Match the activity pool with an appropriate activity measure. ~ Your answer is correct Your answers: Customer orders IHI ~ Number of customer orders Product design c-:i ~ Number of product designs l J Order size c-:i ~ Machine-hours Customer relations c-:i ~ Number of customers
One of the reasons why ABC is not used for external reporting is because it does not comply with: SEC. ~ Your answer is correct. IFRS.
The correct answer Is shown. In the ease of adjustment coding scheme, green costs adjust automatically to changes in activity without manager action. V Your answer is correct.
The correct answer Is shown. Designing and advertising a product are all product-level activities. 4./ Your answer is correct.
What type of activities are performed each time a group of units is processed, regardless of how many units are in the group? ~ Your answer is correct Product Bundle Unit
Activity based costing only charges products for the cost of the capacity used because (select all that apply):../your answer is correct assigning costs of unused capacity artificially reduces product cost per unit Cblle111e
Match each color-coded cost with its description.../your answer is correct 1 Your answers: Red costs Are the most difficult to adjust to changes in activity and require management action J l Yellow costs Green costs c-o../ Require management action in order to make adjustments to changes in activity c-::i../ Automatically adjust to changes in activities L l J
Place the steps for implementing ABC in order. ~ Your answer is correct. r ~ 1 Define activities, activity cost pools, and activity measures. ~ 2 Assign overhead costs to activity cost pools. I ~ 3 Calculate activity rates. ~ 4 Assign overhead costs to cost objects. I ~ 5 Prepare management reports. J
What level of activity involves costs that arise because each unit of product requires certain resources? ~ Your answer is correct Product level Batch-level Customer-level
The correct answer is shown. In activity-based costing, first-stage allocation assigns overhead costs to activity cost pools. (Enter only one word per blank) '-'Your answer is correct.
Match the ease of adjustment code with the correct cost ~ Your answer is correct Your answers: Red cost!kl ~ Building lease J Yellow cost!kl ~ Selling expense Green cost!kl ~ Shipping cost
The correct answer Is shown. In activity-based costing, each cost pool has its own unique measure of activity. -./Your answer is correct
In the ease of adjustment coding scheme, which of the following are usually considered Yellow costs? f i Factory ut ilities * Direct labor Direct materials Factory equipment depreciation ~ Your answer is correct
The correct answer Is shown. Activity rates are used to apply overhead costs to products and customers in the second -stage allocation.. (Enter only one word per blank). V'Your answer is correct.
In activity-based costing, what causes the consumption of overhead resources? Overhead Labor Materials fl Activity../Your answer is correct.
Which of the following are organization-sustaining activities? (Check all that apply.) f 1 Setting up a computer network V Your answer is correct. Arranging for shipping products to a customer f i Heating a factory f 1 Preparing annual reports
Under costing, overhead costs are not assigned to products if costs are not specific to products. traditional both traditional and activity-based ~ Your answer is correct.
The correct answer Is shown. Only costs that can be traced are relevant when deciding to eliminate a product line. -./Your answer is correct.
The correct answer is shown. If the activity rate for the Customer Orders activity pool is $20 per order and there are 400 customer orders, the total overhead cost assigned to this cost pool is $8000. (Do not include a comma In your answer.) V' Your answer is correct
A cost pool including costs to entertain customers and make sales calls would be considered a activity. product-level ~ Your answer is correct unit-level
Under activity-based costing, nonmanufacturing costs: ~ Your answer is correct. are always assigned to products, regardless of cause are never assigned to products f 1 may be assigned to products that they have been reasonably caused by are always treated as period costs
The correct answer Is shown. When using a traditional cost system, standard, high-volume products are generally overcosted and custom, low -volume products are often undercosted...; Your answer is correct.
The correct answer Is shown. A(n) action analysis report shows which costs are assigned to cost objects and how difficult it would be to adjust the cost if there were a change in activity..../your answer is correct
In activity-based costing, what is calculated by dividing the total cost of each activity by its total activity? Cost pool Allocation base if! Activity rates Transaction driver ~ Your answer is correct.
What are some of the limitations of activity-based costing systems? {Check all that apply.) ~ Your answer is correct. f i ABC procedures produce numbers that do not match traditional costing. At least three cost systems must be maintained. fl ABC requires substantial resources. The benefits of accuracy outweigh the costs.
What causes traditional and activity-based costing systems to report different product margins? (Check all that apply.) ~ Your answer ls correct. The ABC system assigns nonmanufacturing overhead costs to products on a cause-and-effect basis as appropriate. The traditional cost system assigns period costs to all products that are produced during the period. Traditional cost systems allocate all of the manufacturing overhead costs to products using a volume-related allocation base.
Activity-based management is focused on which,of the following activities? (Check all that apply.) ~ Your answer is correct. Pricing decisions Increasing processing time
To reconcile ABC product margin to net income: ~ Your answer is correct add overhead costs not assigned to products f 3 subtract overhead costs not assigned to products do nothing; product margin is equal to net income/loss
The correct answer Is shown. The most common reports prepared using ABC data are the product and customer profitability reports. or/ Your answer is correct.
Sales minus the ABC costs of the product is called: gross margin contribution margin f 1 product margin net profit../your answer is correct.
A company has four cost pools-customer relations, order size, product design and customer orders. If indirect labor uses 15% for customer relations, 30% for order size, and 35% for product design, then what percentage is used for customer orders?..; Your answer is correct. 25% 40%
The correct answer Is shown. In activity-based costing, the first-stage allocations are often based on results of interviews with employees. -./Your answer is correct.
