Which of the following is typically regarded as a cost driver in traditional accounting practices?

- Number of customers served

- Number of direct labor hours worked
- Number of purchase orders processed
- Number of transactions processed
The sum of the non-value-added time and the value-added time equals
- The product life cycle
- Inspection time
- Production time
- Cycle time
In activity-base costing, final cost allocations assigns costs to
- Departments
- Products
- Activities
- Processes
Non-value-added activities that are necessary to businesses, but not costs that customers are willing to
pay for are known as
- Short-terms variable activities
- Long-term variable activities
- Business-value-added activities
- Superior Business activities
An activity center is an organizational unit
- That incurs only unit, batch, or product/process level costs
- In which only value-added activities are performed
- For which management wants separate activity information
- That makes a single product or performs a single service
In activity-based costing, cost reduction efforts are directed at specific
- Cost categories
- Cost drivers
- Cost pools
- Processes
Which of the following is not a drawback of mass customization?
- The choices are too numerous
- The potential for errors is great
- Only a small percentage of available choices is normally selected
- All of the above are drawbacks
Which of the following is most likely to make the implementation of ABC/ABM slow and difficult?
- The need for dual systems
 - The inability of all employees to understand the computations involved in ABC
- A lack of involvement by or support from upper management
- An inability to eliminate all business-value-added activities
Traditional standard costs are inappropriate measure for performance evaluation in the “new era” of
manufacturing because they
- Are based on historical information
- Build in allowances for non-value-adding activities
- Don’t reflect current costs
- Are ideal goals
Traditional overhead allocations result in which of the following situations?
- The resulting allocations cannot be used for financing reports
- High-volume products are assigned too much overhead, and low-volume products are
assigned too little overhead
- Overhead costs are assigned as period costs to manufacturing operations
- Low-volume products are assigned too much, and high-volume product are assigned too little
overhead
Global competition has forced American industry to
- Seek increase governmental regulation
- Improve product quality and customer service
- Decrease its social responsibility
- Narrow product lines
A cost accumulation system should most likely be revaluated when a company has
- Automated one or more production processes
- Introduced new products to its customers
- Had its industry deregulated
- All of the above
Cost allocation bases in activity-based costing should be
- Processes
- Cost drivers
- Activity centers
- Value-added acvitivites
Crawford company makes ten different styles of inexpensive feather masks. Which of the following is
this company most likely to have?
- Product complexity
- Product variety
- Process complexity
- Process customization
If only one or two overhead cost pools are used
- Overhead created by a specific product will be assigned to all products
 - Allocations should be made using only unit-based cost drivers
- The reduction in cost accumulation and allocation time will raise company profits
- It would be easy to determine which products or services are creating the most costs
Statement 1 – Activity-based-costing conforms to GAAP with regard to which cost should be expensed.
Statement 2- An activity-based costing system should be evaluated with regard to the benefits it can
provide an organization verses the cost of implementing it
- Statement 1 – FALSE; Statement 2 – TRUE
- Statement 1 – TRUE; Statement 2 – FALSE
- Statement 1 – TRUE; Statement 2 - TRUE
- Statement 1 – FALSE; Statement 2 – FALSE
Simultaneous engineering can be used to
- Reduced the time-to-market of new products through elimination of batch-level activities
- Reduce manufacturing cycle efficiency by reducing process waste
- Reduce both product and process complexity
- Integrate activity-based costing with value chain analysis
Simultaneous engineering helps companies accomplish which of the following?
- Reduces product complexity – YES; Reduces process complexity – YES
- Reduces product complexity – YES; Reduces process complexity – NO
- Reduces product complexity – NO; Reduces process complexity – YES
- Reduces product complexity – NO; Reduces process complexity – NO
An activity driver is used for which of the following reasons?
- To measure demands – NO; To measure resources consumed - YES
- To measure demands – YES; To measure resources consumed - YES
- To measure demands – YES; To measure resources consumed - NO
- To measure demands – NO; To measure resources consumed - NO
The actual time it takes to perform a specific task is called.
