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Exam 5: Activity-Based Costing and Management

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Question 31

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A plant produces 85 different electronic products.Each product requires an average of seven components that are purchased externally.By redesigning the products, it is possible to produce the 85 products so that they all have four components in common.This will reduce the demand for purchasing, receiving, and paying bills.Estimated savings from the reduced demand are $1,400,000 per year.Calculate the nonvalue-added cost of purchasing, receiving, and paying bills.

A) $1,400,000
B) $1,000,000
C) $900,000
D) $600,000

E) A) and D)
F) A) and C)

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Question 32

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_________________________ is a system-wide, integrated approach that focuses management's attention on activities with the objective of improving customer value and profit achieved by providing this value.

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Question 33

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To calculate an activity rate, the practical capacity of each activity must be determined.

Assume that a company spends $15,000 a year for inspecting, $45,000 for purchasing, and $26,000 for reworking products.A good estimate of nonvalue-added costs would be:

Witness Manufacturing produces two types of cameras: 35mm and digital.The cameras are produced using one continuous process.Four activities have been identified: machining, setups, receiving, and packing.Resource drivers have been used to assign costs to each activity.The overhead activities, their costs, and the other related data are as follows: - Calculate the consumption ratio for setups on the digital cameras.(Note: Round answer to two decimal places.)

A(n) ____ is derived from the interview process (or written survey) .

______________ is concerned with doing the activity right the first time it is performed.

Costs that are caused by the inefficient performance of value-added activities are value added costs.

Match each item with the correct statement below. -Activities that are performed each time a unit is produced.

With its original design, a machine requires 14 hours of setup time.By redesigning the machine, the setup time is reduced by 30%.The cost per setup hour is $325.Calculate the reduction in the nonvalue-added cost per setup.

____ focuses on the relationship of activity inputs to activity outputs.

____ are assigned using direct tracing and resource drivers.

An activity-based costing system first assigns costs to activities and then to cost objects.

In an activity dictionary, types of resources consumed is an example of a(n)

A volume-based costing system emphasizes direct tracing and driver tracing.

One of the three major dimensions of measuring activity performance is quality.

A ____________________ is classified as value-added provided it simultaneously meets three conditions.

___________________ are performed each time a unit is produced.

​Which of the following is true of nonvalue-added activities?

The process of choosing among different sets of activities caused by competing strategies refers to