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Exam 7: Activity-Based Costing and Management

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Question 81

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What is assigned using direct tracing and resource drivers?

A) costs
B) profits
C) materials
D) resources

E) B) and D)
F) C) and D)

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Question 82

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

A) True
B) False

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Question 83

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Powen The receiving department of Powen has three activities: unloading, counting goods, and inspecting. Unloading requires a forklift that is leased for $15,000 per year. The forklift is used only for unloading. The fuel for the forklift is $2,000 per year. Inspection requires special testing equipment that has a depreciation of $500 per year and an operating cost of $1,000 per year. Receiving has four employees who each have an average salary of $35,000 per year. The work distribution matrix for the receiving personnel is as follows: $\begin{array}{l}\begin{array} { l c } &\text { Percentage of } \mathrm { T } \text { ime }\\\text { Activity } & \text { on Each Activity } \\\text { Unloading } & 25 \% \\\text { Counting } & 40 \% \\\text { Inspecting } & 35 \%\end{array}\end{array}$ -Refer to Powen. What is the cost of counting?

Which of the following is defined as a category of quality-related costs?

Which of the following are setups, material handling, and inspection all possible examples of?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Resources consumed by the activity in producing its output

Sallisaw Savings & Loan Sallisaw Savings & Loan has requested an analysis of checking account profitability by customer type. Customers are categorized according to size of their account: low balances, medium balances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: $\begin{array}{ll}\text { Opening and closing accounts } & \$ 100,000 \\\text { Issuing monthly statements } & \$ 150,000 \\\text { Frocessing transactions } & \$ 1,025,000 \\\text { Customer inquiries } & \$ 200,000 \\\text { Froviding ATM services } & \$ 560,000\\\text {Total Costs}&\$2,035,000\end{array}$ Additional data concerning the usage of the activities by the various customers are also provided: $\begin{array} { l r r r } & \underline { \text { Low } } & \underline { \text { Medium } } & \underline { \text { High } } \\\text { Number of accounts } & 7,500 & 1,500 & 1,000 \\\text { opened/olosed } & & \\ \text { Number of }& 225,000 & 50,000 & 25,000 \\\text { Sutements issued } \\\text { Processing } \\\text { transactions }& 9,000,000 & 1,000,000 & 250,000\\\text { Number of } \\\text { telephone minutes } & 500,000 & 300,000 & 200,000 \\\text { Number of ATM } \\\text { transactions }& 675,000 & 100,000 & 25,000 \\ \text { Number of checking } \\\text { accolnts }& 19,000 & 4,000 & 2,000\end{array}$ The company uses an activity-based costing system. The activity rate for opening and closing statements is based on the number of accounts opened and closed. The activity rate for issuing monthly statements is based on the number os statements issued. The activity rate for processing transactins is based on the number of transactions processed. The activity rate for customer inquiries is based on the number of telephone minutes. The rate for ATM services is based on the number of ATM transactions. -Refer to Sallisaw Savings & Loan. Using activity-based costing, what is the activity rate for processing transactions?

What are the two classifications of activity drivers?

The consumption ratio is the amount of each activity consumed by all products.

A factory produces 108,000 3D televisions per quarter. A total of 12,000 production hours are used within the factory per quarter. What is the velocity in units per hour?

Which matrix is derived from the interview process (or written survey) ?

A factory produces 175,000 3D televisions per quarter. A total of 8,750 production hours are used within the factory per quarter. What is the cycle time in minutes?

What costing method can help a company to become more competitive by providing more accurate cost data?

What can be caused by using only unit-based activity drivers to assign non-unit-related manufacturing overhead costs?

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Process that answers the question "How many people perform the activities?"

Assume that the accounts payable department of a company has 10 clerks; each one is paid $25,000 per year ($250,000 total clerical salaries). Six of the clerks spend the following percentages of time on the three activities: 20% of time on processing payments 30% of time matching invoices, receiving documents, and billing statement 50% of time correcting errors in the various documents One clerk, the head clerk, spends 50% of her time on administrative duties and the remainder on error correction. The remaining three clerks spend 30% of their time on processing payments and the remaining 70% of their time on matching documents. Long distance telephone costs of $1,700 are directly traced to the activity "correcting errors." A) Assign the clerical salary cost to each of the three activities and to administration. B) Calculate the total cost of the "correcting errors" activity.

A company takes 15,000 hours to produce 30,000 units of a product. What is the velocity?

Which term reflects the process of choosing among different sets of activities caused by competing strategies?

Which term reflects a list of activities accompanied by information that describes each activity?