Cost Accounting 9

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Activity-Based costing is a costing technique that uses a two stage allocation process. Which of the following statements best describes these two stages?
The costs are assigned to activities, and then to the products baed upon their use of the activities.
Which of the following should ot be used as the allocation base in a company that appropriately uses a single plantwide rate?
Sales volume.
The number of services provided by an accounting firm would be classified as a:
product-related activity
Which of the following costs is not related to a batch-related activity?
Complaince costs.
Which one of the following accounts is not used in an activity-based costing (ABC) system?
Allocations Incurred
Multiple (departmental) manufacturing overhead rates are considered preferable to a single (plantwide) overhead rate when:
various products are manufactured that do not pass through the same departments or use the same manufacturing techniques
Which of the following would be a reasonable basis for assigning the materials handling costs to the units produced in an activity-based costing (ABC) system?
Number of components per completed unit.
Companies using activity-based costing (ABC) have learned that costs are a function of:
volume and activities
Personnel administration is an example of a:
organization-sustaining activity
Which of the following activities would be classified as a batch-level activity?
setting up equipment
Property taxes are an example of a cost that would be considered to be:
organization-sustaining
The electricity used for production machinery would be classified as a:
volume-related activity
Activity analysis is one of the first stages in implementing an activity-based costing system. Which of the following steps in "activity analysis" is usually performed first?
Identify the process objectives that are defined by what the customer wants or expects from the process.
Which of the following activities is most likely to be classified as value-added for a manufacturing company?
Assembling.
Activity-based cost management can best be defined as:
the use of cost information gathered using activity-based costing.
Which of the following items would be classified as a volume-level cost in an activity based cost management system?
indirect materials
Which of the following items would be classified as a product-level cost in an activity-based cost management system?
Change order to meet a new customer's specification.
In an activity-based cost management system, facility-level costs are those that are incurred to:
maintain the plant's production capacity.
Activity-based costing information cannot be used by managerial decision-makers to evaluate the:
market potential of a product
The amount of resources used in an activity-based costing system for a specific activity is computed by multiplying the:
cost driver rate and the actual cost driver volume
The amount of production possible under normal working conditions, including planned downtime and scheduled vacations, is called
practical capacity.
The degree to which a good or service meets specifications is called:
conformance to specifications
Black Company's cost management and product costing procedures follow activity-based costing principles. Activities have been identified and classified as being either value-added or nonvalue-added for each product. Which of the following activities, used in Black's production process, is nonvalue-added?
Raw materials storage activity.
Internal failure activities:
correct defective processes or products and services before they are delivered to customers.
Which of the following is the least practical reason for allocating service department costs to user departments?
To provide the best possible service to users.
Service department costs are:
eventually applied by the user departments to the units produced.
Which of the following service departments could logically use space occupied (square footage) to allocate its costs to user departments?
custodial services
Which of the following departments is not a service department in a typical manufacturing company?
assembly.
Which of the following methods provides no data for service departments to monitor each other's costs?
Direct method.
If two service departments service the same number of departments, which service department's costs should be allocated first when using the step method?
The service department that provides the most service to other service service departments.
Which of the following is a weakness of the step method of service cost allocations?
The order of service department allocation has to be determined.
Which of the following best describes the objective of joint cost allocation?
inventory valuation
Allocated joint costs are useful for:
determining inventory cost for accounting purposes
The method of accounting for joint product costs that will produce the same gross margin percentage for all products is the:
net realizable value method
Which of the following is not a physical measure that can be used for allocating joint costs using the physical quantities method?
Dollars of labor.
Products with a realtively minor sales value are called:
by-products
Decentralization refers to the delegation of decision-making authority to:
subordinates
Which of the following is not a characteristic of a decentralized organization?
More decisions made by relatively few individuals.
Which of the following elements is not part of a management control system?
Knowledge of local conditions.
An operating unit of an organization is called an investment center if it is responsible:
for investments in assets
An operating unit of an organization is called a revenue center if it is responsible:
only for revenues
When managers are held responsible for costs but the input=output relationship is not well specified, a __________ is established.
discretionary cost center
When managers are held responsible for costs but the input=output relationship is well specified, a __________ is established.
standard cost center
Decentralized organization can delegate authority and still maintain control and monitor managers' performance by designing appropriate management control systems. Which of the following responsibility centers would be evaluated similar to an independent business?
Investment center
A manager makes a decision that is beneficial for a specific investment center and for the entire organization. From the organization's perspective, this decision resuls in:
goal congruence
The use of dual rates in a cost allocation system assumes that common costs can be:
separated into their fixed and variable components.
Examples of pressures that can lead to financial fraud do not include:
overemphasis on long term results
The Sarbanes-Oxley Act of 2002 requires that management of publicly traded companies:
report on the adequacy of the company's internal controls over financial reporting
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