Managerial Accounting Ch 6

Purchase order processing is an example of a(n): Unit-level activity. Batch-level activity. Organization-sustaining activity. Product-level activity.

Rank the following methods of assigning overhead costs from least accurate to most accurate. departmental rates, plantwide rate, activity-based costing activity-based costing, departmental rates, plantwide rate activity-based costing, plantwide rate, departmental rates plantwide rate, departmental rates, activity-based costing plantwide rate, activity-based costing, departmental rates

Arranging for a shipment of a number of different products to a customer is an example of an activity at which of the following levels? Customer-level activity. Unit-level activity. Organization-sustaining activity. Batch-level activity.

Setting up equipment is an example of a(n): Batch-level activity. Organization-sustaining activity. Unit-level activity. Product-level activity.

The clerical activity associated with processing purchase orders to produce an order for a standard product is an example of a(n): Unit-level activity. Product-level activity. Organization-sustaining activity. Batch-level activity.

Personnel administration is an example of a: Product-level activity. Unit-level activity. Batch-level activity. Organization-sustaining activity.

Which of the following activities would be classified as a batch-level activity? Designing a new product. Milling a part required for the final product. Setting up equipment. Training employees.

Would the following activities at a manufacturer of canned soup be best classified as unit-level, batch-level, product-level, or organization-sustaining activities? researching new recipes ship to store unit unit batch batch product unit product batch Option A Option C Option B Option D

If a cost object such as a product or customer has a positive yellow margin, then: its red margin will be negative. its red margin will be zero. its red margin will be positive. its red margin may be either positive, negative, or zero.

Which of the following statements is (are) true regarding the potential effects of using reported product costs for decision making? (A) Traditional product costing systems (e.g., job and process costing) are designed primarily to accumulate cost information for financial reporting. (B) If a single cost driver is used as the allocation base, applied manufacturing overhead for product costing purposes may lead to inappropriate managerial decisions. Only A is true Only B is true. Both A and B are true. Neither A nor B is true.

Which of the following statements is (are) false regarding first-stage and second-stage cost allocation methods? (A) The basic difference between a first-stage cost allocation and a second-stage cost allocation is that cost pools are not used in first-stage cost allocations. (B) Predetermined overhead rates are used in first-stage cost allocations but not in second-stage cost allocations. Only A is false. Only B is false. Neither A nor B is false. Both A and B are false.

Activity-based costing (ABC) is a costing technique that uses a two stage allocation process. Which of the following statements best describes these two stages? Service department costs are allocated to the production departments, and then to the products based upon their use of the activities. The costs are assigned to activities, and then to the products based upon their use of the activities. The costs are assigned to departments, and then to the products based upon their use of activity resources. Indirect costs are assigned to activities, and then to the products based upon the direct cost resources used by the activities.

Cost pools are used with plant wide rates department rates yes no no yes no no yes yes b a c d

Which of the following should not be used as the allocation base in a company that appropriately uses a single plant wide rate? Direct labor cost Machine hours Direct labor hours Material costs Sales volume

The number of services provided by an accounting firm would be classified as a(n) facility-related activity. volume-related activity. batch-related activity. product-related activity.

Activity analysis is one of the first stages in implementing an activity-based costing system. Which of the following steps in "activity analysis" is usually performed first? Improve the efficiency of all activities and develop plans to eliminate any nonvalue-added activities. Record, from start to finish, the activities used to complete the product or service. Identify the process objectives that are defined by what the customer wants from the process. Classify all activities as value added or nonvalue added.

Which of the following costs is not a batch-related activity? Compliance costs Shipping costs Machine setups Material handling

Which of the following would NOT be a batch-related activity? Setting up a machine for a new production run Processing a customer order Performing 100% inspection Purchasing materials

Which of the following measures is used by traditional costing systems as an allocation base for allocating overhead costs to the units produced? Batch-related activities Facility-related activities Product-related activities Volume-related activities

Which of the following statements is (are) true? (1) Activity-based costs per unit are always greater than volume-based costs per unit. (2) Volume-based costing has typically resulted in lower gross margins for high volume products and higher gross margins for low volume products. Only (1) is true. Neither (1) nor (2) are true. Only (2) is true. Both (1) and (2) are true.

Which one of the following accounts is not used in an activity-based costing (ABC) system? Materials Inventory Finished Goods Inventory Work-in-Process Inventory Overhead Applied Allocations Incurred

Multiple (departmental) manufacturing overhead rates are considered preferable to a single (plant wide) overhead rate when (CMA adapted) various products are manufactured that do not pass through the same departments or use the same manufacturing techniques. the single or plant wide rate is related to several identified cost drivers. individual cost drivers cannot accurately be determined with respect to cause-and-effect relationships. manufacturing is limited to a single product flowing through identical departments in a fixed sequence.