ACCT 3320:901 Chapter 5 Learn Smart

The cost assignment view of the ABC system uses all of the following except ______.

identification of events that trigger activities

Volume-based costing is is also called based costing. (Enter only one word per blank.)

throughput

An activity that must be done for each item produced is a(n) __ level activity.

unit

Activity analysis that looks at a set of linked activities to determine the cause of a non-value added activity is called analysis. (Enter only one word per blank.)

Blank 1: process Blank 2: value

Activities that are necessary to support entire product lines, but are not performed every time a new unit or batch is produced are - level activities. (Enter only one word per blank.)

Blank 1: product Blank 2: sustaining

One way of picturing the relationship between ABC and ABM is in terms of the - ABC model that shows how costs can be repurposed to provide insight into the cost and effectiveness of the processes. (Enter only one word per blank.)

Blank 1: two Blank 2: dimensional

Identification of cost drivers for each activity cost pool occurs in stage of ABC costing. (Enter only one word per blank.)

Blank 1: two or 2

An activity that must be done for each item produced is a(n) - activity. (Enter only one word per blank.)

Blank 1: unit Blank 2: level

Product costs are most likely to be distorted when using a(n) -based product costing system. (Enter only one word per blank.)

Blank 1: volume

Traditional product-costing systems distort product costs by using ______.

a single, volume-based cost driver

A system that uses multiple cost pools and assigns costs to products in accordance with the amount of the activity used by the product line is a(n) ______ costing system.

activity-based

Direct labor is not the best cost driver for a cost related to the purchasing raw materials because the purchasing activity is a(n) ______.

batch activity and direct labor is a unit level activity

Storage time is the time ______.

during which items are held before further processing or shipment

A pool rate of $3.00 per machine hour means that ______.

each machine hour used by a product should cost $3.00

Costs such as heating and cooling, property taxes and insurance on the factory are examples of

facility-level activities

To calculate total unit cost in an activity based system requires ______.

- direct materials per unit - overhead activity cost per unit - direct labor per unit

A set of linked activities is called a(n). (Enter only one word per blank.)

Blank 1: process

Activities required in order for the entire production process to occur are referred to as level activities. (Enter only one word per blank.)

Blank 1: facility

Continuous and gradual cost reduction is the meaning of costing. (Enter only one word per blank.)

Blank 1: kaizen

Assignment of overhead costs to activity cost pools occurs in stage of ABC costing. (Enter only one word per blank.)

Blank 1: one or 1

The cost per unit of the cost driver for a particular activity cost pool is called the . (Enter only one word per blank.)

Blank 1: pool Blank 2: rate

The use of ABC information to support an organization's strategy, improve operations and manage costs is called _______ management.

activity-based

The proportion of an activity consumed by a particular product is called the . (Enter only one word per blank.)

Blank 1: consumption Blank 2: ratio

Identification of activity cost pools occurs in stage of ABC costing. (Enter only one word per blank.)

Blank 1: one or 1

The concept that improvement is the goal and responsibility of every worker from the CEO to manual laborers, in every activity, every day, all the time is the basis of ______ costing.

kaizen

With a traditional volume-based costing system, there is a tendency to undercost ______.

low-volume, complex

The second stage in an ABC system is to ______.

identify the cost driver for each activity cost pool

With a traditional volume-based costing system, there is a tendency to overcost ______ products.

high-volume, standard

Widely varying consumption ratios result from ______.

product line diversity

The time spent ensuring the product is of high quality is called ______ time.

inspection

Costs of setting up machinery for a new production run ______.

is a batch-level activity

True or false: Identification of activities should be done at the broadest level possible.

False

The steps in stage two of ABC costing are ______.

- identification of cost drivers for each activity cost pool - computation of total unit activity cost for each product line

The steps in stage one of ABC costing are ______.

- identification of cost pools - assignment of costs to appropriate cost pool

Traditional product costing systems may not work well when a company ______.

- manufactures a diverse set of products - relies only on unit-based costs drivers

Non-value added activities can be ______.

- necessary, but inefficient and improvable - unnecessary and dispensable

Determining the root causes and what triggers activities is called . (Enter only one word per blank.)

Blank 1: activity Blank 2: analysis

The use of ABC information to support an organization's strategy, improve operations or manage costs is called - management. (Enter only one word per blank.)

Blank 1: activity Blank 2: based

True or false: An activity may be valued-added in some situations and non-value added in other situations.

True

A company's expenditures on IT or accounting is an example of a(n) - - activity. (Enter only one word per blank.)

Blank 1: business Blank 2: value Blank 3: added

A value added activity is ______.

- necessary to production - performed efficiently

Product costs can be distorted by using ______.

- the same cost driver for all activities - single cost pool - only unit leve cost drivers

Volume-based product costing systems have difficulty assigning overhead costs accurately if ______.

- there is a large proportion of non-unit-level activities - products differ significantly in the way they use activities

Labor hour based product costing systems where labor hour are related closely to the factory volume are also called ______ costing systems.

- volume-based - throughput-based

One way to identify differences between products is to compare the ratio of each activity cost pool used by the products. (Enter only one word per blank.)

Blank 1: consumption

The first stage in an ABC system is to ______.

identify significant activities and assign overhead costs to each activity

Categorizing the ways in which time is spent in a production process is one approach cost-management analysts find helpful in ______.

identifying non-value added activities

The focus on the causes of activities and the evaluation of these activities is the view of an ABC system. (Enter only one word per blank.)

Blank 1: process

True or false: The classification of activities into unit-level, batch-level, product-sustaining-level and facility-level activities is called activity based costing.

False

True or false: The total unit product cost is calculated by adding total direct materials and total direct labor costs and dividing by the number of units produced.

False

Non-value added costs should be highlighted in ______.

activity center cost reports

When implementing an ABC system, identifying a company's significant activities ______.

- should create an activity list broken down to the most fundamental level practical - is called activity analysis

An activity that is unnecessary and dispensable is a(n) ______.

non-valued added activity

Which of the following is a customer value added activity?

technical support for a cell phone

Engineering design cost is an example of a(n) ______ level activity.

product-sustaining

Activity analysis and evaluation involves all of the following except ______.

assignment of costs to activities

The classification of activities into levels is called a(n) . (Enter only one word per blank.)

Blank 1: cost Blank 2: hierarchy