Question 1

Which of the following is most likely to be the cost driver for the packaging and shipping activity?

Accepted Answer

A)  Number of setups
B)  Number of orders shipped
C)  Number of units produced
D)  Hours of testingE) B) and C)
F) None of the above

Question 2

High Rise Display Company manufactures display cases to be sold to retail stores.The cases come in three sizes: Large,Medium,and Small.Currently,High Rise Display Company uses a single plant-wide overhead rate to allocate its $3,357,800 of annual manufacturing overhead.Of this amount,$820,000 is associated with the Large Case line,$1,276,800 is associated with the Medium Case line,and $1,261,000 is associated with the Small Case line.Clearview Display Company is currently running a total of 33,000 machine hours: 10,000 in the Large Case line,13,300 in the Medium Case line,and 9,700 in the Small Case line.High Rise Display Company uses machine hours as the cost driver for manufacturing overhead costs.
Required:
a.Calculate the plant-wide manufacturing overhead rate.
b.Calculate the departmental overhead rate for each of the three departments listed.
c.Which product line(s)have been overcosted by using the plant-wide manufacturing overhead rate? By how much per machine hour? Which product line(s)have been undercosted by using the plant-wide manufacturing overhead rate? By how much per machine hour?

Accepted Answer

The answer of High Rise Display Company manufactures display cases...

Question 3

Hummingbird Manufacturing manufactures small parts and uses an activity-based costing system.

The following parts were produced in October with the following information:

Total manufacturing costs for part A is

Accepted Answer

A)  $7,450.
B)  $5,200.
C)  $10,450.
D)  $8,200.E) A) and D)
F) A) and B)

Question 4

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs of the department by the estimated total quantity of the department's cost allocation base.

Accepted Answer

A) True 
 B)False

Question 5

Costs incurred to avoid providing poor quality services would be considered to be

Accepted Answer

A)  appraisal costs.
B)  activity-based costing.
C)  prevention costs.
D)  value engineering.E) B) and D)
F) A) and C)

Question 6

Which of the following is true about lean thinking?

Accepted Answer

A)  Customer orders drive the production process.
B)  Inventory levels are maintained at high levels.
C)  Raw materials are purchased in large quantities.
D)  Finished goods are produced ahead of customers' orders to protect against running out of finished goods inventory.E) None of the above
F) All of the above

Question 7

The Cosmo Corporation manufactures and assembles office chairs.Cosmo uses an activity-based costing system to allocate all manufacturing conversion costs.Each chair consists of 15 separate parts totaling $125 in direct materials,and requires 2.0 hours of machine time to produce.Additional information follows:

What is the cost of assembling per chair?

Accepted Answer

A)  $4.00
B)  $5.50
C)  $7.50
D)  $26.25E) All of the above
F) C) and D)

Question 8

James Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs.The company has two departments: Assembly and Sanding.The Assembly Department uses a departmental overhead rate of $35 per machine hour,while the Sanding Department uses a departmental overhead rate of $20 per direct labor hour.Job 603 used the following direct labor hours and machine hours in the two departments:

The cost for direct labor is $30 per direct labor hour and the cost of the direct materials used by Job 603 is $1,400.
How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates?

Accepted Answer

A)  $450
B)  $380
C)  $715
D)  $390E) B) and C)
F) A) and D)

Question 9

Which of the following is not an activity in an ABC system that determines the cost of a manufactured product?

Accepted Answer

A)  Machining
B)  Inspecting
C)  Accounting
D)  Materials handlingE) B) and C)
F) A) and B)

Question 10

Which of the following cost of quality categories represent the cost incurred to seek and find a new supplier that can provide quality raw materials compared to the low-quality raw materials received from a current supplier?

Accepted Answer

A)  Prevention costs
B)  Appraisal costs
C)  Internal failure costs
D)  External failure costsE) A) and D)
F) C) and D)

Question 11

Darlington & Myrtle,Attorneys at Law,provide a variety of legal services.The law firm uses an activity-based costing system and has developed the following activity pool cost rates:  
Cost and activity data related to two clients is as follows:
  
Required:
a.Calculate the amount of overhead that would be allocated to Client 245 using the activity-based costing system.
b.Calculate the amount of overhead that would be allocated to Client 367 using the activity-based costing system.

Accepted Answer

The answer of Darlington & Myrtle,Attorneys at Law,provide a variety...

Question 12

Swiss Furniture Company manufactures bookshelves and uses an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of May:

Each bookshelf consists of 4 parts.The direct materials cost per bookshelf is $30.00.
What is the total manufacturing cost per bookshelf?

Accepted Answer

A)  $24.80
B)  $22.00
C)  $54.80
D)  $52.00E) A) and B)
F) C) and D)

Question 13

Which of the following items is not a characteristic of a lean company?

Accepted Answer

A)  Machines are arranged by function.
B)  Machine setup times are reduced.
C)  Production is in small batches.
D)  Employees are trained to operate more than one machine.E) All of the above
F) B) and D)

Question 14

As compared to traditional volume-based costing using a single plantwide overhead rate,activity-based costing (ABC)is a more refined costing system that reduces cost distortion.

