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Exam 4: Cost Management Systems and Activity-Based Costing

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Question 51

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Cost assignment is attaching costs to one or more cost objects,such as activities and departments.

A) True
B) False

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Question 52

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Storing inventories and transporting incomplete products in a plant are examples of value-added activities.

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B) False

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Question 53

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What types of firms need cost accounting?

Physically tracing ________ costs is usually straightforward,but allocating ________ costs is usually more complex.

Which is NOT an example of indirect production costs?

Where do benchmarks come from?

Benchmarking is the continuous process of comparing products to the average industry standards.

Which is NOT a purpose of cost allocation?

For a manufacturing firm,product costs first appear on the income statement and then on the balance sheet.

Square feet is a logical cost driver for allocating depreciation expense of heating equipment to cost objects.

FAST Company has obtained the following data concerning a new product: Production Costs,Using traditional costing method……..………......$3.00 Production Costs,Using activity-based costing method…………......$5.00 Nonproduction Costs,Using activity-based costing method…….....$2.50 FAST Company wants the price of the new product to cover all costs plus a 100% markup.The production process used for the low volume product is very complicated and it has a higher proportion of indirect costs than direct costs. What price per unit should FAST Company charge for the new product?

The manufacturing division of an electronics company uses activity-based costing.The company has identified three activities and the related cost drivers for indirect production costs. Three types of products are produced.Direct costs and cost-driver activity for each product for a month are as follows: Indirect production costs for the month are as follows: Required: A)Compute the indirect production costs allocated to each product using the ABC system. B)Compute the indirect production costs allocated to each product using a traditional costing system.Assume indirect production costs are allocated to each product using the cost driver: direct labor hours.

List and explain five reasons why more firms are adopting activity-based costing systems.

A cost pool is anything for which a separate measurement of costs is desired.

When work in process inventory ________,finished goods inventory ________.

Companies must assign all production-related costs to cost objects for external financial reporting purposes.

Speedy Company has identified the following activities relating to indirect production costs: Speedy Company has obtained the following data concerning two products: Required: Using the activity-based costing approach,calculate the manufacturing cost per unit for Speedy1 and Speedy2.

Cost allocation is used to assign direct costs to cost objects.

Investors need more detailed information about products or services than managers.

McBain Company,a manufacturer of windows,has prepared the following list of accounts and their balances: The company also made the following purchases of raw materials: There was no beginning or ending inventories. Required: Calculate the following: A)Direct materials used B)Direct labor C)Indirect production costs