Chapter 7

Question 1

Activity Based Costing

Answer 1

Assigns both types of costs to products, most but not all manufacturing costs and non manufacturing costs

Question 2

Transaction Cost Driver

Answer 2

Simple count of number of times activity occurs

Question 3

Duration Cost driver

Answer 3

This is costly and measures the amount of time needed for activities

Question 4

5 levels of activity

Answer 4

1. Product Level
2. OS activity
3. Customer Level
4. Batch Level
5. Unit Level

Question 5

Product Level

Answer 5

Relates to specific products and must be carried out regardless of how many batches are run or units of products are produced

Question 6

OS Activity

Answer 6

For every product,

Question 7

Customer Level

Answer 7

Made for the customer specifically

Question 8

Batch Level

Answer 8

Manufacturing or non manufacturing - anything clerical

Question 9

Unit Level

Answer 9

One thing to one unit

Question 10

Characteristics of successful ABC

Answer 10

Strong top management
Cross Functional Involvement
Rewards

Question 11

Bench marking

Answer 11

Used to compare results with similar organizations

Question 12

Difference between ABC costing and traditional

Answer 12

Non manufacturing and manufacturing costs may be assigned to products
Some manufacturing costs are excluded from product costs
Numerous overhead costs pools are used

Question 13

Providing power to run processing equipment

Answer 13

Unit-level activities

Question 14

Placing purchase orders

Answer 14

Batch level

Question 15

Setting up equipment

Answer 15

Batch level

Question 16

Arranging for shipments to customers

Answer 16

Batch level

Question 17

Designing a product

Answer 17

Product level

Question 18

Advertising a product

Answer 18

Product level

Question 19

Various individuals manage parts in inventory

Answer 19

Product level

Question 20

What are budgets used for

Answer 20

Planning and controlling

Question 21

What is the principal purpose of the cash budget

Answer 21

To anticipate financial needs

Question 22

What is budget depreciation apart of

Answer 22

For sure manufacturing over head and budgeted income statement

Question 23

What is depreciation for sure not apart of

Answer 23

Cash budget

Question 24

What are the two costs not apart of ABC product costing

Answer 24

Idle time

Organization sustaining

Question 25

If the supervisor got cut in pay what would happen to BEP and MOS

Answer 25

BEP would decrease because in order to break even now you have to sell less
MOS would increase because your BE sales are less

Question 26

If sales increase would you want to be with a company with higher fixed cost or variable cost

Answer 26

Fixed cost

Question 27

Clerk in factory issues purchase orders for job

Answer 27

Batch level

Question 28

Personnel department trains new workers

Answer 28

Organization sustaining