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Exam 6: Activity-Based Costing and Activity-Based Management

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Question 51

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Operating personnel manage costs by ________.

A) controlling physical cost drivers
B) controlling nonphysical cost drivers
C) establishing weekly meetings to train staff
D) layoff nonessential personnel in various offices
E) observing employees to ensure they manage time

F) A) and B)
G) B) and C)

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Question 52

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In indirect cost pools,design costs are ________.

A) batch-level costs
B) output unit-level costs
C) product-sustaining costs
D) direct costs
E) facility-sustaining costs

F) B) and D)
G) C) and D)

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Question 53

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Manufacturing Mates produces special-order tiles for organizations.The company reported that they produced 250 batches of tile and the setup time per batch was 2 hours.Compute the total setup hours.

The Heartmore Organization uses a single cost allocation base.The management accountants group all budgeted indirect costs of $4,000,000 into a single overhead cost pool.They also reported a budget of 40,000 direct manufacturing labor-hours during the same period. Required: What is the rate per direct manufacturing labor-hour?

Identifying the cost-allocation bases defines the number of activity pools into which costs must be grouped into the ABC system.

Why do managers refine costing systems?

The costing system that reduces the use of broad averages for assigning the cost of resources to cost objects is the ________.

The Lighting Factory produces two types of light fixtures to sell to consumers.Product A illuminates high-density lighting and Product B illuminates low-density lighting.The manager at the Lighting Factory reported the following information: Required: Compute the profit margin percentage for each product.

In indirect cost pools,shipment setup costs are ________.

Activity-based costing attempts to identify the most relevant cause-and-effect relationships for each activity pool without restricting the cost driver to only units of output.

Managers can choose the level of detail they choose to use in a costing system when they evaluate the expected costs of the system against the expected benefits that result from better decisions.

Which of the following is not a decision that managerial accountants seek when they use activity-based management?

Homogeneous cost pools and the choice of cost-allocation bases,when tied to the cost hierarchy,provide managers with less confidence when they assign the activity and product cost numbers from the activity-based costing system.

The more cost pools that managers develop the less allocations are necessary to calculate activity costs for each cost pool.

We define second-stage allocation as ________.

A group of coworkers went to lunch at the mall.Listed below is the total cost of each individual meal. Required: Compute the average cost per dinner.When the costs are averaged across all six dinners,is Marla overcosted or undercosted?