Binghamton University - ACCT 305 Chapter 1 Review Questions 1)Which one of the following is not one of the basic procedures related to Activity-based costing? Identify the activity

Binghamton University - ACCT 305

Chapter 1 Review Questions

1)Which one of the following is not one of the basic procedures related to Activity-based costing?

1. Identify the activity.
2. Create an associated activity cost pool.
3. Compute internal failure costs.
4. Calculate the cost per unit of activity.

2. The suppliers and production component of the value chain would include all of the following costs except:

1. Direct production labor.
2. Production set-up.
3. Salaries for sales personnel.
4. Receipt of direct materials from suppliers.

3. Examples of value-adding activities include all of the following except:

1. Product design.
2. Assembly activities.
3. Machinery set-up activities.
4. Establishing efficient distribution channels.

4. Which of the following activities performed by a manufacturer of roller blades are value- adding?

1. Inspection of direct materials upon receipt from suppliers.
2. Storage of direct materials until needed for production.
3. Transfer of direct materials to appropriate points on the assembly line.
4. None of the above are value-adding activities.

5. The just-in-time manufacturing system:

1. Contrasts with the supply push system.
2. Complements the supply push systems.
3. Neither complements nor contrasts with the supply push system.
4. Contrasts the demand pull system.

6. Just-in-time manufacturing systems are also known as:

1. Supply push systems.
2. Supply pull systems.
3. Demand push systems.
4. Demand pull systems.

7. The primary objective of activity-based management is:

1. To develop more accurate product costs.
2. To reduce and eliminate non-value added activities.
3. To increase product quality.
4. To identify instances of internal failure.

8. Target costing is directed toward:

1. Increasing the activity costs associated with existing products.
2. Identifying the amount by which the costs of existing products must be reduced to achieve a target profit margin.
3. The creation and design of products that will provide adequate profits.
4. The improvement of existing production processes by eliminating non-value adding activities.

9. The identification of a target price for a newly designed product or service is focused on:

1. The expected costs of production.
2. The required profit margin.
3. The prices charged by existing and potential competitors.
4. Customers and their functional requirements.

10. During which element of manufacturing cycle time is value added to products?

1. Storage and waiting time.
2. Processing time.
3. Movement time.
4. Inspection time.

11. The manufacturing efficiency ratio equals:

1. Value-added time divided by cycle time.
2. Value-added time multiplied by cycle time.
3. Cycle time divided by value-added time.
4. (Cycle time divided by value-added time) divided by 2.

12. Which of the following is not commonly used to measure product quality in a just-in-time system?

1. Defects per million.
2. Merchandise returns.
3. Manufacturing efficiency ratio.
4. Warranty claims.

13. Four categories of costs associated with product quality are:

1. External failure, internal failure, prevention, and carrying.
2. External failure, internal failure, prevention, and appraisal.
3. External failure, internal failure, training, and appraisal.
4. Warranty, product liability, prevention, and training.

14. Which of the following is an example of the cost of quality?

1. Prevention costs.
2. Internal failure costs.
3. External failure costs.
4. All three are components of the cost of quality.

15. Which of the following is not a prevention cost?

1. Training costs.
2. Warranty costs.
3. Maintenance costs.
4. Quality planning costs.