Accepted Answer

A) True 
 B)False

Question 15

All of the following are considered to be part of the cost hierarchy often used to implement ABC,with the exception of

Accepted Answer

A)  production-level activity.
B)  batch-level activity.
C)  product-level activity.
D)  unit-level activity.E) A) and B)
F) A) and C)

Question 16

Vintage Fun reproduces old-fashioned style roller skates and skateboards.The annual production and sales of roller skates is 950 units,while 1,750 skateboards are produced and sold.The company has traditionally used direct labor hours to allocate its overhead to products.Roller skates require 2.5 direct labor hours per unit,while skateboards require 1.25 direct labor hours per unit.The total estimated overhead for the period is $114,300.The company is looking at the possibility of changing to an activity-based costing system for its products.If the company used an activity-based costing system,it would have the following three activity cost pools: 
The cost pool activity rate for Engineering Costs would be closest to

Accepted Answer

A)  $15.00 per engineering hour.
B)  $10.00 per engineering hour.
C)  $20.00 per engineering hour.
D)  $7.54 per engineering hour.E) None of the above
F) B) and C)

Question 17

Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of June:

Each lawn chair consists of 8 parts;the total direct materials cost per pillow is $10.00.
If the cost to purchase the same lawn chair from a supplier is $35.00,what should Back Porch do to maximize profits?

Accepted Answer

A)  Purchase the lawn chair from the supplier.
B)  Continue to manufacture the lawn chair.
C)  Since the cost to manufacture the lawn chair is also $32.20,the company would make the same profit whether it bought the lawn chair or manufactured it.
D)  Close down the business.E) B) and C)
F) A) and B)

Question 18

In ABC,how is the activity allocation rate computed?

Accepted Answer

A)  The total estimated activity allocation base is divided by the total estimated activity cost pool.
B)  The total estimated activity cost pool is divided by the total estimated activity allocation base.
C)  The total estimated activity allocation base is multiplied by the total estimated activity cost pool.
D)  You take the total estimated activity allocation base and subtract the total estimated total activity cost pool.E) A) and C)
F) None of the above

Question 19

Customer response time is the time that lapses between the receipt of a customer order and delivery of the product or service.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?

Accepted Answer

A)  Appraisal costs
B)  Prevention costs
C)  Internal failure costs
D)  External failure costsE) A) and B)
F) A) and C)

Exam 4: Activity-Based Costing, lean Operations, and the Costs of Quality

Which of the following is not an activity in an ABC system that determines the cost of a manufactured product?

Correct Answer
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In ABC,how is the activity allocation rate computed?

Correct Answer
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Which of the following cost of quality categories represent the cost incurred to seek and find a new supplier that can provide quality raw materials compared to the low-quality raw materials received from a current supplier?

Correct Answer
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Correct Answer
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Correct Answer
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As compared to traditional volume-based costing using a single plantwide overhead rate,activity-based costing (ABC)is a more refined costing system that reduces cost distortion.

Correct Answer
verified

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs of the department by the estimated total quantity of the department's cost allocation base.

Correct Answer
verified

Which of the following is most likely to be the cost driver for the packaging and shipping activity?

Correct Answer
verified

Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?

Correct Answer
verified

All of the following are considered to be part of the cost hierarchy often used to implement ABC,with the exception of

Correct Answer
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Correct Answer
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Costs incurred to avoid providing poor quality services would be considered to be

Correct Answer
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Which of the following items is not a characteristic of a lean company?

Correct Answer
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Correct Answer
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Customer response time is the time that lapses between the receipt of a customer order and delivery of the product or service.

Correct Answer
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Hummingbird Manufacturing manufactures small parts and uses an activity-based costing system. The following parts were produced in October with the following information: Total manufacturing costs for part A is

Correct Answer
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Which of the following is true about lean thinking?

Correct Answer
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Exam 4: Activity-Based Costing, lean Operations, and the Costs of Quality

Which of the following is not an activity in an ABC system that determines the cost of a manufactured product?

Correct AnswerverifiedShow Answer

In ABC,how is the activity allocation rate computed?

Correct AnswerverifiedShow Answer

Which of the following cost of quality categories represent the cost incurred to seek and find a new supplier that can provide quality raw materials compared to the low-quality raw materials received from a current supplier?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

As compared to traditional volume-based costing using a single plantwide overhead rate,activity-based costing (ABC)is a more refined costing system that reduces cost distortion.

Correct AnswerverifiedShow Answer

The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs of the department by the estimated total quantity of the department's cost allocation base.

Correct AnswerverifiedShow Answer

Which of the following is most likely to be the cost driver for the packaging and shipping activity?

Correct AnswerverifiedShow Answer

Which of the following cost of quality categories represents the cost incurred to "test toasters before a sale"?

Correct AnswerverifiedShow Answer

All of the following are considered to be part of the cost hierarchy often used to implement ABC,with the exception of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Costs incurred to avoid providing poor quality services would be considered to be

Correct AnswerverifiedShow Answer

Which of the following items is not a characteristic of a lean company?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Customer response time is the time that lapses between the receipt of a customer order and delivery of the product or service.

Correct AnswerverifiedShow Answer

Hummingbird Manufacturing manufactures small parts and uses an activity-based costing system. The following parts were produced in October with the following information: Total manufacturing costs for part A is

Correct AnswerverifiedShow Answer

Which of the following is true about lean thinking?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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