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Which of the following bases would be an example of a company wide allocation rate? |
| | A) | Machine Hours |
| | B) | Machine Hours and Labor Hours |
| | C) | Machine Hours and Purchase Orders |
| | D) | Machine Hours, Purchase Orders, and Labor Hours |
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| 2 | |
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If Total Overhead is allocated based on machine hours, how much would be allocated to product A. |
| | A) | $ 1,400,000 |
| | B) | $ 314,360 |
| | C) | $ 400,000 |
| | D) | $ 628,720 |
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| 3 | |
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Assume Overhead is allocated based on activities. Using an ABC basis, how much would be allocated to Product B? |
| | A) | $ 1,257,440 |
| | B) | $ 1,173,000 |
| | C) | $ 733,500 |
| | D) | $ 628,720 |
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| 4 | |
Which of the following best describes the impact of undercosting? |
| | A) | This is a goal of all companies. Undercosting all products allows for larger profit margins. |
| | B) | Companies will use target pricing to undercost products. |
| | C) | Undercosting some products will lead to overcosting other products, which is acceptable because it all balances. |
| | D) | Undercosting some products can lead to overcosting other products which may become overpriced and lose market share. |
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| 5 | |
Which best describes the relationship between upstream and downstream costs? |
| | A) | Both upstream and downstream costs are unnecessary and, should be minimized if not eliminated. |
| | B) | Upstream costs occur after and downstream costs occur before goods are manufactured. |
| | C) | Research and development is an example of a downstream cost and commissions are an example of an upstream cost. |
| | D) | Research and development is an example of an upstream cost and commissions are an example of a downstream cost. |
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| 6 | |
In establishing an Activity Based Costing System an organization's goal is to: |
| | A) | allocate costs to all activities within an organization. |
| | B) | define all activities within the organization and the costs required to perform those activities. |
| | C) | assign costs to pools according to the reasons the costs are assumed to be incurred. |
| | D) | allocate costs to products from pools where costs are accumulated based upon the activities that cause the costs to be incurred. |
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| 7 | |
An issue faced by management when implementing a change in an organization such as ABC or Strategic Cost Management is |
| | A) | minimizing employee involvement. |
| | B) | minimizing employee concerns related to reemployment rather than job reduction. |
| | C) | minimizing employee concerns related to job reduction rather than reemployment. |
| | D) | minimize employee's desire to have company succeed. |
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| 8 | |
When defining total quality costs. What components are included in defining voluntary costs? |
| | A) | Prevention and Failure. |
| | B) | Prevention and Appraisal |
| | C) | Failure and Appraisal. |
| | D) | Internal and External Failure. |
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| 9 | |
Minimum total quality cost is defined when |
| | A) | Marginal prevention costs equal marginal internal failure costs. |
| | B) | Marginal appraisal costs equal marginal failure costs. |
| | C) | Marginal voluntary costs equal marginal external failure costs. |
| | D) | Marginal voluntary costs equal marginal failure costs. |
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| 10 | |
Within a statistical quality control process it is determined that 10 items from each batch are to be inspected. What activity level is this cost? |
| | A) | Unit level |
| | B) | Batch-level |
| | C) | Product-level |
| | D) | Facility-level |
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| 11 | |
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Based upon ABC Company's Quality Control Report which of the following is a reasonable conclusion? |
| | A) | They are spending too much on Quality |
| | B) | Their appraisal costs are too high. |
| | C) | They are making a significant attempt to improve quality so that external failure costs should decrease in the future. |
| | D) | There is not enough information to draw a conclusion. |
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| 12 | |
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If all units produced are sold what is the Gross Margin: |
| | A) | $ 2,510,000 |
| | B) | $ 6,750,000 |
| | C) | $14,300,000 |
| | D) | $17,410,000 |
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| 13 | |
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Which of the following is considered to be a direct cost? |
| | A) | Machine maintenance |
| | B) | Machine utilities |
| | C) | Quality control |
| | D) | Labor at $10/hour |
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| 14 | |
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Which of the following is considered to be a unit-level cost? |
| | A) | Machine set-ups |
| | B) | Machine maintenance |
| | C) | Material handling |
| | D) | Product engineering |
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| 15 | |
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Which of the following is considered to be a batch-level cost? |
| | A) | Machine maintenance |
| | B) | Rent of manufacturing facility |
| | C) | Material handling |
| | D) | Product engineering |
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| 16 | |
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Which of the following is considered to be a product-level cost? |
| | A) | Machine maintenance |
| | B) | Rent of manufacturing facility |
| | C) | Material handling |
| | D) | Product engineering |
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| 17 | |
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Which of the following is considered to be a facility-level cost? |
| | A) | Machine maintenance |
| | B) | Rent of manufacturing space |
| | C) | Material handling |
| | D) | Product engineering |
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| 18 | |
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If batch-level costs were allocated based upon machine set-ups, how much would be allocated to Jeans? |
| | A) | $ 700,000 |
| | B) | $1,050,000 |
| | C) | $1,230,000 |
| | D) | $1,750,000 |
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| 19 | |
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If unit-level costs were allocated based upon direct labor hours, how much would be allocated to Shorts? |
| | A) | $1,700,000 |
| | B) | $1,695,000 |
| | C) | $ 471,000 |
| | D) | $ 255,000 |
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| 20 | |
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If facility level costs were allocated based upon number of units produced, how much would be allocated to Shorts? |
| | A) | $ 1,169,811 |
| | B) | $ 3,100,000 |
| | C) | $ 7,750,000 |
| | D) | $22,686,500 |
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| 21 | |
An activity based cost driver can be said to produce a better allocation of costs because it distributes the relevant costs to the appropriate product. This statement assumes: |
| | A) | All employees can be discharged and operations can be maintained. |
| | B) | All related resources are saved. |
| | C) | The avoidable costs are relevant to the decision making process. |
| | D) | All volume-based cost data is always misleading. |
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| 22 | |
Which of the following allocation processes best describes Activity-Based Costing. I. Costs are assigned to Departments
II. Costs are assigned to activities
III. Costs are assigned to pools according to activities
IV. Department Costs are allocated to products
V. Costs in the activity costs pools are allocated to products. |
| | A) | I, IV. |
| | B) | II, V. |
| | C) | II, IV. |
| | D) | III, V. |
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| 23 | |
Which of the following is the best definition of an "Activity Center"? |
| | A) | It is an organizational structure associated with minimal record-keeping tasks. |
| | B) | All overhead costs are combined into cost pools. |
| | C) | Cost/Benefit analysis is performed as the initial step in determining activity centers prior to deciding on an organizational structure. |
| | D) | It is an organizational structure where companies are organized into related activities and the overhead costs associated with performing these activities are combined into cost pools. |
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| 24 | |
Activity-Based Costing differs from Traditional Cost Allocation due to: |
| | A) | Activity Based Costing utilizes One-step and Traditional Cost Allocation utilizes Two-Steps. |
| | B) | Activity Based Costing utilizes Two-steps and Traditional Cost Allocation utilizes One-step. |
| | C) | Activity Based Costing utilizes a cost allocation scheme that is based upon a Departmental Structure and Traditional Cost Allocation utilizes a cost allocation scheme that is based upon Activities. |
| | D) | Activity Based Costing utilizes a cost allocation scheme that is based upon Activities and Traditional Cost Allocation utilizes a cost allocation scheme that is based upon a Departmental Structure. |
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