cost exam 2 ch.5 questions

allocated

Relative to traditional product costing, activity-based costing differs in the way costs are

installing tax software

Which of the following would not be considered a value-added activity in the preparation of a tax return?

for which management wants separate activity information.

An activity center is an organizational unit

yes, yes

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

value-added

An activity that a customer is willing to pay for and increases the worth of a product is referred to as a

non-value added

An activity that does not increase the value of a product for a customer is referred to as a

business value-added

An activity that is essential for business operations but does not add value to a product is referred to as a

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

An objective of activity-based management is to

improve product quality and customer service.

Global competition has forced American industry to

remain constant and simply be spread over products differently.

If activity-based costing is implemented in an organization without any other changes being implemented, total overhead costs will

flexible manufacturing systems.

Mass customization can be achieved through the use of

yes, no, yes, yes

Mass customization is closely associated with Product variety Product complexity Process errors Pareto principle

variable

The "Rule of One" underlies the premise that all costs are

no, no, no

Which of the following is considered a value-added activity? Idle time Inspection time Transfer time

A lack of involvement by or support from upper management.

Which of the following is most likely to make the implementation of ABC/ABM slow and difficult?

The choices are too numerous. The potential for errors is great. Only a small percentage of available choices is normally selected.

Which of the following is not a drawback of mass customization?

number of direct labor hours worked

Which of the following is typically regarded as a cost driver in traditional accounting practices?

yes yes

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

It is impossible to eliminate all BVAs in an organization.

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

process map

A chart that indicates each step in a production process is referred to as a

automated one or more production processes. introduced new products to its customers. had its industry deregulated.

A cost accumulation system should most likely be reevaluated when a company has

yes, yes, no, yes

A just-in-time manufacturing process should have substantially less of which of the following than a traditional manufacturing process? Idle time Transfer time Value-added time Cycle time

the cost of measuring a driver does not exceed the benefits of using it.

A key concept underlying cost driver analysis is that

is also known as a detailed flowchart.

A process map

activity center

A segment of a production or service process for which management wants a separate report is referred to as a(n)

process

A series of activities that when performed together satisfy a specific objective is referred to as a

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

A value chart indicates

yes, yes, yes

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

multiple-product firms with multiple processing steps

ABC should be used in which of the following situations?

devise ways to minimize or eliminate non-value-added activities.

Activity analysis allows managers to

identify only value-added activities.

Activity-based costing and activity-based management are effective in helping managers do all of the following except

does not define product costs in the same manner as GAAP.

Activity-based costing and generally accepted accounting principles differ in that ABC

cost drivers

Cost allocation bases in activity-based costing should be

batch-level costs

Costs that are associated with the production of a group of similar products at the same time are referred to as

unit-level costs

Costs that are associated with the production of a single unit of a product are referred to as

organizational-level

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

product/process level costs

Costs that support a product type or process are referred to as

organizational or facility costs

Costs that support an overall production or service process are referred to as

Product variety

Crawford Company makes ten different styles of inexpensive feather masks. Which of the following is this company most likely to have?

Reengineering

Engaging in which of the following will result in radical changes being made to an organization's processes?

60.0 hours

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?

expensed as incurred

For traditional costing purposes, R&D costs are

overhead created by a specific product will be assigned to all products

If only one or two overhead cost pools are used,

cost drivers

In activity-based costing, cost reduction efforts are directed at specific

products

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

activities

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

a cost driver that is not volume-related should be used.

In allocating fixed costs to products in activity-based costing,

a volume-based cost driver should be used

In allocating variable costs to products

consumer-based.

In the "new era" of manufacturing, good performance indicators are

value-added-activities.

In the pharmaceutical or food industries, quality control inspections would most likely be viewed as

non-value-added time.

Lead time minus production time is equal to

efficiency

Manufacturing cycle efficiency is a measure of

yes, yes, no

Manufacturing cycle efficiency should be increased by employing which of the following techniques? JIT Inventory Flexible Manufacturing Systems Batch Manufacturing

business-value-added activities.

Non-value-added activities that are necessary to businesses, but not costs that customers are willing to pay for are known as

to better assign overhead costs to products

Of the following, which is the best reason for using activity-based costing?

were often technologically incapable of handling activity-based costing information

Product costing systems in use over the last 40 years

yes, no, yes

Setup time is A batch cost A value-added cost A production cost

reduce both product and process complexity.

Simultaneous engineering can be used to

yes, yes

Simultaneous engineering helps companies accomplish which of the following? Reduces product complexity Reduces process complexity

deciding whether to offer a product in one color versus in ten colors

The Pareto principle is important to consider when an organization is

service time

The actual time it takes to perform a specific task is called

processing or service time

The actual time taken to perform all necessary manufacturing functions in a process is referred to as

b. lead time

The amount of time between the development and the production of a product is

original design costs.

The costs of non-quality work do not include

2,4,3,1

The following items are used in tracing costs in an ABC system. In which order are they used? (1) cost object (2) cost driver (3) activity driver (4) cost pool

manufacturing cycle efficiency (MCE)

The proportion of value added processing time to total cycle time equals

cycle time

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

cycle (lead) time

The sum of value-added processing time plus non-value added time equals

any activity that causes costs to be incurred

The term cost driver refers to

still appropriate for financial reporting

Today, traditional accounting methods are

High-volume products are assigned too much overhead, and low-volume products are assigned too little overhead

Traditional overhead allocations result in which of the following situations?

build in allowances for non-value-adding activities.

Traditional standard costs are inappropriate measures for performance evaluation in the "new era" of manufacturing because they

costs

Traditionally, managers have focused cost reduction efforts on

over-costs the product

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?

None of the responses are correct

Under activity-based costing, benchmarks for product cost should contain an allowance for

the creation of an environment for change in an organization.

Use of activity-based costing and activity-based management requires

machine hours

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

decreasing non-value-added costs.

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

organizational costs from total margin provided by products.

When cost driver analysis is used, organizational profit or loss can be determined by subtracting

processing time

Which of the following add customer value?

yes, yes, yes

Which of the following falls under the Activity-Based Management umbrella? Continuous improvement Business process reengineering Activity-based costing

yes, yes, yes

Which of the following have an impact on long-term variable costs? Product variety Product complexity Process complexity

activity driver

measures the resources consumed by a manufacturing process

Process complexity

refers to the number of different processes through which a product flows.