Exam 2 (Quiz 5) - Chapter 19 Flashcards
List:
Parts of Product Cost in Activity-Based Costing System
- Raw Materials
- Direct Labor
- Manufacturing Overhead
Answer:
Direct labor and direct materials can be traced directly to ___(a)___ or ___(b)___
a, the specific product
b. the specific service
Answer:
Manufacturing overhead is a/an ___(a)___ cost
indirect
Answer:
An activity-based costing system is a/an ___(a)___ system that allows you to ___(b)___ across various types of ___(c)___ or ___(d)___
a. more refined
b. allocate indirect cost
c. production lines
d. service types
Answer:
An activity-based costing system allows you to avoid ___(a)___
a. product cost distortion
Answer:
An activity-based costing system is more ___(a)___, but it gives you a ___(b)___ way to allocate ___(c)___ and ___(d)___ across ___(e)___
a. complicated
b. more accurate
c. indirect costs
d. manufacturing overhead
e. all different types of products
Answer:
After an initial ___(a)___ the first step in an activity-based costing system is to ___(b)___ and ___(c)___
a. analysis of the production cycle
b. identify activities
c. categorize different activities into activity centers
List:
Examples of Types of Activities
- Production activities
- Quality check activities
- Setup Activities
etc.
Answer:
In step 2 of the activity-based costing system you identify the ___(a)___, which is also called the ___(b)___for each ___(c)___
a. allocation base
b. cost driver
c. activity center
Answer:
Identifying the allocation base/cost driver for each activity center gives you the flexibility to allocate your ___(a)___ using a different ___(b)___ for each different ___(c)___
a. manufacturing overhead
b. allocation base/cost driver
c. activity center
Answer:
In step 2 of the activity-based cost systems, after you identify the cost driver for each activity center, you ___(a)___ the ___(b)___ of each ___(c)___
a. estimate
b. total quantity
c. allocation base
Answer:
In step 3 of the activity-based cost system, you divide ___(a)___ by ___(b)___to calculate the ___(c)___ for each ___(d)___
a. estimated cost
b. estimated allocation
c. predetermined overhead ratio
d. activity center
Equation:
Predetermined Overhead Ratio
(activity-based cost system)
Estimated Cost / Estimated Allocation
done for each activity center
Answer:
In step 4 of the activity-based cost system, you calculate ___(a)___ and then allocate that ___(b)___ to the ___(c)___
a. allocated manufacturable overhead
b. manufacturing overhead
c. cost objective
List:
Steps in Activity-Based Cost System
- Identify the different activities and categorize them into activity centers, then estimate the total cost of each
- Identify the allocation base/cost driver for each activity center and estimate the total quantity of each allocation base/cost driver
- Calculate predetermined overhead ration for each activity center
- Calculate manufacturable overhead and allocate it to the cost objective
Answer:
The biggest difference between traditional costing systems and the activity based costing system is the ___(a)___ where in traditional systems you have ___(b)___ and in the activity-based costing system you have ___(c)___
a. number of allocation ratios
b. one
c. as many as you need
Define:
Activity-Based Management
ABM
Management tool that uses activity-based costing to make decisions
List:
Types of Decisions Made Using Activity-Based Management
- Pricing and Product Mixing Decisions
2. Cost Cutting Decisions (aka cost control decisions)
Answer:
Cost cutting decisions are also known as ___(a)___
a. cost control decisions
List:
Types of Pricing Decisions
- Target Pricing
2. Cost-Based Pricing
Define:
Target Pricing
We set up the price first based on the market.
We don’t have control
Take price less desired profit and get target cost - try to keep cost within this target
Answer:
To determine target cost you take ___(a)___ (set by the ___(b)___, so we don’t have ___(c)___) and subtract ___(d)___
a. price
b. market
c. control
d. desired profit
Define:
Cost-Based Pricing
First calculate full cost and then add desired profit to get sales price
Answer:
Companies can use a combination of ___(a)___ pricing and ___(b)___
a. target
b. cost-based
