ACCT 434 Week 1 Quiz

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ACCT 434 Week 1 Quiz

1.Question :(TCO 1) The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble.
Marblette                 Italian Marble          Purchase volume                                     20,000                         1,000
Purchase cost per unit                                 $50                          $250
Shipments received                                       12                              12
Hours used per shipment *                             5                                3
        * These data were accumulated after a careful activity analysis.Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis.  In-Sync Fixtures is considering refining the allocation of its receiving costs of $40,000.  It realizes that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume.Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures?
Student Answer: The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because a more appropriate cost driver will be used as the allocation base.
 The traditional allocation method being used is causing product-cost cross-subsidization with the product line Marblette being undercosted.
 The cost allocated to the Italian Marble product line under the traditional system is more than the activity-based costing allocated cost.
 The use of this refined activity-based costing system will increase the accuracy of the resulting product costs becaues it probably will


Question 2.Question :(TCO 1) Building or plant security is an example of
Student Answer: unit-level costs.
 batch-level costs.
 product-sustaining costs.
 facility-sustaining costs.

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Question 3.Question :(TCO 1) A significant limitation of activity-based costing is the
Student Answer: attention given to indirect cost allocation.
 many necessary calculations.
 operations staff’s attitude toward the accounting staff.
 use it makes of technology.


Question 4.Question :(TCO 1) A company produces three products; if one product is overcosted then
Student Answer: one product is undercosted.
 one or two products are undercosted.
 two products are undercosted.
 no products are undercosted.


Question 5.Question :(TCO 1) The MOST likely example of an output unit-level cost is
Student Answer: general administrative costs.
 paying suppliers for orders received.
 engineering costs.
 machine depreciation.


Question 6.Question :(TCO 1) Unit-level cost drivers are most appropriate as an overhead assignment base when
Student Answer: several complex products are manufactured.
 only one product is manufactured.
 direct labor costs are low.
 factories produce a mix of products.


Question 7.Question :(TCO 1) A PRIMARY reason for assigning selling and distribution costs to products for analytical purposes is
Student Answer: to justify a product mix.
 that controllers are required to assign all costs when valuing inventories.
 that different processes, products, and customers require different quantities of selling and distribution activities.
 that all indirect costs must be assigned.


Question 8.Question :(TCO 1) Activity-based costing information
Student Answer: should be used when services place similar demands on resources.
 usually results in peanut-butter costing.
 will yield inaccurate cost numbers when products are similar.
 may assist in improving product design and efficiency.


Question 9.Question :(TCO 1) Products make diverse demands on resources because of differences in all of the following EXCEPT
Student Answer: volume.
 selling price.
 batch size.


Question 10.Question :(TCO 1) Danielle Company produces a special spray nozzle.  The budgeted indirect total cost of inserting the spray nozzle is $180,000.  The budgeted number of nozzles to be inserted is 60,000.  What is the budgeted indirect cost allocation rate for this activity?
Student Answer: $3.00



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