Chapter 7 Managerial Accounting 202 Activity based costing: A tool to aid decision making

Which is not a management report that is normally prepared with ABC data?

Customer Margins

Which costs would be allocated to products or customers?

Customer service, machine setup, product design

Activity- based costing accumulates costs for each ______

Activity

What is used in the second-stage allocation of overhead costs to assign costs to cost objects?

Activity rates

Shipping orders to a grocery store would be considered a(n)

Batch- level activity

Activity- Based costing estimates the costs of the resources consumed by ______

Cost objects

In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin.

Cost of goods sold

Which is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget?

Depreciation expense

In a direct materials budget, whatis the desired ending raw materials inventory equal to for the year?

Desired ending raw materials inventory for thelastperiod.

Which costs would not be allocated using ABC?

Direct labor

Which of the following is an allocation base commonly used under the traditional methods for allocation of overhead costs?

Direct labor- hours.

First- stage allocation of overhead costs to each cost pool is accomplished using which allocation?

Employee interviews and percentages

Which is not a first- stage allocation overhead costs to each cost pool?

Grouping batch and unit level activities

What is not a benefit of self-imposed budgets?

Lower- level managers are encouraged to create budgetary slack since they are more knowledgeable of day-today operations.

Does ABC allocation on all manufacturing costs to products differ between activity-based costing (ABC) and traditional absorption costing?

NO

What are some examples of cost pools?

Ordering materials, settting up machines, assembling products, and inspecting products are examples of

Advertising is an example of a ____ activity?

Product level

Which of the following are management report that is normally prepared with ABC data?

Product profitability, customer profitability

The budgeting process begins with the preparation of the ____ budget.

Sales

What is not one of the reasons that organizations use budgets?

The budgeting process enables managers to uncover bottlenecks as they occur.

What is the purpose of preparing a direct materials budget ?

To estimate the quantity of raw materials to be purchased

A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________.

Totsal budgeted variable sellign and administrative expenses

What is Activity Based Costing? (ABC) and what is it's use?

is a costing method that is potentially affect capacity and therefore "fixed" as well as variable costs. Used to supplement to, rather than as a replacement for, a company's usual costing system.