True or false: ABC data should report how employees are rewarded and evaluated. False k* rrue../your answer is correct.
What manufacturing overhead costs are not assigned to products in activity-based costing? (Check all that apply.) ~ Your answer is correct. I* The costs of idle capacity The costs of direct labor The costs of capacity used The costs of organization-sustaining activities
For what reasons is an ABC system more costly to maintain than traditional costing systems? (Check all that apply.)../your answer is correct. Costs for materials and labor must be entereol. Numerous activity measures must be entered into system. Large amounts of payroll data must be entered. Numerous activity measures must be collecte-0 and checked.
What pieces of information are provided in product and customer profitability reports? (Check all that apply.) ~ Your answer is correct. Unsatisfied customers
Which of the following can be combined in activity-based costing? f i Highly correlated activities ~ Your answer is correct. Activities should not be combined in activity based costing Labor and overhead activities Batch and product level activities
The correct answer Is shown. Customer sales minus direct material, direct labor, and overhead cost pools used for each customer equal customer margin. ~ Your answer is correct.
The correct answer is shown. The first major step In implementing ABC is to identify the activities that will fonn the foundation for the system. v' Your answer is correct
Computing overhead costs to be assigned to products for an action analysis report: C* results in a cost matrix. ~ Your answer is correct. calculates a single cost number for each cost pool. provides less detail than conventional ABC analysis. C* includes a color-<:oding scheme to help with adjustments.
Match the following activity levels in activity -based costing with the correct activity. ~ Your answer is correct Your answers: Unit-level c-a ~ Power to run production equipment Batch-level IHI ~ Machine set-up Product-level CHI ~ Product design Customer-level C!- 1 ~ Sales calls Organization-sustaining CH:I ~ Factory cooling system
The correct answer Is shown. Benchmarking is a systematic approach to identifying the activities that need the most improvement o./ Your answer is correct.
The correct answer Is shown. All manufacturing costs are assigned to products in the traditional costing system. (Enter only one word per blank.).,,, Your answer is almost correct. You wrote.., overhead instead of ~ manufacturing.
True or false: One difference between ABC and traditional product costing is that when using activitybased costing, organization-sustaining costs are assigned to products. Under traditional costing, they are not True fl False titl' Your answer is correct.
In ABC, the greater the number of activities: f 1 the more accurate the costs are likely to be ~ Your answer is correct. the easier the system will be to implement and maintain If I the more costly the system will be to design
The action analysis report (Check all that apply.) ~ Your answer is correct f 1 provides better information for decision making than a traditional cost system. C* identifies costs that have been assigned to a product. results in a different bottom line margin that a traditional ABC product margin. f 1 shows how difficult it would be to adjust costs given changes in activities.
Redeploying resources is only beneficial if the resources are shifted to the in the process. first stage most expensive work center least expensive work center c constraint ~ Your answer is correct.
A company assigns overhead using a plantwide rate. If total estimated manufacturing overhead is $900,000 and the total estimated activity is 30,000 machine-hours, what overhead cost will be assigned to a product if it uses 12,000 machine-ihours? ~ Your answer is correct. $2,250,000 $450,000 $900,000
The correct answer is shown. Managers may make the mistake of assigning idle costs and organization-sustaining costs to products, resulting in higher product costs and lower product margins. (Enter only one word per blank.) to/ Your answer is correct.
Which characteristics are essential for successful implementation of ABC? (Check all that apply.) ~ Your answer is correct. f 1 Top managers must support ABC. f 1 ABC data should be linked to how people are 1rewarded. f i A cross-functional team should be created. Top managers must design and implement ABC.
ABC is generally used for reporting. external fl internal both internal and external ~ Your answer is correct
The correct answer is shown. ABC systems assign nonmanufacturlng overheadl on a(n) cause-and-effect basis. -./Your answer is correct.
Traditional cost systems allocate all manufacturing costs using a(n) allocation base. ~ Your answer is correct. activity-related overhead-related materials-related
The correct answer is shown. An ABC action analysis report involves more overhead cost detail than the conventional ABC analysis. ~ Your answer is correct.
The correct answer Is shown. An activity measure in activity-based costing is used as a(n) allocation base. -./Your answer is correct. Cllllleqe
In traditional costing, which type of cost is not included In the product margin? Overhead Ci Period Organization-sustaining Direct labor../your answer is correct.
Compared to traditional systems, activity-based costing uses cost pools and unique measures of activity. fewer the same number of fl more ~ Your answer is correct.
The correct answer is shown. All manufacturing costs are assigned to products in traditional costing. (Enter only one word per blank.) ~ Your answer is correct
The correct answer Is shown. An activity cost pool relates to a single activity measure in the ABC system.../your answer is correct.
Which costs are assigned and/or traced when computing product margin in a traditional cost system? (Check all that apply.) Selling and administrative ~ Your answer is correct
In activity based costing another term for activity measure is: ~ Your answer is correct k* cost driver cost pool overhead volume
The correct answer Is shown. Activity-based costing can identify activities that would benefit from process improvements. (Enter only one word per blank.) V Your answer is correct.
The differences between ABC costing for internal reporting and ABC costing for external reporting are that: (Check all that apply.) " Your answer is correct. external ABC costing includes organization-sustaining costs in the computation. external ABC costing includes non manufacturing costs that can be traced to the product in the computation. internal ABC costing using multiple overhead rates and external ABC costing uses only one. if! external ABC costing includes all manufacturing overhead costs in the computation.
True or false: In an automated environment, using traditional allocation bases based on volume may distort unit product costs. fi rrue False../Your answer is correct.