1. The first stage of an activity-based costing system does not involve:
a. Identifying activities and its attributes
b. Identifying activity attributes
c. Assigning costs
d. Preparing activity dictionary
2. According to the video, what is the output of the processing activity?
a. Number of statements
b. Number of transactions
c. Number of cards
d. Number of teller transactions
3. An activity dictionary consists of a(an) _________.
a. Activity description
b. Cost object
c. Activity driver
d. All of these choices are correct.
4. What is the purpose of interview questions?
a. It helps to identify activities and activity drivers.
b. It helps to identify the resources spent on each activity.
c. It helps to determine the time spent on each activity by the employees.
d. All of these choices are correct.
5. "We have three products: classic, gold, and platinum credit cards. We process transactions for these three types of cards, and we send statements to clients holding them. Similarly, we answer the questions of all clients who hold these cards."
This is the response for which of the following questions?
a. Who or what uses the activity output?
b. What are the outputs of each activity?
c. What resources are used by each activity?
d. How much time do workers spend on each activity?
6. When is driver tracing used?
a. When the resource is shared by more than one activity.
b. When the resource is exclusive to the activity.
c. When the resource is a labor resource.
d. All of these choices are correct.
7. According to the video, how is the cost of computers assigned to the activities?
a. Using direct tracing.
b. Using driver tracing.
c. Using both direct tracing and driver tracing.
d. Using resource drivers.
8. According to the video, what is the basis for assigning labor costs to the activity?
a. Total number of transactions.
b. Time spent on each activity.
c. Total number of employees.
d. Hours of usage of computers.
9. How are costs assigned to products?
a. By multiplying a predetermined activity rate by the usage of the activity.
b. By dividing the activity costs by the total driver quantity for each activity.
c. By dividing a predetermined activity rate by the usage of the activity.
d. By multiplying the activity costs by the total driver quantity for each activity.
10. The total cost of a resource is $160,000 and the resource is shared by three activities according to the relative usage of 20%, 30%, and 50%. How much is assigned to each activity one, two, and three?
a. Activity one $32,000
b. Activity two $48,000
c. Activity three $80,000
d. All of these choices are correct.
11. Product costs consist of
a. direct materials.
b. direct labor.
c. factory overhead.
d. All of these choices are correct.
12. All of the following are common methods of allocating factory overhead to products except the __________ method.
a. single plantwide rate
b. multiple production department rate
c. activity-based costing
d. straight division
13. All of the following are common allocation bases used with the single plantwide factory overhead rate method except
a. direct labor hours.
b. direct labor dollars.
c. machine hours.
d. indirect labor hours.
14. Assume that Valdez Company, which manufactures snow shovels and snow blowers in a single factory, has total budgeted factory overhead costs of $2,750,000 for the year, and 25,000 total budgeted direct labor hours. Revenue is estimated to be $10,000,000. Using the single plantwide rate method, what would be the factory overhead rate to apply?
a. $110
b. $400
c. $290
d. None of these choices are correct.
15. To minimize product cost distortion, a company with departments that differ significantly in their processes should use a(n) __________ rate.
a. single plantwide
b. multiple production department
c. average
d. None of these choices are correct.
16. The __________ method uses different rates for each production department to allocate factory overhead costs to products.
a. multiple production department factory overhead rate
b. average rate
c. cost
d. None of these choices are correct.
17. The __________ method provides an alternative approach for allocating factory overhead that uses multiple factory overhead rates based on different activities.
a. single plantwide rate
b. multiple production department rate
c. activity-based costing (ABC)
d. None of these choices are correct.
18. All of these are examples of an activity using ABC except
a. setup.
b. assembly.
c. fabrication.
d. Department A combined activities.
19. The factory overhead rates used to assign costs to products with the ABC method are known as __________ rates.
a. cost
b. activity
c. expense
d. None of these choices are correct.
20. Generally accepted accounting principles (GAAP) require that selling and administrative expenses be reported as __________ expenses on the income statement.
a. period
b. product
c. nonoperating
d. None of these choices are correct.
21. A disadvantage with allocating selling and administrative expenses to products based on sales volume is that
a. sales volume cannot be predicted.
b. products may consume activities in ways that are unrelated to their sales volumes.
c. sales volume will never properly allocate selling and administrative expenses.
d. None of these choices are correct.
22. Which of the following activities would most likely be identified with a healthcare business?
a. Fabrication
b. Diagnostic imaging
c. Assembly
d. Mixing
23. Jacobsville Hospital has budgeted costs of $850,000 in diagnostic imaging. The total estimated activity-based usage is 2,500 images. Total costs for the entire hospital are estimated to be $3,000,000. The activity rate per image is
a. $340.
b. $1,200.
c. $860.
d. None of these choices are correct.