Chapter 5 Activity-Based Costing+Management

ABC Stage ______ Identify significant activities in business

One

Of the following organizations, activity-based costing (ABC) cannot be used by: manufacturers. financial-services firms. book publishers. hotels. None of these are correct, as all these organizations can use ABC.

none

Generally speaking, companies prefer doing business with customers who:

request normal delivery times.

ABC (activity based costing) follows a ____ stage procedure to assign overhead costs to products

two

establishes relationships between overhead costs and activities so that we can better allocate overhead costs

activity based costing

The following tasks are associated with an activity-based costing system 1— Assignment of cost to products 2— Calculation of pool rates 3— Identification of cost drivers 4— Identification of cost pools Which of the following choices correctly expresses the proper order of the preceding tasks?

4,3,2,1,

Various overhead costs related to x (ex. machinery--> Maintinence, lubrication, electricity, computer support, depreciation, calibration)

Activity cost pool (Machinery Cost Pool --> total budgeted cost)

often reveal products that were under- or over-costed by traditional costing systems.

Activity-based costing systems:

When determining customer profitability, activity-based costing can be used to analyze:

All of the answers are correct.

Consider the following statements regarding traditional costing systems: I. Overhead costs are applied to products on the basis of volume-related measures. II. All manufacturing costs are easily traceable to the goods produced. III. Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements. Which of the above statements is (are) true?

I and III.

proper sequence of events in an activity-based costing system?

Identification of cost pools, identification of cost drivers, calculation of pool rates, assignment of cost to products.

How to collect ABC data

Interviews (paper trails), storyboarding (flowchart), multidisciplinary project teams (accounting, finance, production, operations, engineers, marketing)

ABC Stage ____ Identify cost drivers to each activity

Two

wanna know how profitable we are to determine activities, costs, and profit associated with serving customers

customer profitability analysis

requires special packaging demands fast service orders frequently often changes orders orders small quantities

a costly customer

focuses on managing activities to reduce costs

activity based management

Which of the following can have a negative impact on a particular sale's profitability? Number of required sales contacts (phone calls, visits, etc.). Special shipping instructions. Accounts receivable collection time. Purchase-order changes.

all

The salaries of a manufacturing plant's management are said to arise from:

facility-level activities.

ABC management helps make

management decisions

Successful adoptions of activity-based costing typically occur when companies rely heavily on:

multidisciplinary project teams