Accounting Ch 5

A hospital administrator is in the process of implementing an activity-based-costing system. Which of the following tasks would not be part of this process?

NONE OF THE ABOVE, as all these tasks would be part of the process.

Of the following organizations, activity-based costing cannot be used by:

NONE OFTHE ABOVE, as all are able to use this costing system

Activity-based costing systems:

OFTEN REVEAL products that were under- or overcosted by traditional costing systems

Consider the following statements regarding traditional costing systems:

OVERHEAD, TRADITIONAL costing

Vanguard combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours. Activity-based costing would likely show that with Vanguard's current procedures,

the company's HIGH-volume products are OVERCOSTED

Under a traditional costing system, which of the following costs would likely be classified as indirect with respect to the various products manufactured?

ALL OF THE ABOVE

Widely varying consumption ratios:

ARE REFLECTIVE of product-line diversity

Williams Corporation is changing from a traditional costing system to an activity-based system. As a result of this action, which of the following costs would likely change from indirect to direct?

(long) PRODUCTION setup, FINISHED-goods inspection, and product SHIPPING

Which of the following statements about activity-based costing (ABC) is false?

ABC CANNOT be used by service businesses

Which of these factors should be considered in the selection of a cost driver?

All 3 answers

In an activity-based costing system, materials receiving would typically be classified as a:

BATCH-level activity

Which of the following activity cost pools and activity measures likely has the lowest degree of correlation?

EMPLOYEE TRAVEL to job sites, NUMBER of EMPLOYEES

The salaries of a manufacturing plant's management are said to arise from:

FACILITY-level activities

The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost:

HIERARCHY

Which of the following is the proper sequence of events in an activity-based costing system?

IDENTIFICATION of COST POOLS, identification of cost drivers, calculation of cost application rates, assignment of cost to products

Which of the following choices correctly depicts a cost that arises from a batch-level activity and one that arises from a facility-level activity?

INSPECTION, PROPERTY taxes

Which of the following is least likely to be classified as a facility-level activity in an activity-based costing system?

MACHINE processing cost

Which of the following is not a broad, cost classification category typically used in activity-based costing?

MANAGEMENT-level.

Successful adoptions of activity-based costing typically occur when companies rely heavily on:

MULTIDISCIPLINARY project teams

Which of the following tasks is not normally associated with an activity-based costing system?

PREPARATION of allocation matrices

In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:

PRODUCT- LINE diversity or a large proportion of nonunit-level activities.

Which of the following generally fails to signal the need for a new product-costing system?

PRODUCT-line profit margins are easy to explain

Foster, Inc., an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a:

PRODUCT-sustaining activity

Which of the following is least likely to be classified as a batch-level activity in an activity-based costing system?

PROPERTY taxes

Which of the above statements is (are) true?

Product diversity CREATES COSTING problems because diverse products tend to utilize manufacturing activities in different ways, OVERHEAD

Grossman Enterprises is converting to an activity-based costing system and needs to depict the various activities in its manufacturing process along with the activities' relationships. Which of the following is a possible tool that the company can use to accomplish this task?

STORYBOARDS

Consumption ratios are useful in determining:

THE EXISTENCE of product-line diversity

Consider the following statements regarding product-sustaining activities:

THEY ARE NEEDED to support an entire product line

Jackson manufactures products X and Y, applying overhead on the basis of labor hours. X, a low-volume product, requires a variety of complex manufacturing procedures. Y, on the other hand, is both a high-volume product and relatively simplistic in nature. What would an activity-based costing system likely disclose about products X and Y as a result of Jackson's current accounting procedures?

UNDER cost, OVER cost

In an activity-based costing system, direct materials used would typically be classified as a:

UNIT-level cost

Moon Bay Manufacturing uses machine hours to apply manufacturing overhead to products. This method of costing would likely be acceptable if the company has:

a LARGE PROPORTION of unit-level activities and FAIRLY IDENTICAL consumption ratios among product lines

Many traditional costing systems:

combine widely varying elements of overhead into a single cost pool

Which of the following choices correctly expresses the proper order of the preceding tasks?

identify POOLS, identify DRIVERS, CALCULATION, ASSIGNMENT