Which of the following activities is most likely to be classified as value-added for a manufacturing company? A. storing B. ordering C. inspecting D. assembling 2. Which of the following activities is most likely to be classified as value-added for a merchandise company? A. purchasing B. waiting C. receiving D. setting up 3. Activity-based cost management (ABM) can best be defined as A. a cost system using multiple departmental overhead rates. B. the use of cost information gathered using activity-based costing (ABC). C. a quality-control system focusing on eliminating errors and mistakes. D. an incentive system for a company's key decision-makers. 4. Which of the following items would be classified as a hatch-level cost in an activity-based cost management (ABM) system? A. indirect labor B. production supervisor's salary C. depreciation on factory building D. machinery set-up costs 5. Which of the following items would be classified as a product-level cost in an activity-based cost management (ABM) system? A. change order to meet new a new customer's specification B. movement or materials for products in production C. long-term lease payments for factory equipment D. insurance and property taxes on faculty building 6. Which of the following items would not he used as the cost driver for a volume-level cost in an activity-based cost management (ABM) system? A. direct labor hours B. machine hours C. units produced D. square footage 7. In an activity-based cost management (ABM) system, facility-level costs are those that are incurred to: A. sustain the company's marketing program. B. maintain the plant's production capacity. C. support the research and development process. D. caused by a change in the engineering plans for a product. 8. Activity-based costing (ABC) information cannot be used by managerial decision-makers to evaluate the A. profitability of a customer. B. market potential of a product. C. cost of using a particular supplier. D. whether to continue providing a service. 9. Green Lumber Supply noticed a recent decline in the amount of purchases from a key customer. Worried that other customers might also reduce their purchases, Green's management decided to evaluate the cost of its delivery service. Which of the following cost drivers should be used for general administrative costs of the Delivery Department'? A. number of orders entered B. value ofeach order C. number of items in each order D. number of deliveries made 10. The unused resource capacity is the difference between the resources supplied and the resources A. purchased. B. wasted. C. used. D. on hand. 11. The amount of production possible under normal working conditions, including planned downtime and scheduled vacations, is called A. actual capacity B. normal capacity. C. practical capacity. D. theoretical capacity. 12. Which of the following statements regarding quality costs is(are) false'? (A) In a cost of quality system, internal and external failure costs are called conformance costs. (B) Prevention costs are costs incurred to detect individual units of product that do not conform to its specifications. A. Only A is false. B. Only B is false. C. Both A and I3 are false. D. Neither A nor B is false. 13. Which of the following is not an example of a prevention cost? A. Training employees to improve quality B. Designing products to reduce production problems C. Correcting product defects before they are sold D. Inspecting the production process as it occurs 14. Which of the following is an example of a prevention cost? A. Machine inspection B. Warranty repairs C. Field testing D. Marketing costs 15. Which of the following is an example of an internal failure cost? A. Training employees to improve quality B. Designing products to reduce production problems C. Correcting product defects before they are sold D. Inspecting the production process as it occurs. 16. Which of the following is not an example of an external failure cost'! A. Accepting company liability resulting from product failure B. experiencing decreasing sales as a result of poor-quality products C. Repairing or replacing defective products after they've been sold D. Testing products in use at the customer's site 17. Which of the following items is included in almost all quality control systems'? A. Quality-related waiting time B. Quality planning and analysis C. Excess or obsolete inventory D. Quality-related overtime 18. Beta Company is preparing its annual profit plan. As part of its analysis of the profitability of its customers, management estimates that the $12,000 for sales support should be assigned to the individual customers from the information given as follows: Customer A Customer B Units purchased 100,000 200,000 Purchase orders(annual) 5 20 What is the amount of the sales support costs that should be allocated to customer A assuming Beta uses activity-based costing (ABC)? A. $2,400 B. $4,000 C. 8,000 D. 9,600 E. Some other answer 19. Which of the following statements about activity-based costing (ABC) is not true? (CIA adapted) A. In ABC, cost drivers are what cause costs to be linked to products. B. ABC is useful for assigning marketing and distribution costs C. ABC differs from traditional costing systems in that products are not cross-subsidized. D. ABC is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products. 