Accounting Chapter 4 SmartBook
An approach that aims to improve by reducing and eliminating errors, streamlining activities, and continuously making production process better is called _____ ______ management
total quality
An approach that aims to improve products by reducing and eliminating errors, streamlining activities, and continuously making production processes better is called ______ ______
total quality
The linked set of activities required to design, produce, and deliver products and provide aftermarket services to customers is called the _____ ______
value chain
The formula to compute activity proportion is ______.
cost driver for product / cost driver for all products
Activity-based management focuses on _____
improving operations increasing efficiency
The duration of a product from it infancy through its eventual decline is represented by the product _____ ______
life cycle
To calculate manufacturing overhead cost per unit using ABC, divide the total ______
manufacturing overhead cost by the number of units produced
To calculate manufacturing overhead cost per unit using ABC, divide the total _______
manufacturing overhead cost by the number of units produced
To keep quality problems from happening in the first place, companies incur _______ costs
prevention
Under activity-based costing, a degree program at a university is considered a(n) ______-level activity
product
A proactive approach managers use to determine what costs should be is called ______
target costing
The approach to determine what costs should be in order to earn an acceptable profit across a product's life time cycle is called ______ _____
target costing
The activity rate is computed by dividing the ____ by the _____
total activity cost; total cost driver
True or False: Before implementing ABC, a company does not need to weigh the benefits against the cost
False
Estimated MOH= 500.000 Estimated DL= 250.000 Actual MOH= 720.000 Actual DL= 300.000 What is the predetermined overhead rate per direct labor dollar
$2.00 per direct labor dollar (500000/250000=2.00)
Adele's Attic assigns overhead to products based on direct labor hours. For the upcoming year the business plans to use a total of 25000 hours and 5000 direct labor hours. Total overhead cost is expected to be 35000. How much overhead would be assigned to a job that used 180 machine hours and 40 direct labor hours?
$280, reason being 35000/5000 or 7/dl hour x 40 hours
Two statements about a just-in-time system
1. is used to help reduce costs 2. is a demand-pull system
Two true statements about ABC systems
1. managing and reducing costs is the true benefit of ABC 2.Implementing an ABC system is not a trivial task
In direct costs can be assigned to products or services using ______
1. the activity rate method 2. the activity proportion method
Using an ABC system, a company has estimated overhead of 2,100,000. they expect to use 1,000,000 machine hours and 500,000 labor hours. ABC has identified this as a machine-hour related activity. The activity rate for this activity is _______
2.10 (2,100,000 / 1,000,000)
Larson Productions LLC has an activity cost pool called product design and redevelopment. The cost driver for this pool is design hours. A total of 1000 design hours were used, 620 for Modle XLT and 380 for Model TXT . The total cost assigned to the cost pool was 118000. Using the activity proportion method, determine how much cost should be allocated to each product
773160 to Model XLT and 44840 to Model TXT
In activity-based costing, what is calculated by dividing the total cost of each activity by its total cost driver?
Activity Rate
True or False: the best reason to implement an ABC system is to obtain more accurate information about the cost of products and services
False: This in itself is not a good reason to implement ABC. The real benefit is the information it provides managers to pursue cost management
True or False: The support of upper management is required for successful ABC implementation
True
True or False: When computing unit costs, the direct materials and direct labor costs are the same, regardless of whether ABC or a volume-based costing system is used
True
Improving operations and reducing costs is the focus of ______-_______ managment
activity based
The percentage of the total cost driver that is attributed to each product line is called a(n)_____ ______
activity proportion
The final step in activity-based costing is ______
assigning indirect costs to products or services