Management Control Systems-Exam 2
To calculate total unit cost in an activity-based system requires ______. -direct labor per unit -total direct labor -overhead activity cost per unit -direct materials per unit -total direct materials
direct materials per unit overhead activity cost per unit direct labor per unit
A characteristic of an event or activity that results in the incurrence of costs is a cost _____
driver
Storage time is the time ______.
during which items are held before further processing or shipment
A pool rate of $3.00 per machine hour means that ______.
each machine hour used by a product should cost $3.00
A cost ____ is a forecast of costs at a particular level of activity
estimation
The use of ABC information to support an organization's strategy, improve operations, and manage costs is called ______ management.
activity-based
The use of ABC information to support an organization's strategy, improve operations, or manage costs is called ____-____ management
activity-based
A complete listing of all activities identified and used in the ABC analysis is ______.
an activity dictionary
Activity analysis and evaluation involves all of the following except ______.
assignment of costs to activities
True or false: Interviews with key employees should rarely be used in developing ABC systems.
false
A cost that remains unchanged in total and changes per unit as activity levels change is a ______ cost.
fixed
Direct labor is not the best cost driver for a cost related to the purchasing raw materials because the purchasing activity is a(n) ______.
batch activity and direct labor is a unit-level activity
Cost functions is another term for cost ______.
behavior patterns
A complete listing of activities required for the production of a product or service is a(n) ______.
bill of activities
As activity changes, variable costs ______.
change in total and remain the same per unit
The relationship between cost and activity is called ____ ____
cost behavior
A characteristic of an event or activity that results in the incurrence of costs is a(n) __.
cost driver
The classification of activities into levels is called a(n) ____ ____
cost hierarchy
Cost of measurement relates to the ______.
cost of obtaining the information compared to the benefit of using the information obtained
When marginal costs change depending on the level of activity, a(n) ____ ____ behavior pattern exists
curvilinear cost
A "whale chart" is a common name for a ______.
customer-profitability profile
The customer-profitability analysis information is frequently used by management to do all of the following except ______.
determine which product lines to eliminate
With a traditional volume-based costing system, there is a tendency to undercost ______.
low-volume, complex
Identification of a proper cost driver can result in all of the following except ______.
lower system implementation costs
Traditional product-costing systems may not work well when a company ______. -only does large production runs -manufactures a diverse set of products -has high direct labor and direct material and very low overhead costs -relies only on unit-based costs drivers
manufactures a diverse set of products relies only on unit-based costs drivers
Activities that are necessary to support entire product lines, but are not performed every time a new unit or batch is produced are ____-____ level activities
product-sustaining
Engineering design cost is an example of a(n) ______ level activity.
product-sustaining
A graphical display of an organization's complete customer-profitability analysis is called a customer-profitability ____ or a more commonly a(n) _____ chart
profile whale
Using activity-based costing to determine the activities, costs, and profits associated with serving particular customers is called customer ______ analysis.
profitability
Increasing automation, coupled with sophisticated real-time information systems, ______.
provides the data needed to implement highly accurate product costing systems
True or false: An activity may be valued-added in some situations and non-value added in other situations.
true
Identification of cost drivers for each activity cost pool occurs in stage ____ of ABC costing
two
An activity that must be done for each item produced is a(n) __-level activity.
unit
An activity that must be done for each item produced is a(n) ____-____ activity
unit-level
A cost that changes in total in direct proportion to a change in the activity level is a ______ cost.
variable
True or false: The classification of activities into unit-level, batch-level, product-sustaining-level, and facility-level activities is called activity-based costing.
False
Activity analysis that looks at a set of linked activities to determine the cause of a non-value-added activity is called ____ ____ analysis
process value
A common version of ABC that is used in the service industry is called ____
TDABC
The advantages of TDABC over convention ABC are ______. -TDABC activity bases are more appropriate for manufacturing industries -the system will assign costs based upon theoretical capacity -TDABC activity is more easily tracked than the data used in conventional ABC -the system will assign costs based upon practical capacity
TDABC activity is more easily tracked than the data used in conventional ABC the system will assign costs based upon practical capacity
Which of the following statements are true? -The objectives of ABC costing in service industries are no different from those in manufacturing industries. -Activities in service industries are classified as unit-level, batch-level, product-sustaining-level, and facility-level activities. -The objectives of ABC costing in service industries are different from those in manufacturing industries. -Service industries cannot use ABC costing as service industries only have labor cost drivers.