20. In an activity-based costing (ABC) system, cost reduction is accomplished by identifying and eliminating (CPA adapted) All Cost Drivers Nonvalue-added Activities A. No no B. Yes yes C. No yes D. Yes no 21. Black Companys cost management and product costing procedures follow activity-based costing (ABC) principles. Activities have been identified and classified as being either value-added or nonvalue added for each product. Which of the following activities, used in Blacks production process, is nonvalue-added? (CPA adapted A. Drill press activity B. Heat treatment activity C. Design engineering activity D. Raw materials storage activity BC Enterprises quality control report for august 2008 contains the following item. Gathering, analysis, and reporting quality data $1,000 Inspecting raw materials received from vendors $2,000 Testing and inspecting finished products $3,000 Visiting customer sites and addressing complaints $4,000 Designing product to reduce production problems $5,000 Repairing and/ or replacing products under warranty $6,000 Maintaining the equipment used to gather quality data $7,000 Cost (net) of materials wasted during production $8,000 22. What would be the total of the prevention costs on the August 2008 quality control report for BC Enterprises? A. $5,000 B. $7,000 C. $11,000 D. $12,000 E. Some other answer 23. What would be the total of the appraisal costs on the August 2008 quality control report for BC Enterprises? A. $8000 B. $11,000 C. $12000 D. $15000 E. Some other answer 24. What would be the total of the internal failure costs on the august 2008 quality control report for BC Enterprises? A. $8,000 B. $13000 C. $14,000 D. $16,000 E. Some other answer 25. What would be the total of the external failure costs on the August 2008 quality control report for BC Enterprises? A. $4,000 B. $6,000 C. 7,000 D. 14,000 E. Some other answer 26. What would be the total of the conformance costs on the August 2008 quality control report for BC Enterprises? A. $22,000 B. $20,000 C. $15,000 D. $13,000 E. Some other answer 27. What would be the total of the nonconformance costs on the August 2008 quality control report for BC Enterprises? A. $22,000 B. 21,000 C. 14,000 D. 13,000 E. Some other answer Another section Basic decision analysis using cvp 1.Anus Amusement center has collected the following data for operations for the year Total revenues $800,000 Total fixed costs $218,750 Total variable costs $450,000 Total tickets sold $50,000 Required a. What is the average selling price for a ticket? b. What is the average variable cost per ticket ? c. What is the average contribution margin per ticket? d. What is the break-even point? e. Anu has decided that unless the operation can earn at least $43,750 in operating profits, she will close it down. What number of tickets must be sold for anus amusements to make a $43,750 operating profit for the year on ticket sales? 2. basic CVP analysis The manager of Kimas food Mart estimates operating costs for the year will include $900,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of 40 percent b. Find the break-even point is sales dollars with a contribution margin ratio of 25 percent c. Find the sales dollars required to generate a profit of $200,000 for the year assuming a contribution margin ratio of 40 percent. 3. basic decision analysis using CVP Cambridge, inc is considering the introduction of a new calculator with the following price and cost characteristics: Sales price $18 each Variable costs 10 each Fixed costs 20,000 per month a. What number must cambridge sell per month to break even? b. What number must cambride sell to make an operating profit of $16,000 for the month? 4. Basic Decision Analysis using CVP Refer to the data for cambridge, Inc (the question above). Assume that the projected number of units sold for the year is 7,000. Consider requirements (b),(c) and (d) independently of each other. a. What will the operating profit be? b. What is the impact on operating profit if the sales price decreases by 10percent? Increases by 20 percent c. What is the impact on operating profit if variable costs per unit decreases by 10 percent? Increase by 20 percent? d. Suppose that fixed costs for the year are 10 percent lower than projected, and variable costs per unit are 10 percent higher than projected. What impact will these cost changed have on operating profit for the year? Will profit go up? Down? By how much? 5. CVP and margin of safety Rainbow tours gives walking tours of springfield, Rainbow charges $40 per person for the tour and incurs $16 in variable costs for labor, drinks, and maps. The monthly fixed costs for rainbow tours are 