Ch 5 - ABC costing cost accounting

Which of the following statements about business-value-added activities (BVAs) is true?

It is impossible to eliminate all BVAs in an organization.

Costs that are common to many different activities within an organization are known as ____ costs.

Organizational

Which of the following is/are part of activity-based management? Activity analysis Cost driver analysis

Yes, Yes

For a CPA firm, how would the wages of staff auditors be classified? Direct Costs Value-Added Costs

Yes, yes

A value chart indicates

all steps in a process and the time it takes for them to be completed.

The sum of the non-value-added time and the value-added time equals

cycle time.

When a firm redesigns a product to reduce the number of component parts, the firm is

decreasing non-value-added costs.

A process map

is also known as a detailed flowchart.

When a company is labor-intensive, the cost driver that is probably least significant would be

machine hours

Lead time minus production time is equal to

non-value-added time.

Traditionally, overhead has been assigned based on direct labor hours or machine hours. What effect does this have on the cost of a high-volume item?

over-costs the product

An objective of activity-based management is to

reduce or eliminate non-value-added activities incurred to make a product or provide a service.

An activity driver is used for which of the following reasons? To measure demands To measure resources consumed

yes yes

A value chart should include which of the following? Service time Inspection time Transfer time

yes, yes, yes

For one product that a firm produces, the manufacturing cycle efficiency is 20 percent. If the total production time is 12 hours, what is the total manufacturing time?

60 hours

In activity-based costing, preliminary cost allocations assign costs to

Activities

Cost allocation bases in activity-based costing should be

Cost drivers