ACCT 2020 Chapter 5 Smartbook

second

Activity rates are used to apply overhead costs to products and customers in the ______ stage allocation.

profitability reports

The most common reports prepared using ABC data are the product and customer...

overcomes some important limitations of ABC & does not assume employees will self-report IDLE time

Time-driven activity-based costing (TDABC) does what

Capacity Analysis

Time-driven activity-based costing (TDABC) performs ________ ________ to evaluate employee idle time

activity rates

Total cost of each activity divided by the total activity is the computation of:

30

Total estimated manufacturing overhead is $900,000 and total estimated activity is 30,000 machine-hours. The plantwide overhead rate is $____per machine hour.

True

True or false: Activity-based costing can be used for process improvement.

overcosts; undercosts

Usually, traditional costing ______ high-volume products and ______ low-volume products.

top managers must design the ABC system

Which of the following is NOT essential for the successful implementation of an ABC system?

employees do not have to self-report idle time, it helps estimate the financial impact of aligning capacity with demand, it is easy to update

Strengths of time-driven activity-based costing (TDABC) include:

activities

The first major step in implementing ABC is to identify the __________ that will form the foundation for the system.

activity-based management

Focusing on activities to eliminate waste, decrease processing time, and reduce defects is the basis of:

can be difficult, time-consuming, require a great deal of judgement and often involves individual employee interviews

Identifying the activities that will form the foundation for the system:

an activity

In activity-based costing, the consumption of overhead resources is caused by:

False

True or false: Traditional cost systems tend to overcost standard products and overcost specialty products.

overhead

Activity-based costing uses numerous _________ cost pools.

Absorption

All manufacturing costs are allocated to products in a(n) ___________ costing system, regardless of whether the product consumes the resources associated with those costs.

traditional

All manufacturing costs are allocated to products in a(n) ___________ costing system, regardless of whether the product consumes the resources associated with those costs.

requires substantial resources, produces different numbers than a traditional system, is costly to maintain

An activity-based costing system:

assists with measuring customer profitability & uses estimates based on practical capacity

Customer cost analysis using time-driven activity-based costing (TDABC):

helps manage customer mix & does not require employee interviews

Customer cost analysis using time-driven activity-based costing (TDABC):

LESS

External reports are _______ (more/less) detailed than internal reports.

offset each other in cost of goods sold and inventory valuations

If some products are overcosted and some are undercosted the errors will:

$1700

If the activity rate for the customer order cost pool is $250 per order and the total for this cost pool is $425,000, the total number of customer orders is:

1. Managers and employees may resist the change to ABC. 2. ABC procedures produce numbers that do not match traditional costing. 3. ABC requires substantial resources.

What are some of the limitations of activity-based costing systems?

Traditional absorption costing

Which costing method assigns only manufacturing costs to products?

Product and customer profitability reports

Which of the following help companies channel their resources into the most profitable growth opportunities?

a link to how people are evaluated and rewarded

A characteristic essential for successful implementation of ABC is:

FALSE

A strength of TDABC is that it can be easily updated by interviewing employees.

step-fixed

Customer service employees are a ____________ cost.

$8 per customer call and $15 per development hour

Your Answer incorrect A company's total expected overhead for the year is $500,000. Two activity cost pools have been identified: Customer Service with a total cost of $200,000 and a total activity of 25,000 customer service calls; and Product Development with a total cost of $300,000 and total activity of 20,000 development hours. Using activity-based costing, calculate the appropriate activity rate(s).

$360,000

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, the overhead cost assigned to a product using 12,000 machine-hours is:

second

Activity rates are used to apply overhead costs to products and customers in the _____ stage allocation

1,700

If the activity rate for the customer order cost pool is $250 per order and the total for this cost pool is $425,000, the total number of customer orders is:

activity

In ABC, any event that causes consumption of overhead resources is a(n) __________

manufacturing

In a traditional cost accounting system, what type of costs are assigned to products even if the costs are not caused by the products?

first-stage

In activity-based costing, ______ allocation is the process of assigning overhead costs to activity cost pools. (a stage of a step)

manufacturing

In traditional costing, ______ costs are assigned to products.

external

Individual product costs calculated using ABC are not listed on ______ reports.

Activity Based Costing

Some manufacturing costs may be excluded from product costs when using:

external financial reports

Traditional absorption costing is designed to provide data for: