ACC 208 -Chapter 6 LS
In activity-based costing, nonmanufacturing and manufacturing costs are assigned to products of a(n) _____ basis.
Cause-and-effect
An activity _____ pool relates to a single activity measure in the ABC system.
Cost
Activity measure
Cost driver
Another name for an activity measure or allocation base in ABC is _____ _____.
Cost driver
T/F: In an automated environment, using traditional allocation bases based on volume may distort unit product costs.
True
T/F: Some manufacturing costs may be excluded from product cost when using ABC.
True
Product-level
Product design
To compute a product's profits or _____ _____, sales, direct and indirect costs are needed.
Product margin
In activity-based costing, _____ are different from those calculated using traditional costing
Product margins
A customer relations cost pool would include the cost of...
Sales calls
Customer-level
Sales calls
Individual customer _____ minus individual customer_____ equals customer margin.
Sales, costs
Activity-bases costing uses activity rates to apply overhead costs to products in _____ allocation
Second-stage
The customer orders cost pool uses 25% of indirect factory wages. If total indirect factory wages are $500,000 the amount allocated to this cost pool in the first-stage allocation is...
$125,000 ($500,000 x 0.25)
A company assigns overhead using a plantwide rate. If total estimated manufacturing overhead is $900,000 and the total estimated activity is 30,000 machine-hours, the overhead cost assigned to a product using 12,000 machine-hours is...
$360,000 ($900,000/30,000)
For what reasons is an ABC system more costly to maintain than traditional costing systems?
-Numerous activity measures must be entered into the system -Numerous activity measures must be collected and checked
In ABC, any event that causes consumption of overhead resources is a(n) _____.
Activity
Total cost of each activity divided by the total activity is the computation of...
Activity rates
Overhead includes both manufacturing and nonmanufacturing costs under...
Activity-based costing
Some manufacturing costs may be excluded from product costs when using...
Activity-based costing
Focusing on activities to eliminate waste, decrease processing time, and reduce defects is the basis of _____-_____ _____.
Activity-based management
An activity measure is a(n) _____ base in an activity-based costing system.
Allocation
Activity cost pool
Amount of costs accumulated for a single activity
Duration Driver
Amount of time to perform an activity
In activity-bases costing, the consumption of overhead resources is causes by...
An activity
Activity based costing provides managers with information that affects...
Both fixed and variable expenses
Organization-sustaining
Factory cooling system
External reports are _____ (more/less) detailed than internal reports
Less
Batch-level
Machine set-up
In a traditional absorption costing system all _____ costs are assigned to products.
Manufacturing
In traditional costing, _____ costs are assigned to products.
Manufacturing
Activity-based costing _____ included activities that do not relate tot he number of units produced.
May
An example of a transaction driver is the...
Number of bills sent out to a customer
Transaction Driver
Number of times an activity occurs
All manufacturing costs are assigned to products in _____ costing.
Traditional
When using a tradition cost system, standard, _____-volume procducts are generally overcosted and custom, _____-volume products are often undercosted
high, low
The most common management reports using ABC data are...
-Product profitability -Customer profitability
What causes traditional and activity-based costing systems to report different product margins?
-Traditional cost systems allocate all manufacturing overhead costs to products -Traditional cost systems allocated all of the manufacturing overhead costs to products using a volume-related allocation base -The ABC system assigns nonmanufacturing overhead costs to products on a cause-and-effect basis as appropriate
What pieces of information are provided in product and customer profitability reports?
-Unprofitable customers -Profitable product lines -Unprofitable product lines
An activity-based costing system...
-Uses numerous overhead cost pools -May exclude some manufacturing costs from product costs
Costs that can be easily traced to individual products include...
-Warranty repair costs -Shipping costs -Sales commission
Activity-based costing uses more cost _____ than traditional costing.
Drivers
An activity cost pool accumulates costs for _____ activity measure(s).
Exactly one
In activity-based costing, first-stage allocation assigns _____ costs to activity cost pools.
Overhead
Comparing _____ is the basis of benchmarking
Performance within the same industry
Unit-level
Power to run production equipment
If the activity rate is $65 per order with a total of 120 orders for a product, the overhead costs assigned to the product is _____.
$78,000