The objectives of ABC costing in service industries are no different from those in manufacturing industries. Activities in service industries are classified as unit-level, batch-level, product-sustaining-level, and facility-level activities.
A better, more credible ABC system is likely to be designed by ______.
a multidisciplinary ABC project team
Determining the root causes and what triggers activities is called ____ ____
activity analysis
Non-value-added costs should be highlighted in ______.
activity center cost reports
The steps in stage two of ABC costing are ______. -assignment of overhead costs to appropriate cost pools -identification of activity cost pools -computation of total unit activity cost for each product line -identification of cost drivers for each activity cost pool
identification of cost drivers for each activity cost pool computation of total unit activity cost for each product line
The steps in stage one of ABC costing are ______. -computation of pool rate -identification of cost pools -assignment of costs to appropriate cost pool -computation of product cost per unit for each product line -computation of total activity cost for each product line
identification of cost pools assignment of costs to appropriate cost pool
The first stage in an ABC system is to ______.
identify significant activities and assign overhead costs to each activity
The second stage in an ABC system is to ______.
identify the cost driver for each activity cost pool
ABC costing is used in the service industry for all of the following except to ______. -identify value-added and non-value-added activities -improve organizational profitability -identify the number of products to sell to each customer -obtain more accurate information about the cost of producing services
identify the number of products to sell to each customer
Categorizing the ways in which time is spent in a production process is one approach cost-management analysts find helpful in ______.
identifying non-value-added activities
A step-variable cost ______.
increases in small steps instead of continuously
An important factor in the move toward ABC system is ______.
increasing automation makes information more available
One factor driving the movement toward ABC is ______.
more product diversity
The concept of involving personnel from various functional areas to gather information from all facets of operations and improve credibility of decisions is the purpose of a(n) ______.
multidisciplinary team
Non-value-added activities can be ______. -necessary, efficient, and not improvable -necessary, but inefficient and improvable -unnecessary and dispensable -considered a sunk cost
necessary, but inefficient and improvable unnecessary and dispensable
An activity that is unnecessary and dispensable is a(n) ______.
non-value added activity
Managers who have a good understanding of which customers are generating the greatest profit can ______. -often change customer behaviors -make informed decisions about customer service -share cost savings with customers -eliminate all special services
often change customer behaviors make informed decisions about customer service share cost savings with customers
Identification of activity cost pools occurs in stage ____ of ABC costing
one
A value-added activity is ______. -performed efficiently -unnecessary, but performed efficiently -necessary to production
performed efficiently necessary to production
Storyboarding is the process of ______.
placing key information about departmental activities on cards and organizing the cards into the activity sequence
The time-driven cost driver rate is calculated based on ______ capacity.
practical
Reasons that time-driven activity-based costing (TDABC) is used in service industries include ______. -the focus of reporting can easily highlight unused capacity -resources deployed are frequently associated with the time taken to provide the service -non-time-based activity data are usually collected in service industries, unlike conventional ABC -capacity in service industries is usually expressed in terms of time
resources deployed are frequently associated with the time taken to provide the service the focus of reporting can easily highlight unused capacity capacity in service industries is usually expressed in terms of time
When implementing an ABC system, identifying a company's significant activities ______. -should create an activity list broken down to the most fundamental level practical -is the final step -should create an activity list that combines all related functions (i.e., all purchasing activities) together -is called activity analysis
should create an activity list broken down to the most fundamental level practical is called activity analysis
When displaying semivariable costs graphically, the variable cost per unit is the ______.
slope of the total-cost line
Customer-profitability analysis is not affected by ______.
