1) An activity that has a direct cause-effect relationship with the resources consumed is a(n)
2) A well-designed activity-based costing system starts with
3) What sometimes makes implementation of activity-based costing difficult in service industries is
4) Which of the following is a nonvalue-added activity?
5) Each of the following is a limitation of activity-based costing EXCEPT
6) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:
- Mini A Maxi B
- Direct labor hours 15,000 25,000
- Machine setups 600 400
- Machine hours 24,000 26,000
- Inspections 800 700
- Overhead applied to Mini A using activity-based costing is
7) Which of the following factors would suggest a switch to activity-based costing?
8) Poodle Company manufactures two products, Mini A and Maxi B. Poodle's overhead costs consist of setting up machines, $800,000; machining, $1,800,000; and inspecting, $600,000. Information on the two products is:
- Mini A Maxi B
- Direct labor hours 15,000 25,000
- Machine setups 600 400
- Machine hours 24,000 26,000
- Inspections 800 700
- Overhead applied to Maxi B using traditional costing using direct labor hours is
9) Seran Company has contacted Truckel Inc. with an offer to sell it 5,000 of the wickets for $18 each. If Truckel makes the wickets, variable costs are $11 per unit. Fixed costs are $12 per unit; however, $5 per unit is avoidable. Should Truckel make or buy the wickets?
10) Max Company uses 10,000 units of Part A in producing its products. A supplier offers to make Part A for $7. Max Company has relevant costs of $8 a unit to manufacture Part A. If there is excess capacity, the opportunity cost of buying Part A from the supplier is