ACC 500 Accounting For Managers- Assignment (Wk4)

Multiple Choice Questions 7-1 through 7-15 pages 296 -297 Chapter 7

Cornerslone Exercise 3-21 Safely Stock and the Reorder Point will": Safely Slack La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole} and is purchased from external suppliers. Each year, 8,000 pounds of lava stone is used; it is used evenly at the rate of 30 pounds per day. However, some days as many as 35 pounds are used. It takes La Cucina 5 days from the time of order to the time ofarrival of the order. Required: 1. Calculate me amount of safety,r stock. 2. Calculate the reorder point with safety stock. MULTIPLE-CHOICE EXERCISES 7-1 A unit-level driver is consumed by a product each and every time that a. a batch of products is produced. d. a customer complains. b. a unit is produced. e. none of these. C. a purchase order is issued. 7-2 Which of the following is a nonunit-level driver? a. Direct labor hours d. Setup hours b. Machine hours Assembly hours c. Direct materials Use the following information for Multiple-Choice Exercises 7-3 and 7-4: Consider the information given on two products and their activity usage: Laser Printer Inkjet Printer Units produced 1,000 4,000 Setup hours 800 400 Inspection hours 500 500 Machine hours 200 1,000 7-3 Refer to the information above. The consumption ratios for the setup activity for each product are a. 0.167; 0.833. d. 0.667; 0.333. b. 0.333; 0.667. e. none of these. C. 0.500; 0.500. 7-4 Refer to the information above. Suppose that machine hours are used to assign all overhead costs to the two products. Select the best answer from the following: a. Laser printers are overcosted, and inkjet printers are undercosted. b. Laser printers and inkjet printers are accurately costed. C. Laser printers are undercosted, and inkjet printers are overcosted. d. Using inspection hours to assign overhead costs is the most accurate approach. e. None of the above. 7-5 The first stage of ABC entails the assignment of a. resource costs to departments. d. resource costs to distribution channels. b. activity costs to products or customers. e. resource costs to individual activities. c. resource costs to a plantwide pool.7-6 The second stage ofABC entails the assignment of a. activity costs to products or customers. d. resource costs to individual activities. b. resource costs to departments. c. resource costs to distribution channels. c. resource com to a plantwide pool. 17 Interview questions are asked to determine a. what activities are being performed. d. possible activit}.r drivers for assigning costs b. who performs the activities. to products. c. the relative amount of time spent on each c. all of these. activity by individual workers. 7-3 The receiving department employs one worker, who spends 25 percent of his time on the receiving activity and 75 percent of his time on inspecting products. His salary is 540,000. The amount of cost assigned to the receiving activity is a. $34,000. d. $30,000. b. $40,000. e. none of these. c. $10,000. 7-9 Assume that the moving activity has an expected cost of $80,000. Expected direct labor hours are 40,000, and expected number of moves is 20,000. The best activity rate for moving is a. $4 per move. d. $2 per move. b. $1.33 per hourmove. e. none of these. c. $4 per hOur. 7-10 Which of the following is a true statement about activity-based customer costing? a. Customer diversity does not require multiple drivers to trace costs accurately to customers. b. Customers consume customer-driven activities in the same proportions. c. It seldom produces changes in the company's customer mix. d. It never improves protability. e. None of the above are true. 7-1 1 Which of the following is a true statement about activity-based supplier costing? The cost of a supplier is the purchase price of the components or materials acquired. It encourages managers to increase the number of suppliers. It encourages managers to evaluate suppliers based on purchase cost. Suppliers can affect many intemal activities of a rm and signicantly increase the cost of purchasing. e. All of the above are true. moo-in 7-12 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), die amount of shipping cost amigned to the customer by using ABC would be a. unable to be determined. d. $12,000 (1 percent of the shipping cost). b. $8,000 (50.80 per pound shipped). e. none of these. c. $24,000 (2 percent of the shipping cost). 7-13 Lambert Company has two suppliers: Deming and Leming. The cost of warranty work due to defective components is $2,000,000. The total unim repaired under warranty average 100,000, of which 90,000 have components from Deming and 10,000 have components from Lcming. Select the items below that represent true statements. Components purchased from Leming cost $200,000 more than their purchase price. Components purchased from Deming cost 51,800,000 more than their purchase price. Components from Lcming appear to be of higher quality. All of the above are true. None of the above is true. oar-tr!" 7-14 A forklift and its driver used for moving materials are examples of :1. activity inputs. d. activity outputs. b. activity Output measures. e. root causes. c. resource drivers. 7-1.5 Which of the following are nonvalue-added activities? a. Moving goods d. Reworking a defective product b. Storing goods e. All of these c. Inspecting nished goods