Exam 1 Multiple Choice

Volume-based (traditional, plant-wide)) cost systems tend to a. Under-cost low-volume products and under-cost high-volume products b. Under-cost low-volume products and over-cost high-volume products c. Over-cost low-volume products and under-cost high-volume products. d. Over-cost low-volume products and over-cost high-volume products.

B

Dallas, 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: a. unit-level activity. b. batch-level activity c. product-level activity d. facility-level activity e. competitive-level activity

C

Product costs differ from period expenses because a. period expenses are not considered part of operating expenses for a manufacturing company b. period expenses reduce reported income whereas product costs do not c. product costs may appear on the balance sheet as assets d. product costs are expenses for manufacturing companies and period expenses are expenses for service organizations.

C

Costs incurred when products and services fail to conform to requirements or satisfy customer needs after being delivered to customers are: a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs. e. a different category of quality related costs.

D

The cost of warranty work is an example of a(n): a. prevention cost b. appraisal cost c. internal failure cost d. external failure cost

D

Which terms would make the following sentence true? 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 ___________ diversity among the various products that they produce. a. low, little b. low, considerable c. high, little d. high, considerable

D