ACCT 434 Week 1 Quiz, Activity Based Costing

ACCT 434 Week 1 Quiz, Activity Based Costing

1. (TCO 1) The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble.
Marblette Italian Marble

Purchase volume 20,000 1,000
Purchase cost per unit $50 $250
Shipments received 12 12
Hours used per shipment * 5 3
* These data were accumulated after a careful activity analysis.

Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of its receiving costs of $40,000. It realizes that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume.

Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures?

2. (TCO 1) The allocation of indirect costs in an activity-based costing system

3. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management?

4. (TCO 1) A company produces three products; if one product is over costed then

5. (TCO 1) To set realistic selling prices

6. (TCO 1) Different products consume different proportions of manufacturing overhead costs because of differences in all of the following EXCEPT

7. (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis

8. (TCO 1) Companies use ABC system information to

9. (TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based cost systems can help to

10. (TCO 1) Danielle Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $180,000. The budgeted number of nozzles to be inserted is 60,000. What is the budgeted indirect cost allocation rate for this activity?

ACCT 434 Week 1 Quiz 2

1. The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble.
Marblette Italian Marble

Purchase volume 20,000 1,000
Purchase cost per unit $50 $250

Shipments received 12 12
Hours used per shipment * 5 3
* These data were accumulated after a careful activity analysis.

Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of its receiving costs of $40,000. It realizes that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume.

Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures?

2. (TCO 1) The allocation of indirect costs in an activity-based costing system

3. (TCO 1) Evaluating customer reaction of the trade-off of giving up some features of a product for a lower price would best fit which category of management decisions under activity-based management?

4. (TCO 1) Undercosting a particular product may result in

5. (TCO 1) The MOST likely example of a batch-level cost is

6. (TCO 1) Which method of allocation probably best estimates actual overhead costs used? Why?

7. (TCO 1) A well-designed, activity-based cost system helps managers make better decisions because information derived from an ABC analysis

8. (TCO 1) Companies use ABC system information to

9. (TCO 1) For service organizations that bill customers at a predetermined average rate, activity-based cost systems can help to

10. (TCO 1) Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?

ACCT 434 Week 1 Quiz 3

1. Based on the information provided for Problem 1, determine the activity-cost-driver rate for packaging costs.

2. Based on the information provided for Problem 1, using the ABC system, for the sugar cookie, compute the estimated overhead costs per 1,000 cookies.

3. Based on the information provided for Problem 1, using the ABC system, for the sugar cookie, compute the estimated operating profit per 1,000 cookies.

4. Based on the information provided for Problem 1, using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated overhead costs per 1,000 cookies

5. Based on the information provided for Problem 1, using a traditional system (with direct labor hours as the overhead allocation base) for the sugar cookie, compute the estimated operating profit per 1,000 cookies.

6. Based on the information provided for Problem 1, explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why?

7. Problem 2 (Essay question): What is activity-based management and how can it be used to improve the profitability of a company?