Managerial Accounting Chapter 4 Answers – Flashcards
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True or False: A traditional costing system allocates overhead by means of multiple overhead rates.
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False
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True or False: Activity-based costing allocates overhead costs in a two-stage process.
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True
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True or False: Direct materials and direct labor costs are easier to trace to products that overhead.
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True
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True or False: As manufacturing processes have become more automated, more companies have chosen to allocate overhead on the basis of direct labor costs.
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False
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True or False: In activity-based costing, an activity is any event, action, transaction, or work sequence that incurs costs when producing a product.
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True
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Value Added or Non-Value Added: Inspecting completed skis
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Non-value added
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Value Added or Non-Value Added: Storing raw materials
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Non-value added
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Value Added or Non-Value Added: Machine setups
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Non-value added
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Value Added or Non-Value Added: Installing binding on skis
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Value added
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Value Added or Non-Value Added: Packaging skis for shipment
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Value added
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Value Added or Non-Value Added: Reworking defective skis
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Non-value added
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Batch Level, Product Level, Unit Level, or Facility Level? Engineering Design
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Product-level
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Batch Level, Product Level, Unit Level, or Facility Level? Machine Setup
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Batch-level
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Batch Level, Product Level, Unit Level, or Facility Level? Toy Design
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Product-level
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Batch Level, Product Level, Unit Level, or Facility Level? Interviews of Prospective Employees
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Facility-level
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Batch Level, Product Level, Unit Level, or Facility Level? Inspection After Each Setup
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Batch-level
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Batch Level, Product Level, Unit Level, or Facility Level? Polishing Parts
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Unit-Level
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Batch Level, Product Level, Unit Level, or Facility Level? Assembling Parts
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Unit-level
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Batch Level, Product Level, Unit Level, or Facility Level? Health and Safety
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Facility-level
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Self-Test Question: Activity-based costing (ABC):
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focuses on activities performed to produce a product, and is a 2-stage overhead cost allocation system that identifies activity cost pools and cost drivers.
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Self-Test Question: Any activity that causes resources to be consumed is called a __________
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cost driver.
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Self-Test Question: The first step in the development of an activity-based costing system is:
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identify and classify activities and allocate overhead to cost pools.
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Self-Test Question: Which of the follow would be the BEST cost driver for the assembling cost pool? A. Number of product lines B. Number of parts C. Number of orders D. Amount of square footage
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B. Number of parts
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Self-Test Question: A frequently cited limitation of activity-based costing is:
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certain overhead costs remain to be allocated by means of come arbitrary volume-based cost driver such as labor or machine hours.
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Self-Test Question: A company should consider using ABC if:
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its product lines differ greatly in volume and manufacturing complexity.
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Self-Test Question: An activity that adds costs to the product but does not increase its perceived market value is a:
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non-value added activity
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Self-Test Question: Which of the following activities is value-added activity? A. Storage of raw materials B. Moving parts from machine to machine C. Shaping a piece of metal on a lathe D. All of the above
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C. Shaping a piece of metal on a lathe
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Self-Test Question: A relevant facility-level cost driver for heating cost is:
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Floor Space
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Define: Batch-level activities
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Activities performed for each batch of products rather than for each unit.
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Define: Facility-level activities
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Activities required to support or sustain an entire production process.
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Define: Product-level activities
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Activities performed in support of an entire product line, but not always performed every time a new unit or batch of products is produced.
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Define: Unit-level activities
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Activities performed for each unit of production.
