SB4

Improving operations and reducing costs is the focus of _______-______ management. (Enter only one word per blank.)

activity based

A method that attempts to assign overhead costs based on what is required to produce products is ______ costing.

activity-based

Indirect costs ______.

are not easily traced to products or services

At a minimum, an ABC system should have ______.

at least one non-unit-level activity cost pool

Activity-based costing systems typically include ______ cost drivers.

both volume- and non-volume-based

A group of similar activities that have been combined together is called an activity______ _______. (Enter only one word per blank.)

cost pools

Activity-based management focuses on ______.

increasing efficiency improving operations

A system that pulls materials and products through the manufacturing system based on customer demand is called ______.

just-in-time

Indirect costs are also referred to as ____ costs.

overhead

A proactive approach managers use to determine what costs should be is called ______.

target costing

An approach that aims to improve products by reducing and eliminating errors, streamlining activities, and continuously making production processes better is called _____ _____management. (Enter only one word per blank.)

total quality

A management system that focuses on continually improving production processes is called ______.

total quality management

True or false: ABC is designed to provide managers with detailed information about the cost of activities and is therefore not useful in providing sustainability-related information.

False

Widgets, Inc., plans to produce 8,000 widgets during the upcoming year. Each widget requires four direct labor hours at $25 per hour and $110 in direct material costs. Manufacturing overhead is assigned based on direct labor hours and is estimated to be $625,000 for the upcoming year. Compute the predetermined overhead rate per direct labor hour.

$19.53 Reason: $625,000/(8000x4)=$19.53

Adele's Attic assigns overhead to products based on direct labor hours. For the upcoming year the business plans to use a total of 25,000 machine hours and 5,000 direct labor hours. Total overhead cost is expected to be $35,000. How much overhead would be assigned to a job that used 180 machine hours and 40 direct labor hours?

$280 Reason: Predetermined overhead rate = $35,000/5,000 or $7 per direct labor hour × 40 hours = $280.

Which of the following statements are true? Multiple select question. -Before implementing ABC, a company should weigh the benefits against the costs. -Given today's technology, implementing ABC is an easy task. -Better cost measurement is the true benefit of ABC. -The support of upper management is required for successful ABC implementation.

-Before implementing ABC, a company should weigh the benefits against the costs. -The support of upper management is required for successful ABC implementation.

Which of the following statements are true? Multiple select question.

-Managing and reducing costs is the true benefit of ABC. -Implementing an ABC system is not a trivial task.

A company assigns overhead based on direct labor costs. The predetermined overhead rate is $3.00 per direct labor dollar. A job that used a total of 20 direct labor hours ($400 in total direct labor costs) would be assigned $_________ in total overhead. (Enter your answer as a whole number).

1200

Fill in the Blank Question Fill in the blanks to complete the sentence. SPL Enterprises assigns overhead based on number of machine hours. For the upcoming year, they plan to use a total of 250,000 machine hours and 50,000 direct labor hours. Total overhead cost is expected to be $500,000. The predetermined overhead rate per machine hour is $__________ . (Enter your answer as a whole number without decimal places). Listen to the complete question

2

Which of the following statements is true?

An existing ABC system can report sustainability-related information.

Batch-level

Batch-level activities are performed each time a group of units is processed, regardless of how many units are in the group.

Which of the following is NOT a volume-based cost driver?

Machine setups

Activities that occur regardless of how many products are produced or how many batches are run or units made are _____ _____ activities. (Enter only one word per blank.)

Facility-level activities

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

Facility-level

Product-level

Product-level activities are incurred for each product produced and are not dependent on the number of units or batches.

Unit-level

Unit-level activities are performed for each unit.

Non-volume-based cost drivers ______.

are used in ABC systems allow more indirect costs to be allocated to products

The final step in activity-based costing is ______.

assigning indirect costs to products or services

A just-in-time (JIT) system ______.

is used to help reduce costs is a demand-pull system

The approach to determine what costs should be in order to earn an acceptable profit across a product's life cycle is called ______ _________or cost planning. (Enter only one word per blank.)

target costing

Indirect costs can be assigned to products or services using ______.

the activity rate method the activity proportion method

Direct labor hours and machine hours are both examples of_______ -based cost drivers. (Enter only one word per blank.)

volume