standard product costs
A cost that remains unchanged in total over a wide range of activity, but jumps in total when the range limit is reached is a(n) ____-____ cost
step-fixed
The degree of correlation is the ______.
relationship between the consumption of an activity and the consumption of the cost driver
A company's expenditures on IT or accounting is an example of a(n) ____-____-____ activity
business-value-added
The steps in customer-profitability analysis include ______. -calculate customer-related cost driver rate -calculate production-related cost driver rate -identify production-related activities -identify customer-related cost drivers -identify production-related cost drivers -apply customer-related cost driver rate to customer activity -apply production-related cost driver rate to customer activity -identify customer-related activities
calculate customer-related cost driver rate identify customer-related cost drivers apply customer-related cost driver rate to customer activity identify customer-related activities
One way to identify differences between products is to compare the ____ ratio of each activity cost pool used by the products
consumption
Activities required in order for the entire production process to occur are referred to as ____-level activities
facility
Costs such as heating and cooling, property taxes, and insurance on the factory are examples of ______.
facility-level activities
True or false: Identification of activities should be done at the broadest level possible.
false
True or false: If the steps in a step-variable cost behavior pattern are large, the step-variable cost function may be approximated by a variable cost function without must loss in accuracy.
false
True or false: The total unit product cost is calculated by adding total direct materials and total direct labor costs and dividing by the number of units produced
false
Cost behavior patterns are also called cost _____
functions
Factors influencing the movement from traditional to ABC costing include all of the following except ______.
high reliance on labor to produce products
With a traditional volume-based costing system, there is a tendency to overcost ______ products.
high-volume, standard
The cost assignment view of the ABC system uses all of the following except ______. -assignment of resource costs to activity cost pools -identification of events that trigger activities -assignment of activity cost to cost objects -determination of resource cc
identification of events that trigger activities
The time spent ensuring the product is of high quality is called Blank______ time.
inspection
The process of speaking with a key employee in a support department to gather information about how time is spent is an example of ______.
interviewing
Costs of setting up machinery for a new production run ______.
is a batch-level activity
A duplicate operation ______.
is always a non-value-added activity
Continuous and gradual cost reduction is the meaning of ____ costing
kaizen
The concept that improvement is the goal and responsibility of every worker from the CEO to manual laborers, in every activity, every day, all the time is the basis of ______ costing.
kaizen
The cost per unit of the cost driver for a particular activity cost pool is called the ____ _____
pool rate
A set of linked activities is called a(n) ____
process
The focus on the causes of activities and the evaluation of these activities is the ____ view of an ABC system
process
Widely varying consumption ratios result from ______.
product line diversity
A cost that is nearly variable, but increases in small steps rather than continuously is a(n) ____-____ cost
step-variable
The purpose of bill of activities is to provide a list of ____
steps to make a particular product
The purpose of bill of activities is to provide a list of ______.
steps to make a particular product
A procedure used to develop a detailed process flowchart, which visually represents activities and the relationship between activities, is called _____
storyboarding
The purpose of an activity dictionary is to provide a list of ______.
system terminology for consistent usage
Which of the following is a customer-value-added activity? -technical support for a cell phone -legal costs of a patent -advertising -salary of company's president
technical support for a cell phone
Product costs can be distorted by using ______. -only unit-level cost drivers -multiple cost pools -single cost pool -the same cost driver for all activities -activity-based cost drivers
the same cost driver for all activities single cost pool only unit-level cost drivers
Volume-based product-costing systems have difficulty assigning overhead costs accurately if ______. -there is a large proportion of non-unit-level activities -products differ significantly in the way they use activities -products are substantially similar -there is a large proportion of unit-level activities
there is a large proportion of non-unit-level activities products differ significantly in the way they use activities
Volume-based costing is also called ____-based costing
throughput
Labor-hour-based product-costing systems where labor hour are related closely to the factory volume are also called ______-costing systems.
throughput-based volume-based
If the steps are small, a step-variable cost may be approximated using a Blank______ cost function without significant loss in accuracy.
variable
Product costs are most likely to be distorted when using a(n) ____-based product-costing system
volume
