question

Assign costs to activities and then products.

answer

ABC costing

question

a batch of product is produced.

answer

A batch-level driver is consumed by a product each and every time that

question

Set up hours.

answer

Which of the following is a nonunion-level driver?

question

.5 and .5

answer

Refer to the information above. The consumption ratios for the inspection activity for each product are

question

Laser printers are undercosted, and inkjet printers are overcosted.

answer

Refer to the information above. Suppose that machine hours are used to assign all overhead cost to the two products. Select the best answer from the following;

question

resource costs to individual activities.

answer

The first stage of ABC entails the assignment of

question

activity costs to products or customers.

answer

The second stage of ABC entails the assignment of

question

1,what activities are being performed., 2,who performs the activities., 3,the relative amount of time spent on each activity by individual workers., 4, possible activity drivers for assigning costs to products,

answer

Interview questions are asked to determine

question

$10,000

answer

The receiving department employs one worker, who spends 25% of his time on the receiving activity and 75% of his time on inspecting products. His salary is $40,000 . The amount of cost assigned to the receiving activity is

question

$2 per move

answer

Assume that the moving activity has an expected cost of $80,000 . Expected direct labor hours are 20,000 , and expected number of moves is 40,000 . The best activity rate for moving is

question

Customer diversity requires multiple drivers to trace costs accurately to customers.

answer

Which of the following is a true statement about activity-based customer costing?

question

Suppliers can affect many internal activities of a firm and significantly increase the cost of purchasing.

answer

Which of the following is a true statement about activity-based supplier costing?

question

$8000, ($0.80per pound shipped).

answer

This year, Lambert Company will ship 1,500,000 pounds of goods to customer at a cos of $1200,000. If a customer orders 10,000 pounds and produces $200,000 of revenue (total revenue is $20 millions), the amount of shipping cost assigned to the customer by using ABC would be

question

1, Components purchased from Leming cost $200,000 more than their purchase price. 2, Components purchased from Deming cost $1,800,000 more than their purchase price. 3, Components from Leming appear to be of higher quality.

answer

Lambert Company has two suppliers: Deming and Leming. The cost of warranty work due to defective components is $2,000,000. The total units repaired under warranty average 100,000 , of which 90,000 have components from Deming and 10,000 have components from Leming. Select the items below that represent true statements.

question

activity inputs.

answer

A forklift and its driver used for moving materials are examples of

question

1, Moving goods 2, Storing goods 3, Inspecting finished goods 4, Reworking a defective product

answer

Which of the following are nonvalue-added activities?

question

$100,000

answer

Suppose that a company is spending $60,000 per year for inspecting, $30,000 for purchasing, and $40,000 for reworking products. A good estimate of nonvalue-added costs would be

question

activity elimination.

answer

The cost of inspecting incoming parts is most likely to be reduced by

question

is 6 units per hour.

answer

Thom Company produces 60units in 10hours. The cycle time for Thom

question

Efficiency

answer

Striving to produce the same activity output with lower costs for the input used is concerned with which of the following dimensions of activity performance?

question

Quality planning Supplier evaluation and selection Quality audits Field trials

answer

Which of the following is a quality prevention cost?

question

Manager of an inspection team

answer

Which of the following is an appraisal cost (quality)?

question

Retesting

answer

Which of the following is an internal failure cost (quality)?

question

Lost sales

answer

Which of the following is an external failure cost (quality)?

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Carrying out contamination tests

answer

Which of the following represents environmental detection costs?

question

cost of operating scrubbers

answer

An example of an environmental internal failure cost is

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medical care due to polluted air.

answer

An example of a societal cost is

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developing environmental management systems.

answer

An example of an environmental prevention cost is

question

Multiple Choice Questions

answer

Chapter 7

question

activity cost driver.

answer

1, Identify activities and

question

Share costs, times, % per activity

answer

2, Assign costs to each activity, use DRIVER TRACING to allocate costs if costs are share among activities

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Activity Over Head / Total driver quantity,

answer

3. Calculate the predetermined activity overhead rate (Activity rate) for each activity.

question

Activity rate, times, driver quantity per product, Or Consumption ration, Times, Total activity Over Head cost.

answer

4, Assign activity Overhead cost to products for each activity using

question

Absorption, and variable costing

answer

Ch 8a

question

Thus, under absorption costing, fixed overhead is viewed as a product cost, not a period cost.

answer

Absorption Costing

question

Thus, under absorption costing, fixed overhead is viewed as a period cost.

answer

Variable Costing

question

subunit of a company for which performance reports are prepared Examples: divisions departments product lines customer types

answer

Segments

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Fixed expenses that are directly traceable to a segment; vanish if the segment is eliminated.

answer

Direct Fixed Expenses;

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Fixed expenses that are jointly caused by two or more segments. These expenses exist even if one of the segments is eliminated.

answer

Common Fixed Expenses;

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common selling and administrative expense

answer

Variable and selling expense

question

Example. A 5% sales commission is paid for each of the product lines. You multiply .05, times Sales to get the Variable selling expense.

answer

Variable selling Expense

question

the costs of placing and receiving and order order processsing insurance unloading , receiving

answer

Ordering costs:

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the costs of storing inventory insurance property taxes storage space handling costs

answer

Carrying costs:

question

EOQ= the square root of: 2x Cost of placing one order x annual units/Cost of carrying one unit in inventory

answer

The optimal number of units that should be ordered at one time to minimize total inventory costs

question

= the square root of: 2x Cost of placing one order x annual units/Cost of carrying one unit in inventory

answer

1. Calculate the Economic Order Quantity

question

=Annual units/EOQ

answer

2. Calculate the number of orders required annually

question

=Number of orders per year x Cost of placing an order

answer

3. Calculate the ordering costs

question

= (EOQ- 0)/2

answer

4. Calculate the average inventory.

question

=Average inventory x Carrying cost of one unit in inventory

answer

5. Calculate the carrying costs

question

= Ordering costs +Carrying costs

answer

6. . Calculate Total Inventory-Related Costs

question

the point in time when a new order should be placed ; function of EOQ, lead time, rate of inventory usage

answer

Reorder point:

question

Days required to receive EOQ once order is placed

answer

Lead time:

question

Max Daily usage x Lead time

answer

Reorder point

question

= (Avg daily usage x lead time)+ Safety stock

answer

OR Reorder point

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Extra inventory carried to serve as insurance against changes in demand

answer

Safety stock:

question

= (Max daily usage-Avg daily usage) x Lead time

answer

Safety stock

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