Ch6-Ch7
The accounts receivable department prepares the bill for a completed order. x
batch level
The company's paint shop makes a stencil for a customer's logo to be used for a specific order. x
batch level
The purchasing department orders the specific color of paint specified by the customer from the company's supplier. (x)
batch level
a clerk in the factory issues purchase orders for a job (x)
batch level
net operating income under absorption costing may differ from net operating income determined under variable costing. how is this difference calculated?
change in the quantity of units in inventory X the fixed manufacturing overhead rate per unit...
organisation sustaining activities are activities of the general organisation that supports specific products.
false
manufacturing companies that benefit the most from activity based costing are those where overhead costs are a ________________ percentage of total product cost and where there is a __________________ level of diversity among the various products the produce.
high, high
when production exceeds sales, net operating income reported under variable costing generally will be:
less than net operating income reported under absorption costing
An outside attorney draws up a new generic sales contract for the company limiting Green Glider's liability in case of accidents that involve its golf carts. x
organisation sustaining
Electricity is used to heat and light the factory and the administrative offices. x
organisation sustaining
the factory's general manager meets with other department heads such as marketing to coordinate plans (x)
organisation sustaining
the maintenance department performs periodic preventive maintenance in general use equipment x
organisation sustaining
the personnel department trains new production workers (x)
organisation sustaining
rank the following methods of assigning overhead costs from least accurate to most accurate
plantwide rate, departmental rates, activity based costing
A new model golf cart is shipped to the leading golfing trade magazine to be evaluated for the magazine's annual rating of golf carts. x
product level
The company's engineer modifies the design of a model to eliminate a potential safety problem. x
product level
when sales are constant, but the production level fluctuates, net operating income determined by the variable costing method will:
tend to remain constant
over an extended period of time in which the final ending inventories are zero, the accumulated net operation income figures reported under absorption costing will be:
the same as those reported under variable costing
a reason why absorption costing income statements are sometimes difficult for the managers to interpret is that:
they shift portions of fixed manufacturing overhead from period to period according to hanging levels of inventories
costs classified as batch level costs should depend on the number of batches processed rather than on the number of units produced, the number of units sold, or other measures of volume.
true
in activity-based costing, some manufacturing costs may be excluded from product costs.
true
in general, duration drivers are more accurate measures of the consumption of resources than transaction drivers
true
the costs of idle capacity should not be assigned to products in activity-based costing
true
the practice of assigning costs of idle capacity to products can result in unstable unit product costs
true
unit level activity are performed each time a unit is produced
true
A golf cart is painted. x
unit level
A steering wheel is installed in a golf cart. (x)
unit level
direct labour workers assemble products(x)
unit level
A sales representative visits an old customer to check on how the company's golf carts are working out and to try to make a new sale. x
customer level
The marketing department has a catalogue printed and then mails copies to golf course managers that have ordered Green Glider in the past. x
customer level
a driver that provides a measure of the amount of time required to perform an activity is called a:
duration driver
which if the following are considered to be product costs under absorption costing?
variable manufacturing overhead and fixed manufacturing overhead
overhead allocation based solely on a measure of volume such as direct labour hours:
will systematically overcost high volume products and undercost low volume products
a transaction driver is:
a simple count of the number of times an activity occurs
under variable costing, costs that are treated as period costs include:
all fixed costs
an activity based costing system that is designed for internal decision making will not conform to generally accepted accounting principles because:
all of the above are reasons why an activity based costing system...
the materials storekeeper issues raw materials to be used in jobs (x)
batch level
a portion of the total fixed manufacturing overhead cost incurred during a period may:
be excluded from cost of goods sold under absorption costing
when a company shifts from a traditional cost system in which manufacturing overhead was applied based on direct labour hours to an activity based costing system in which there are batch level and product level costs, the unit costs of low volume products typically decrease whereas the unit product costs of high volume products typically increase.
false
different individuals manage the parts of inventory for each product manufactured(x)
product level
engineers design new products (x)
product level
which of the following activities would be classified as a a batch level activity?
setting up equipment
when sales are constant, but the production level fluctuates, net operating income determined by the absorption costing method will:
tend to fluctuate in the same direction as fluctuations in the level of production
Completed golf carts are individually tested on the company's test track. x
unit level
which if the following are considered to be product costs under variable costing?
variable manufacturing overhead
