Managerial Accounting 4E

True or false: Activity-based costing is appropriate for every company.

False

Activities that occur regardless of how many products are produced or how many batches are run or units made are _______________ ___________________ activities.

company level

Selling price per unit minus total manufacturing costs per unit equals ________________ ________________ per unit.

gross margin

Activities incurred for each product produced and not dependent on the number of units or batches are ______________________ -level activities.

product

An integrated management information system that encompasses the entire organization is called a(n) ________________ ____________________ planning system.

enterprise resource

What level of activity is performed each time a single item is produced?

Batch

A method that attempts to assign overhead costs based on what is required to produce products is ______ costing. a. activity-based b. volume-based c. traditional d. target

a. activity-based

The first step in implementing an ABC system is to identify the organization's major

activities.

indirect costs

are not easily assigned using volume based cost systems

At a minimum, an ABC system should have ______. a. at least four activity cost pools—one for each type of activity b. at least one non-unit-level activity cost pool c. one unit-level activity cost pool

b. at least one non-unit-level activity cost pool

Activity-based costing ______. a. works best in a single-product company b. offers some advantages over traditional costing systems c. should be used in every company that has indirect costs d. assigns overhead using volume-based cost drivers

b. offers some advantages over traditional costing systems

Costs at the batch level depend on the number of ______.

batches processed

Which of the following is NOT a volume-based cost driver? a. Sales revenue b. Direct material costs c. Machine setups d. Direct labor dollars

c. machine setups

To compute the per-unit manufacturing cost, add ____________________ _____________________ to direct materials and direct labor.

manufacturing overhead

Indirect costs are also referred to as _____________________ costs.

overhead

Direct labor hours and machine hours are both examples of __________ based cost drivers.

volume

Direct labor hours and machine hours are both examples of ______________ based cost drivers.

volume

A technique that attempts to assign overhead costs to products based on the actions they require is called

Activity-Based Costing

A method that attempts to assign overhead costs based on what is required to produce products is ______ costing.

activity-based

Which of the following is NOT a volume-based cost driver? a. direct material costs b. machine setups c. sales revenue d. direct labor dollars

correct answer: b. machine setups

What types of activities are performed each time a group of units is processed, regardless of how many units are in the group? a. facility b. unit c. product d. batch

d. batch

The first step in implementing an ABC system is to ______. a. select cost drivers b. form activity cost pools c. assign indirect costs based on activity demands d. identify and classify activities

d. identify and classify activities

What types of activities are carried out regardless of which products are produced, how many batches are run, or how many units are produced? Product-level Batch-level Unit-level Facility-level

facility-level

Research and development is a(n) __________________ -level activity.

product

Unit-level activities are ______.

- proportional to the number of units produced -performed for specific customers

A(n) ______ system is an integrated management information system that encompasses the entire organization.

Enterprise Resource Planning

Activities performed to design a new type of service to be offered are ______-level activities.

Product

Gross margin equals sales price minus ______. a. manufacturing costs only b. both manufacturing and non-manufacturing costs c. non-manufacturing costs only

a. manufacturing costs only

Which of the following are facility-level activities? a. Setting up factory equipment b. Arranging for shipping products to a customer c. Human resource hiring fairs d. Paying factory insurance

c. Human resource hiring fairs d. paying factory insurance