- Inspection time
- Quality time
- Transfer time
- Service Time
Today, traditional accounting methods are
- Still appropriate for both internal and external financing reporting
- Still appropriate for providing useful cost information to internal managers
- Still appropriate for financial reporting
- Outdated for all purposes
THE MLA company manufactures and sells packaging machines
- P114,850 higher
- P141,850 lower
- P141,950 lower
 - P114,950 higher
In allocating variable costs to products
- Direct labor hours should always be used as the allocation base
- A company should never use more than one cost driver
- A volume-based cost drive should be used
- A company should use the same allocation base that it uses for fixed costs
When a company is labor-intensive, the cost driver that is probably least significant would be
- Direct labor dollars
- Cost of materials used
- Direct labor hours
- Machine hours
Activity-based costing and generally accepted accounting principles differ in that ABC
- Information is useful only to manager, while GAAP information is useful to all organizational
stakeholders
- Cannot be used to compute an income statement, but GAAP can
- Does not define product costs in the same manner as GAAP
- Is concerned only with costs generate form automated processes, but GAAP is concerned with
costs generated from both manual and automated processes
Lead time minus production time is equal to
- Storage time
- Value-added time
- Non-value-added time
- Idle time
In allocating fixed costs to products in activity-based costing
- Machine hours should always be used
- A cost driver that is not volume0related should be used
- A company should use the same allocation base that is uses for variable costs
- Direct labor hours should always be used as the allocation base
Which of the following would not be considered a value-added activity in the preparation of a tax return
- Checking for accuracy
- Printing a copy of the return for the IRS
- Printing a copy of the return for the client
- Installing tax software
Job 1234 contains 3,000 units. It weighs 10,000 grams and uses 300 hours of labor. Compute the total
overhead costs that should be assigned to job 1234
- P31,955
- P32,000
- P26,000
- P27,750
Traditionally, managers have focused cost reduction efforts on
- Departments
- Costs
- Processes
- Activities
Statement 1 – Activity-based-costing is appropriate for a company that has high overhead cost that are not
proportional to unit volumes of individual products Statement 2- there is direct relationship between the
complexity of a production process and overhead costs
- Statement 1 – TRUE; Statement 2 – TRUE
- Statement 1 – FALSE; Statement 2 – FALSE
- Statement 1 – TRUE; Statement 2 - FALSE
- Statement 1 – FALSE; Statement 2 – TRUE
The term cost driver refers to
- Any activity that causes costs to be incurred
- Any activity that can be used to predict cost changes
- The person who gathers and transfers cost data to the management accountant
- The attempt to control expenditures at a reasonable level
For one product that affirm produces, the manufacturing cycle efficiency is 20 percent. If the total
production time is 12 hours, what is the total manufacturing time?
- 2.4hours
- 60 hours
- 15 hours
- 12 hours
The pareto principle is important to consider when an organization is
- Deciding whether to offer a product in one color versus in ten colors
- Assessing whether to employ acvitivity-based costing versus attribute-based costing
- Evaluating the number of activities that are value-added versus those that are non-value-added
- Determining whether simultaneous engineering activities will be impacted by the Rule of One
Engaging in which of the following will result in radical changes being made to an organization’s
processes?
- Continuous improvement
- Reengineering
- Benchmarking
- Mass customization
For traditional costing purposes, R&D costs are
- Capitalized and amortized over three years
- Charged to the future accounting periods that received the benefit of the R&D exxpenditures
- Capitalized and allocated over the product life cycle
- Expensed as incurred
How much was the full cost per unit of product GG using ABC
- Php 12.5
- Php 16.07
- Php 15.5
- Php 19.07
The following items are used in tracing costs in an ABC system. In which order are they used? (1) cost
object (2) cost driver (3) activity driver (4) cost pool
- 4, 3, 1, 2
- 2, 3, 4, 1
- 2, 4, 3, 1,
- 1, 2, 3, 4,
Mass customization is closely associated with
- Product Variety – YES, Product Complexity - NO; Process Errors – NO; Pareto Principle – YES
- Product Variety – YES, Product Complexity - NO; Process Errors – YES; Pareto Principle
- YES
- Product Variety – YES, Product Complexity - YES; Process Errors – YES; Pareto Principle - NO
- Product Variety – NO, Product Complexity - YES; Process Errors – NO; Pareto Principle - NO
Which of the following is/are part of activity-based management?
- Activity analysis – YES; Cost Driver analysis – YES
- Activity analysis – YES; Cost Driver analysis – NO
- Activity analysis – NO; Cost Driver analysis – NO
- Activity analysis – NO; Cost Driver analysis – YES
If activity-based costing is implementing in an organization without any other changes being
implemented, total overhead costs will
- Remain constant and simply be spread over products differently
- Be reduced because of the elimination of non-value-added activities
- Be increased because of the need for additional people to gather information on costs drivers and
costs pools
- Be reduced because organizational costs will not be assigned to products or services
Which of the following statements about business-value-added activities (BVA’s) is true?
