1. Which of the following is a true statement about activity-based supplier costing?
a. The cost of a supplier is the purchase price of the components or materials acquired.
b. Suppliers can affect many internal activities of a firm and significantly increase the cost of purchasing.
c. It encourages managers to evaluate suppliers based on purchase cost.
d. It encourages managers to increase the number of suppliers.
e. All of the above are true.

2. This year, Lambert Company will ship 1,500,000 pounds of goods to customers at a cost of $1,200,000. If a customer orders 10,000 pounds and produces $200,000 of revenue (total revenue is $20 million), the amount of shipping cost assigned to the customer by using ABC would be
a. cannot be determined.
b. $24,000 (2 percent of the shipping cost).
c. $8,000 ($0.80 per pound shipped).
d. $12,000 (1 percent of the shipping cost).
e. none of the above.

3. Lambert Company has two suppliers: Deming and Leming. The cost of warranty work due to defective components is $2,000,000. The total units repaired under warranty average 100,000, of which 90,000 have components from Deming and 10,000 have components from Leming. Select the items below that represent true statements.
a. Components purchased from Deming cost $200,000more than their purchase price.
b. Components purchased fromLeming cost $1,800,000more than their purchase price.
c. Components from Deming appear to be of higher quality.
d. All of the above are true.
e. None of the above is true.

4. A forklift and its driver used for moving materials are examples of
a. activity outputs.
b. activity output measures.
c. resource drivers.
d. activity inputs.
e. root causes.

5. Which of the following are nonvalue-added activities?
a. Moving goods
b. Storing goods
c. Inspecting finished goods
d. Reworking a defective product
e. All of the above

6. Suppose that a company is spending $50,000 per year for inspecting, $40,000 for purchasing, and $60,000 for reworking products. A good estimate of nonvalue-added costs would be
a. $110,000.
b. $50,000.
c. $60,000.
d. $90,000.
e. $100,000.

7. The cost of inspecting incoming parts is most likely to be reduced by
a. activity sharing.
b. activity selection.
c. activity reduction.
d. activity elimination.
e. none of the above.

8. Thom Company produces 100 units in 5 hours. The cycle time for Thom
a. is 20 units per hour.
b. is 5 hours per unit.
c. is 3 minutes per unit.
d. is 1 hour per 20 units.
e. cannot be calculated.

9. Thom Company produces 100 units in 5 hours. The velocity for Thom
a. is 20 units per hour.
b. is 5 hours per unit.
c. is 3 minutes per unit.
d. is 1 hour per 20 units.
e. cannot be calculated.

10. Striving to produce the same activity output with lower costs for the input used is concerned with which of the following dimensions of activity performance?
a. Quality
b. Time
c. Activity sharing
d. Efficiency
e. Effectiveness