1.) Which statements are true regarding lifecycle costing?

A.)1, 2 and 4

B.)2 and 3 only

C.)1 and 3 only

D.)1, 2, 3 and 4

2.) Which of the following declarations are true about activitybased costing?

A.)1 only

B.)2 only

C.)Neither 1 nor 2

D.)Both 1 and 2

3.) Which of the following are said to be benefits of lifecycle costing?

( )It provides the true financial cost of a product

( )The length of the lifecycle can be shortened

( )Expensive errors can be avoided in that potentially failing products can be avoided

( )Lower costs can be achieved earlier by designing out costs

( )Better selling prices can be set

( )Decline stages of the lifecycle can be avoided

4.) Which of the following activities within a bike manufacturer as value-added (VA)

( )Inspecting completed bike.

( )Storing raw materials.

( )Machine setups.

( )Installing bindings on bike.

( )Packaging bike for shipment.

( )Reworking defective bike.

5.) Productivity improvement is a primary objective of Strategic cost management, which of the following principles may be applied to achieve this objective. Check all that applies.

( )Eliminate non value adding activity

( )Define their Standard Operating Procedures.

( )Eliminate forced idleness in interdependent process

( )Since productivity improvement must be seen from cost angle, factors related to quality and not quantity must be ignored should be ignored.

6.) Kaizen and activity-based costing models are two related Strategic cost management principles. Which of the following areas do these principles complement each other? Check all that applies.

( )identification of cost drivers

( )identification of waste of time and resources and eliminating them on a continuous basis.

( )Identification of value adding and non value adding activities

( )Need of quantifiable data.

7.) ABC Co. produces and ships components via its own logistics operation to its central manufacturing center from a wide variety of locations. It is attempting to identify the correct cost driver for the cost pool called part handling. Which of the following would be the correct figure to use?

A.) Average components per unit

B.) Total number of components shipped

C.) Average distance traveled by a component

D.) Total componentsdistance travelled

8.) Which of the following statements is/are correct regarding lifecycle costing?

A.) 1 and 2

B.) 2 only

C.) 2 and 3

D.) 1, 2 and 3

9.) Strategic Cost management encompasses which of the following ? Check all that applies.

( ) focuses on cost management only and does not include improvement in revenue management

( ) Continuous reduction and controlling of costs

( ) it integrates business functions.

( ) Strategic cost management requires involvement of every employee

( ) Improve the strategic position of a firm.

( ) Management's use of cost information for decisionmaking.

( ) it is a permanent task that ensures continuous improvements.

10.) Which of the following statements are true regarding ABC and cost drivers?

A.) A and C

B.) B and C

C.) A and B

D.) A, B and C

11.) Of the following, which is the best reason for using activity-based costing?

A.) To keep better track of overhead costs

B.) To more accurately assign overhead costs to cost pools so that these costs are better controlled

C.) To better assign overhead costs to products

D.) To assign indirect service overhead costs to direct overhead cost pools

(1) Product life cycles are becoming progressively short. This means that the initial costs are an increasingly important component in the product's overall costs. (2) Product costs are increasingly weighted to the start of a product's life cycle, and to properly understand the profitability of a product these costs must be matched to the ultimate revenues. (3) The high costs of (for example) research, design and marketing in the early stages in a product's life cycle necessitate a high initial selling price. (4) Traditional capital budgeting techniques do not attempt to minimize the costs or maximize the revenues over the product life cycle. (1) A cost pool is an activity which uses resources and for which overhead costs are identified and allocated. (2) The overhead absorption rate (CAR) is calculated in the same way as the absorption costing OAR, and the same OAR will be calculated for each activity. (1) Life cycle costing takes into account all costs incurred in a product life cycle with exception of sunk costs incurred on research and development. (2) Life cycle costing ensures a profit is generated over the life of the product. (3) Life cycle costing is most useful for products with an even weighting of costs over their life. (A) A cost driver is any factor that causes a change in the cost of an activity. (B) For long-term variable overhead costs, the cost driver will be the volume of activity. (C) Traditional absorption costing tends to under-allocate overhead costs to low-volume products