ch4 accounting

Four basic steps are used in an ABC system. List the proper order of these steps, which are currently scrambled below:

1. Identify the primary activities and estimate a total cost pool for each. 2.Select an allocation base for each activity. 3.Calculate an activity cost allocation rate for each activity. 4. Allocate the costs to the cost object using the activity cost allocation rates.

Which of the following statements is TRUE regarding activity-based costing systems?

ABC costing systems have separate indirect cost allocation rates for each activity.

Which of the following statements does NOT describe an ABC system?

ABC systems may only be used by service companies.

The use of which of the following costing systems is most likely to reduce cost distortion to a minimum?

Activity-based costing

In using an ABC system, which of the following steps is NOT performed before the company's year begins?

Allocate the costs to the cost object using the activity cost allocation rates.

What is the last step in developing an ABC system?

Allocate the costs to the cost object using the activity cost allocation rates.

Which of the following refers to costs incurred in detecting poor quality goods or services?

Appraisal costs

Which of the following terms best describes costs incurred to detect poor quality goods or services?

Appraisal costs

Which term below best describes the quality cost category for "cost of testing food processors before sale"?

Appraisal costs

Which of the following can be used in conjunction with activity-based costing

Both A and B A) Job costing B) Process costing

Which of the following does ABC take into account?

Both A and B A. The types of manufacturing activities used by the product B.The extent to which the manufacturing activities are used by the product

Which of the following is TRUE about a lean production system?

Customer orders drive the production process

Which of the following cost items should be classified as an external failure cost on a cost of quality report?

Customer returns of defective products

Which term below best describes the quality cost category for "cost of warranty repairs on food processors"?

External failure costs

Which term below best describes the quality cost category for "lost profits from lost sales"?

External failure costs

Which term listed below describes costs incurred when the company fails to detect poor quality goods or services?

External failure costs

Which of the following is NOT a factor in the success of lean production systems?

Inflexible production operations

Production loss caused by downtime is an example of what type of cost?

Internal failure cost

Which term below best describes the quality cost category for "cost to re-inspect reworked food processors"?

Internal failure costs

Which term listed below describes costs incurred when the company detects poor quality goods or services before delivery to the customer?

Internal failure costs

Which of the following pertains to a lean production system?

It will produce goods in smaller batches than a traditional production system.

A system in which companies purchase raw materials only when needed is called:

JIT production.

Which term listed below describes a system where companies purchase raw materials when needed in production and complete finished goods when needed by customers?

Just-in-time

Which is NOT a characteristic of companies using lean production systems

Machines are arranged by function.

Which of the following is NOT likely to be a cost driver of activities associated with determining product cost?

Number of cost accountant's labor hours

Which of the following is MOST likely to be the cost driver for the packaging and shipping activity?

Number of orders shipped

) Which of the following is one of the four cost categories typically found on a cost of quality report?

Prevention costs

What costs are incurred to avoid poor quality goods or services in the first place?

Prevention costs

Which of the following terms best describes costs incurred to avoid poor quality goods or services?

Prevention costs

Which term below best describes the quality cost category for "preventive maintenance on machinery"?

Prevention costs

Which of the following is NOT considered to be part of the cost hierarchy often used to implement ABC?

Production-level activity

Which of the following pertains to a lean costing or production system?

Summary journal entries are made when units are completed.

Which of the following statements regarding total quality management is FALSE?

TQM increases time spent on rework and warranty work.TQM increases time spent on rework and warranty work.

Which of the following cost items should be classified as a prevention cost on a cost of quality report?

Technical support provided to suppliers

Which of the following describes how, in ABC, the activity allocation rate is computed?

The total estimated activity cost pool is divided by the total estimated activity allocation base.

All of the following are activities in an activity-based costing system that determine the cost of a manufactured product except for

accounting

Activity-based costing considers ________ to be the fundamental cost object.

activities

The ________ system focuses on activities as the fundamental cost objects. It uses the costs of those activities as building blocks for compiling the indirect costs of products and other cost objects.

activities-based costing

The cost of inspection at various stages of production is an example of a(n):

appraisal cost.

The cost of maintaining testing equipment would be classified as a(n)

appraisal cost.

The cost of training quality control supervisors would be classified as a(n):

appraisal cost.

Costs incurred to detect poor quality goods and services refer to:

appraisal costs.

Machine set-up would most likely be classified as a:

batch-level activity.

The cost of product liability claims is an example of a(n):

external failure cost.

The cost of warranty work is an example of a(n):

external failure cost.

The lost profits from lost customers are an example of:

external failure costs.

Using factory utilities would most likely be classified as a:

facility-level activity.

The cost of downtime caused by quality problems with the raw materials would be classified as a(n):

internal failure cost.

The cost of fixing defective units found during the quality inspections would be classified as a(n):

internal failure cost.

The costs incurred when poor quality goods or services are detected and corrected before delivery to customers are called:

internal failure costs.

Managers who practice total quality management:

invest more resources at the front end of the value chain in research and development and design to produce a superior product.

The production system designed to eliminate waste is called a(n):

lean production system.

The cost of evaluating potential raw material suppliers is an example of a(n):

prevention cost.

The cost of improved production equipment and production processes is a(n):

prevention cost.

The cost of testing incoming raw materials from a supplier would be classified as a(n) :

prevention cost.

The cost of training production personnel on their job tasks is an example of a(n):

prevention cost.

Costs incurred to avoid poor quality goods or services are considered:

prevention costs.

Research and development would most likely be classified as a

product-level activity

ABC costing might lead to:

raising the sale price of low-volume products.

Molding and sanding each unit of product would most likely be classified as a

unit-level activity.

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's external failure costs:

would usually decrease.

If a company were to increase its appraisal costs by inspecting more units as the units are completed, the company's internal failure costs:

would usually increase.