- BVAs are actually value-added activities of an organization that relate to administrative processes
- A process map will not reflect BVAs because such activities are not essential to process
performance
- Bas reflect the same processes in all organizations
- It is impossible to eliminate all BVAs in an organization
Which of the following have an impact on long-term variable costs?
- Product variety – NO; Product Complexity – NO; Process Complexity – NO
- Product variety – YES; Product Complexity – YES; Process Complexity – YES
- Product variety – NO; Product Complexity – YES; Process Complexity – YES
 - Product variety – YES; Product Complexity – NO; Process Complexity – YES
Under activity-based costing, benchmarks for product cost should contain an allowance for
- Idle time
- Idle time and scrap materials
- Spoilage
- None of the responses are correct
The Rule of One underlies the premise that all costs are
- Variable
- Short-term
- Fixed
- Unit-based
Statement 1 – Cost drivers are selected based on their underlying relationship to organizational costs.
Statement 2 – ideally, a casual relationship exists between the cost’s driver and a cost pool
- Statement 1 – TRUE; Statement 2 – TRUE
- Statement 1 – FALSE; Statement 2 – FALSE
- Statement 1 – TRUE; Statement 2 - FALSE
- Statement 1 – FALSE; Statement 2 – TRUE
An objective of activity-based management is to
- Eliminate the majority of centralized activities in an organization
- Reduce or eliminate non-value-added activities incurred to make a product or provide a
service
- Institute responsibility accounting systems in decentralized organizations
- All of the above
A just-in-time manufacturing process should have substantially less of which of the following than a
traditional manufacturing process?
- Idle time – NO, Transfer time – YES, Value-added time – YES; Cycle Time – NO
- Idle time – YES, Transfer time – YES, Value-added time – YES; Cycle Time – YES
- Idle time – YES, Transfer time – YES, Value-added time – NO; Cycle Time – YES
- Idle time – YES, Transfer time – NO, Value-added time – NO; Cycle Time – YES
A value chart indicates
- The value-added steps in a process and the time it takes for them to be completed
- The time and costs of all value-added and non-value-added steps in a process
- All steps in a process and the time it takes for them to be completed
- The time and cost of all value-added steps in a process
In the pharmaceutical or foods industries, quality control inspections would most likely be viewed as
- Business-value-added activities
- Process-efficiency activities
- Value-added-activities
- Non-value-added activities
Relative to traditional product costing, activity-based costing differs in the way costs are
- Benchmarked
- Processed
- Incurred
- Allocated
Costs that are common to many different activities within an organization are known as ____ costs
- Organizational-level
- Product- or process-level
- Unit level
- Batch level
In comparison with firms that use plantwide overhead rates and departmental overhead rates, companies
that have adopted activity-based costing will typically use
- Fewer cost pools and more cost driver
- More cost pools and more cost drivers
- Fewer cost pools and fewer cost drivers
- More cost pools and fewer cost drivers
Which of the following add customer value?
- Setup time
- Idle time
- Storage time
- Processing time
Which of the following falls under the Activity-Based Management umbrella?
- Continuous Improvement – NO; Business process reengineering – NO; Activity-based costing –
YES
- Continuous Improvement – NO; Business process reengineering – YES; Activity-based costing -
NO
- Continuous Improvement – YES; Business process reengineering – NO; Activity-based costing -
NO
- Continuous Improvement – YES; Business process reengineering – YES; Activity-based
costing - YES
When cost driver analysis is used, organizational profit or loss can be determined by subtracting
- Total product costs from total product revenue
- Total unit, batch, product/process, and organizational level costs incurred for a period
- Organizational costs from total product revenue
- Organizational costs from total margin provided by products
In-activity-based costing, preliminary costs allocations assign costs to
- Processes
- Products
 - Departments
- Activities
A process map
- Is also known as a value chart
- Should indicate only value-added activities
- Should include only those steps/processes that are obvious in the production of goods/services
- Is also known as detailed flowchart
A value chart should include which of the following
- Service time – YES, inspection time – NO; Transfer time – YES
- Service time – NO, inspection time – NO; Transfer time - YES
- Service time – YES, inspection time – YES; Transfer time - YES
- Service time – YES, inspection time – YES; Transfer time - NO
Traditionally, overhead has been assigned based on direct labor hours or machine hours. What effect does
this have on the cost of a high-volume item?