3,000 a. How many tours must rainbow sell every month to break even? b. Rainbow tourss owner believes that 175 people a month will sign up for the walking tour. What is the margin of safety in terms of the number of people signing up for the tour? 6. marias food service provides meals that nonprofit organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April, when she expects to produce and sell 3,000 meals: Sales revenue $18,000 $6.00 per unit Costs of meals produced $13,500 4.50 per unit Gross profit $4500 $1.50 per unit Administrative costs $ 2,100 0.07 Operating profit $2,400 $0.80 Fixed costs included in this income statement are 4,500 for meal production and $600 for administrative costs. Maria has received a special request from an organization sponsoring a picnic to raise funds for the Special Olympics. This organization is willing to pay $3.50 per meal for 300 meals on April 10. Maria has sufficient idle capacity to fill this special order. These meals will incur all of the variable costs of meals produced, but variable administrative costs and total fixed costs will not be affected. a. What impact would accepting this special order have on operating profit? b. Should Maria accept the order? 7. Mobility partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, trailblazers, inc offered to sell these rear wheel assemblies to mobility. If mobility makes the assembly, its cost per rear wheel assembly is a as follows (based on annual production of 2,000 units): Direct materials $25 Direct labor $53 Variable overhead $16 Fixed overhead $47 Total $141 Trailblazers has offered to sell the assembly to mobility for $110 each. The total order would amount to 2,000 rear wheel assemblies per year , which mobilitys management will buy instead of make if mobility can save at least $10,000 per year. Accepting trailblazers offer would eliminate annual fixed over head of $40,000 a. Should mobility make rear wheel assemblies or buy them from trailblazers? Prepare a schedule that shows the differential costs per rear wheel assembly. 7. Mels meals 2 go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mels kitchen and adjoining meeting room operate at 70 percent of capacity. Mels purchases the cookies for $0.60 each but is considering making them instead. Mels can bake each cookie for $0.20 for materials, $0.15 for direct labor and $0.45 for overhead without increasing its capacity. The $0.45 for overhead includes an allocation of $0.30 per cookie for fixed overhead. However, total fixed overhead for the company would not increase if mels makes cookies. Mel himself has come to you for advice. it would cost me $0.80 to make the cookies, but only $0.60 to buy. Should I continue buying them? materials and labor are variable costs, but variable overhead would be only $0.15 per cookie. Two cookies are put into every lunch a. how would you advise mel? Prepare a schedule to show the differential costs. 8. estimate machine hours worked from overhead data Sydney Corporation estimates that machine-hours for the year would be 20,000 hours and over head(all fixed) would be $80,000. Sydney applies its overhead on the basis of machine hours during the year, all overhead costs were exactly as planned ($80,000). There was $11,000 in over-applied overhead. a. How many machine hours were worked during the period? Show computations. 9. compute equivalent units: Weighted- Average Method Clean Corporation manufactures liquid window cleaner. The following information concerns its work in process: Beginning inventory, 8,000 partially complete gallons Transferred out, 42,000 gallons Ending inventory (materials are 10 percent complete; conversion costs are 20 percent complete) Started this month 48,000 gallons a. Compute the equivalent units for materials using the weighted- average method. b. Compute the equivalent units for conversion costs using the weighted-average method. 10. compute equivalent units: Weighted- Average Method Missouri Corporation shows the following information concerning the work in process at its plant: Beginning inventory was partially complete (material s are 100 percent complete; conversion costs are 60 percent complete) Started this month, 180000 units Transferred out, 150,000 units Ending inventory, 100,000 units (materials are 100percent complete; conversion costs are 15 percent complete) a. Compute the equivalent units for materials using the weighted-average method. b. Compute the equivalent units for conversion costs using the weighted-average method. 11. Compute Equivalent Units: FIFO method Materials are added at the beginning of the production process at Santiago Company which uses a FIFO process costing system. The following information on the physical flow of units is available for the month of april: Beginning work in process (40%complete) 45,000 Started in April 510,000 Completed in April and transferred out 480,000 Ending work in process (70% complete) 75,0000 a. Compute the equivalent units for the conversion costs calculation