first step in ABC is to calculate a manufacturing overhead rate.The first step in ABC is to identify the activities required to make the product or provide the service,so indirect costs can be assigned to them.

An activity that is performed for each individual unit is a ___________ level activity.

Yuma,Inc.manufactures teddy bears and dolls.Currently,Yuma makes 2,000 teddy bears each month.Each teddy bear uses $2.00 in direct materials and $0.50 in direct labor.Yuma uses two activities in manufacturing the teddy bears: Sewing and Processing.The cost associated with Sewing is $15,000 a month,allocated on the basis of direct labor hours.The cost associated with Processing is $10,000 a month,allocated on the basis of batches.Teddy bears use 1/2 of the direct labor hours,and 35% of total batches.What is the total manufacturing cost for one teddy bear?

Each individual indirect cost should be assigned to one activity when forming activity cost pools.Some costs will need to be allocated among several activities.

GG's Personal Training Services is owned by Gina Garfield.Gina provides personal training and coaching to individuals or small groups using the local fitness facility and pool.Gina rents the group training room at the local fitness facility or the pool for scheduled classes.For one-on-one training,she meets clients at the fitness facility where she is a member.Gina is currently learning Zumba and plans to offer a Zumba class in the group training room on Wednesday mornings starting next month.To advertise this class and all her other services,Gina developed a company Facebook page.The development of the Facebook page is considered a ___________ activity for GG's.

Which of the following is not a type of quality cost?