- Has no effect the product cost
- Under-cost the product
- Cost per unit is unaffected by product volume
- Over-costs the product
Product costing systems in use over the last 40 years
- Have generally been responsive to changes in the manufacturing environment
- Were often technologically incapable of handling activity-based costing information
- Have been appropriate for managerial decision purposes as long as they meet the requirement of
GAAP
- Concentrated on using multiple cost pools and cost drivers
Statement 1 – Building depreciation is generally considered a product or process level cost. Statement 2 –
Machine setup is normally considered a unit-level cost
- Statement 1 – FALSE; Statement 2- FALSE
- Statement 1 – TRUE; Statement 2 - TRUE
- Statement 1 – FALSE; Statement 2 - TRUE
- Statement 1 – TRUE; Statement 2 - FALSE
A key concept underlying cost driver analysis is that
- Only costs occurring at the unit-level should be assigned to products or services
- The cost of measuring a driver does not exceed the benefits of using it.
- All cost drivers identified should be used for cost accumulation
- Organizational/Facility costs are non-value-added and should never be assigned to products or
services
The cost of non-quality work does not include
- Warranty cost
- Original design costs
 - The cost of scrap
- The cost of handling complaints
Mass customization can be achieved through the use of
- Just-in-time inventory
- Activity-based costing
- Flexible manufacturing systems
- All of the above
Statement 1 – When non-value-added time is greater, manufacturing cycle efficiency is lower. Statement
2 – Lead time in a production process includes both value and non-value-added time.
- Statement 1 – TRUE; Statement 2 – TRUE
- Statement 1 – FALSE; Statement 2 - TRUE
- Statement 1 – FALSE; Statement 2 – FALSE
- Statement 1 – TRUE; Statement 2 – FALSE
When a firm redesigns a product to reduce the number of component parts, the firm is
- Increasing consumer value
- Decreasing product variety
- Increasing the value added to the product
- Decreasing non-value-added costs
ABC should be used in which of the following situations?
- Multiple-product firms with multiple processing steps
- In all manufacturing firms
- Single – product firms with multiple steps
- Multiple – product firms with only a single process
Activity analysis allows managers to
- Classify activities so that processes can be eliminated
- Devise ways to minimize or eliminate non-value-added activities
- Evaluate process performance to gain competitive advantages
- All of the above
Activity-based costing and activity-based management are effective in helping managers do all of the
following except
- Identify only value-added activities
- Trace technology costs to products
- Promote excellence standards
- Analyze performance problems
Manufacturing cycle efficiency is measure of
- Bottlenecks
- Quality
- Effectiveness
- Efficiency
Of the following, which is the best reason for sing activity-based costing?
- To more accurately assign overhead costs to cost pools so that these costs are better controlled
- To keep better tract of overhead costs
- To better assign overhead costs to products
- To assign indirect service overhead costs to direct overhead cost pools
Setup time is
- A batch cost – YES; A value-added cost – YES; A production cost – NO
- A batch cost – NO; A value-added cost – NO; A production cost - YES
- A batch cost – YES; A value-added cost – NO; A production cost - YES
- A batch cost – NO; A value-added cost – YES; A production cost - YES
Manufacturing cycle efficiency should be increased by employing which of the following techniques?
- JIT Inventory – YES; Flexible Manufacturing Systems – YES; Batch Manufacturing – NO
- JIT Inventory – YES; Flexible Manufacturing Systems – NO; Batch Manufacturing – YES
- JIT Inventory – NO; Flexible Manufacturing Systems – NO; Batch Manufacturing – NO
- JIT Inventory – YES; Flexible Manufacturing Systems – YES; Batch Manufacturing – YES
Use of activity-based costing and activity-based management requires

- the creation of an environment for change in an organization.

- elimination of all non-value-added activities in an organization.
- that company processes be automated and the use of direct labor be minimal.
- each process be fully mapped and all activities be identified as value-added or
non-value-added.
The amount of time between the development and the production of a product is
- the production life cycle
- value-added time
- production time
- lead time
in the new era of manufacturing, good performance indicators are’
- consumer-based
- production based
- sales based
- cost based