ACCT 2302 Test 1

Why is top management support needed when ABC is implemented?

Leadership is instrumental in motivating employees to embrace ABC.

Costs assigned and/or traced when computing product margin in a traditional cost system are ______.

Manufacturing OH, direct material and direct labor

What type of activities are carried out regardless of which customers are served, which products are produced, how many batches are run or how many units are produced?

Organization-sustaining

Each department has a separate Work in Process account when using ______ costing.

Process

Work is performed on products, and materials, labor, or overhead costs are added to products in a(n)

Processing Deparment

True or false: The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing.

True

Which of the following is a key difference between process and job-order costing?

Under process costing, it makes no sense to try to identify materials, labor and overhead costs with a particular customer order.

What level of activity is performed each time an item of a product is produced?

Unit

the journal entry to record direct materials costs in processing Department #1 is debit ______.

Work in Process-Department #1 and credit Raw Materials

The journal entry to record direct labor costs in processing Department #1 is debit ______,

Work in process-Department #1 and credit Salaries and wages payable

The type and quantity of each type of direct material needed to complete a unit of product is listed on the ______.

bill of materials

Activity based costing provides managers with information that affects ______.

both fixed and variable costs

Identifying the activities that will form the foundation for the system ______.

can be time-consuming often involves interviewing employees involves a great deal of judgment

In activity-based costing, nonmanufacturing and manufacturing costs are assigned to products on a(n) ______ basis.

cause-and-effect

Process costing accumulates costs by

department

Conversion costs are ______.

direct labor plus manufacturing overhead

An activity cost pool accumulates costs for ______ activity measure(s).

exactly one

Similarities between job-order costing and process costing include the ______.

flow of costs through the manufacturing accounts manufacturing accounts used basic purpose to assign and compute product costs

Costs of unused or idle capacity are assigned to products when using a(n) costing system

full

In process costing, manufacturing overhead costs are ______.

generally applied using a predetermined overhead rate

Process costing produces ______ units.

homogeneous

An activity-based costing system ______. Multiple select question. is costly to maintain provides benefits of improved accuracy that always outweigh the costs produces different numbers than a traditional system requires substantial resources

is costly to maintainrequires substantial resourcesproduces different numbers than a traditional system

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

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

Activity-based costing only charges products for the cost of the capacity used because ______.

it results in a more stable unit product cost products are only assigned the costs of resources they actually use

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the ______.

job cost sheet

Factory labor charges that cannot be easily traced to a job are treated as ______.

manufacturing overhead

Under activity-based costing, nonmanufacturing costs ______.

may be allocated to products based on cause

Activity-based costing uses numerous cost pools.

overhead

In activity-based costing, first-stage allocation assigns costs to activity cost pools

overhead

Work is performed on products, and materials, labor, or overhead costs are added to products in a(n) department.

processing department

Customer service employees are a ______ cost.

step-fixed

Which costing system does not assign selling and administrative costs to products when computing product margin?

traditional

The flow of costs through manufacturing accounts is basically the same for job-order costing and process costing.

trure

Place the steps for implementing ABC in order

1. define activities, activity cost pools, and activity measure. 2. assign overhead costs to activity cost pools. 3. calculate activity rate 4. assign overhead costs to cost objects 5. prepare management reports.

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

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

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

Activity based management

The journal entry to record material cost in the second department includes a Work in Process-Department #2.

Debit

ABC is generally used for ______ reporting.

Internal

A characteristic essential for successful implementation of ABC is ______.

a link to how people are evaluated and rewarded

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under costing. (

absorption

Differences between job-order and process costing include that process costing ______.

accumulates costs by department is used for indistinguishable products

The first major step in implementing ABC is to identify the that will form the foundation for the system. (Enter only one word per blank.) Listen to the complete question Need help? Review these concept resources.

activities

Which costing system charges products only with the costs of the capacity used by those products and not with the cost of unused capacity?

activity based

Total cost of each activity divided by the total activity is the computation of ______.

activity rates

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

first

Costs that can be easily traced to individual products include ______.

warranty repair costs sales commission shipping costs

A processing department is an organization unit ___

where work is performed on a product, and materials, labor or overhead are added

When using process costing, each processing department has a separate account. (

work in process account