Module 18 100% CORRECT ANSWERS GUARANTEE GRADE ‘A’

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Topic: Changing Cost Environment LO: 1 1. The twentieth century saw an accelerating shift from traditional manufacturing activities to production procedures requiring large investments in raw materia... ls and labor. Topic: Changing Cost Environment LO: 1 2. Over the past century, overhead costs have increased as a percentage of total product cost. Topic: Activity-Based Costing LO: 2 3. Activity-based costing determines the cost of activities and traces their costs to objects of the basis of the cost object’s usage of the activity. Topic: Purchasing Department Cost Allocation LO: 2 4. The number of purchase orders is a reasonable basis for allocating to jobs the purchasing department costs. Topic: Activity-Based Costing LO: 2 5. Activity-Based Costing (ABC) is a two-stage method of cost assignment that assigns overhead costs to key activities, and then assigns those costs to products or services based on their use of those activities. Topic: Plant-Wide Allocation Rate LO: 3 6. The plant-wide rate approach is the simplest to apply, but it is also the most costly to implement, compared to a departmental or activity-based cost allocation system. Topic: ABC Implementation LO: 4 7. ABC is generally more costly to implement than traditional costing. Topic: ABC Implementation LO: 4 8. ABC is particularly useful when product lines differ greatly in volume and in manufacturing complexity. Topic: Customer Profitability LO: 5 9. ABC is useful for product costing, but traditional costing is superior for customer profitability. Topic: Customer Profitability LO: 5 10. If products are being sold to customers A and B above costs and the company is earning a profit, then customers A and B must both be profitable Topic: Activity-Based Management LO: 6 11. Activity-based management (ABM) focuses on reducing costs and maximizing value to consumers. Topic: Reducing Non Value Added Activities LO: 6 12. Any activity that decreases the cost of producing a product is value-added activity. Topic: Activities and Cost Drivers LO: 2 1. The most appropriate cost driver for the activity of cleaning (bussing) tables in a restaurant is: Topic: Activity-Based Costing LO: 2 2. Which of the following statements about activity based costing is true? Topic: Cost Objective LO: 2 3. An object to which costs are assigned is called: Topic: Activity-Based Costing LO: 2 4. Which of the following procedures best describes activity-based costing? Topic: Two-Stage Activity-Based Costing Model LO: 2 5. Which of the following tasks is not required when using a two-stage activity-based costing model? Topic: Two-Stage Activity-Based Costing LO: 2 6. In a two-stage activity-based costing model, stage one involves: Topic: Activity-Based Costing LO: 2 7. In an activity-based costing model, total costs assigned to cost objectives may include: Topic: Job Costing with Activity-Based Costing LO: 2 8. Nashville, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: Maintenance $600,000 Inspection 400,000 The following data have been assembled for use in developing a bid for a proposed job: Direct materials $6,000 Direct labor $16,000 Machine-hours 400 Number of inspections 4 Direct labor-hours 800 The practical capacity of machine-hours for all jobs during the year is 25,000, and for inspections is 800. These are the cost drivers for maintenance and inspection costs, respectively. Using the appropriate cost drivers, the total cost of the potential job is: Topic: Product Costing with Activity-Based Costing LO: 2 9. Fischer, Inc., uses activity-based costing. The company produces two products, 001 and 002. Information relating to the two products is as follows: Topic: Product Costing with Activity-Based Costing LO: 2 10. Turtle, Inc. uses activity-based costing. The company produces X and Y. Information relating to the two products is as follows: X Y Units produced 38,000 50,000 Machine-hours 15,000 17,000 Direct labor-hours 16,000 24,000 Materials handling (number of moves) 8,000 12,000 Setups 10,000 14,000 The following costs are reported: Materials handling $320,000 Labor-related overhead 960,000 Setups 480,000 Labor-related overhead costs assigned to product X are: Topic: Activity-Based Costing LO: 2 11. Which of the following is a true characteristic of activity-based costing? Topic: Two-Stage Activity-Based Costing Model LO: 2 12. The second stage of an activity-based costing two-stage product costing model includes: Topic: Stage Two Activity-Based Costing LO: 2 13. Assume that total costs assigned to the setup activity cost pool in March are $80,000 and 100 setups were completed in March. Further, assume that during March machines were setup 20 times to make product X5. The total setup cost that would be assigned to product X5 would be: Topic: Practical Capacity LO: 3 14. The practical capacity for a particular production facility is best described as: Topic: Calculating a Plant-Wide Rate LO: 3 15. The following information is available pertaining to Lily Division, that uses a plant-wide overhead rate based on machine hours: Activity-Based Costing LO: 3 16. Which of the following product costing methods produces the most precise product costing information? Applications of Activity-Based Costing LO: 4 17. Activity-based costing is a technique for more precisely measuring the cost and profitability of: Topic: Implementation of Activity-Based Costing LO: 4 18. Which of the following aspects of manufacturing must be understood in order to implement activity based costing in a production setting? Topic: Activity-Based Costing Implementation LO: 4 19. Which of the following statements describes the typical effect of creating a large number of refined activity cost pools for a given costing application? Topic: Activity-Based Costing Implementation LO: 4 20. Activity-based costing systems tend to products. Topic: Activity-Based Costing Implementation LO: 4 21. Although adding more activity cost pools to an activity-based costing system [Show More]

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