Cost Accounting Exam 2

A measure of the quantity of resources consumed by an activity:

A resource consumption cost driver

Which of the following is not considered a benefit of activity-based costing? A) Decreased production activity levels B) Improved understanding of cost of capacity C) A better understanding of processes D) Improved planning

A) Decreased production activity levels

All of the following are low-value-added activities except: A) processing B) reworking C) Moving D) Inspection E) Warranty

A) Processing

Which of the following is an example of a high-value added activity? A) Shipping the customers order B) Scheduling the customer order for production C) Inspecting goods to ensure the right quantity is being shipped D)E-mailing customer to assure that a complaint will be resolved expeditiously E) More than of these answers choices a high-value-added activity

A) Shipping the customers order

In an organization that makes furniture, which of the following is a high value-added activity? A) Using direct materials in production B)Inspecting production C)Storing finished goods inventory D) Moving work-in-process E) Reworking the product to repair

A) Using direct materials in production

The management of activities to improve the value received by the customer and the competitiveness of the organization is

Activity-based management

A measure of frequency and intensity of demands placed on activities by cost object is:

An activity consumption cost driver

Important concept in resource consumption accounting include all of the following except: A) Variable costing B) Resource Interrelationships C) Activity Interrelationships D) Detail level cost information E) Treatment of idle capacity

C) Activity Interrelationship

Which of the following is a benefit of activity-based costing? A) Reduced overhead costs B) More accurate measures of production volume C) Facilitate better pricing decisions D) Having fewer cost drivers than volume-based costing systems E) More streamlined manufacturing

C) Facilitate better pricing decisions

Which of the following would likely be the most appropriate cost driver of electric power used by machines? A) Number of units B) Machine size C) Number of machine hours D)Number of production runs E) Purchase cost of machines

C) Number of Machine Hours

In regard to selling activities, which one of the following would not be a cost driver for selling expense? A) Number of invoices B) Number of sales calls C) Number of production runs D) Number of shipments

C) Number of production runs

Processing sales returns and allowances is usually classified as a:

Customer batch-level cost

Processing sales returns and allowances is usually classified as:

Customer batch-level cost

Invoicing cost is an example of a:

Customer batch-level cost.

Freight charges based on number of units shipped to customers is a:

Customer unit-level cost

The cost to process monthly statements is an example of a:

Customer-sustaining cost

Which of the following would not be considered a facility-level activity? A)Providing security for the plant B) Factory property taxes and insurance C) Closing the books each month D) Placing purchase orders

D) Placing purchase orders

In calculating unit cost in a process costing system, "conversion cost" is defined as the sum of:

Direct labor and factory overhead costs

Which one of the following is a high value-added activity? A) Set-up B) Rework C) Repair D) Storage E) Processing

E) Processing

ABC costing helps and organization implement its strategy through all of the following means except: A) Providing accurate cost information B)Identifying the most profitable products and customers C) Helping improve cycle time D) identifying value added and non-value added activities E) Providing a basis for effective utilization of capacity

Helping improve cycle time

The cost of unused c capacity can be determined usingABC costing for the purpose of

Helping managers plan the short and longer-term use of the operating resources

Customer profitability analysis:

Helps identify actions that affect customers profitability

which of the following activities is a facility-level activity? A) Materials handling B) Plant maintenance C) Product inspection D) Design Engineering E) Purchase orders

Plant maintenance

An activity that is performed to support the production of a new custom-order product is a:

Product-level Activity

An activity that is perfumed to support the production of a new custom-order product is a:

Product-level activity

Engineering change orders, maintenance of equipment used in manufacturing, and product design costs are examples of:

Product-level costs

Multistage ABC is used when:

There are complex relationships among the activities

A firm has many products, some produced in an automated production process and some produced in a manual production process. Using labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

Understate overhead of the product

An activity that is performed for each unit of production is a(n):

Unit-level activity

Time-driven ABC provides a direct way to measure:

Unused capacity

Activity-based costing systems:

have separate overhead rates for each activity