Week 3 SmartBook

A system that uses multiple cost pools and assigns costs to products in accordance with the amount of the activity used by the product line is a(n) ______ costing system.

activity-based

A cost that results from management's decision to spend a particular amount of money for some purpose is a(n) __________ cost.

discretionary

One issue with data collection is that fixed __________ costs are often budgeted in a manner than makes them appear variable.

discretionary

A characteristic of an event or activity that results in the incurrence of costs is a cost

driver

The method of cost estimation that studies the current process and the resulting cost incurrence is the __________ method.

engineering

The cost estimation method that uses two points to estimate the variable and fixed costs is __________ __________

high-low

With a traditional volume-based costing system, there is a tendency to overcost ______ products.

high-volume, standard

An engineered cost

bears a definitive physical relationship to the activity measure

High volume and quickly changing or new information provided in multiple formats are characteristics of

big data

The goodness of fit for a regression line is measured by the __________ __________ __________

coefficient of determination

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 process of identifying the cost and use of services by customers is called __________ __________ analysis.

customer profitability

The customer-profitability analysis information is frequently used by management to do all of the following except ______.

determine which product lines to eliminate

The level of activity within which management expects the company to operate is called the __________ __________.

relevant range

One way of picturing the relationship between ABC and ABM is in terms of the __________ __________, ABC model that shows how costs can be repurposed to provide insight into the cost and effectiveness of the processes

two dimensional

An activity that must be done for each item produced is a(n) __ level activity.

unit

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

Given a least-squares regression line, the b is the

-slope coefficient -variable cost per unit

The method of cost estimation that studies the current process and the resulting cost incurrence is the ________ method

engineering

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

One issue with data collection is that, during periods of __________, historical cost data may not reflect future cost behavior.

inflation

With a traditional volume-based costing system, there is a tendency to undercost ______.

low-volume, complex

Another term for a semivariable cost is a(n) __________ cost

mixed

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) __________ __________. (Enter only one word per blank

unit level

A common version of ABC that is used in the service industry is called __________

TDABC

When the analyst has no clear idea about the behavior of a cost item, it is helpful to use the __________ __________ method to plot recent observations of the costs at various levels of activity

visual fit

Labor hour based product costing systems where labor hour are related closely to the factory volume are also called ______ costing systems.

volume-based throughput-based

Which of the following statements are true?

-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 no different from those in manufacturing industries.

Which of the following statements are correct?

-Cost behavior pattens can depend on the cost driver selected. -Organizations are crucial determinants of cost behavior for each cost item. -Conclusions about cost behaviors are not necessarily transferred between industries.

The steps in customer-profitability analysis include ______.

-apply customer related cost driver rate to customer activity -calculate customer related cost driver rate -identify customer related activities -identify customer related cost drivers

The steps in stage one of ABC costing are ______

-identification of activity cost pools -assignment of overhead costs to appropriate cost pools

An activity that must be done for each item produced is a(n) __ level activity.

-identification of cost drivers for each activity cost pool -computation of total unit activity cost for each product line

The steps in stage two of ABC costing are ______.

-identification of cost drivers for each activity cost pool -computation of total unit activity cost for each product line

Given the least-squares regression line, the sigma is the ______.

-intercept -total fixed cost

Managers who have a good understanding of which customers are generating the greatest profit can ______.

-make informed decisions about customer service -share cost savings with customers -often change customer behaviors

Non-value added activities can be ______.

-necessary, but inefficient and improvable -unnecessary and dispensable

Product costs can be distorted by using ______.

-only unit level cost drivers -single cost pool -the same cost driver for all activities

Traditional product costing systems may not work well when a company ______.

-relies only on unit-based costs drivers -manufactures a diverse set of products

Reasons that time-driven activity-based costing (TDABC) is used in service industries include ______.

-the focus of reporting can easily highlight unused capacity -capacity in service industries is usually expressed in terms of time -resources deployed are frequently associated with the time taken to provide the service

A close examination of an organization's ledger accounts is an example of the __________ __________ method of cost estimation.

account classification or analysis

The intersection of the cost assignment view and the process view in the two-dimensional ABC model is ______.

activities

The use of ABC information to support an organization's strategy, improve operations or manage costs is called __________ __________ management.

activity based

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

The least-squares regression line includes two estimates which are called __________

parameter

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

Volume-based costing is is also called __________ based costing

throughput

Volume-based costing is 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