ACCT 526 END OF COURSE TEST QUESTIONS AND
SOLUTIONS RATED A+
✔✔Steven Co. has two products: A and B. The following is information about the
assembly activity in its factory:
Estimated Cost. Estimated Activity
A. B. Total
Assembly $15,000. 490. 260. 750
The activity rate for the Assembly Department is closest to:
a.$62.90.
b.$20.00.
c.$55.81.
d.$25.06. - ✔✔b.$20.00.
$15, = $20.00
✔✔Activity drivers can be classified as:
a.only non-unit based.
b.either unit based or diversity based.
c.only unit based.
d.either unit based or non-unit based. - ✔✔d.either unit based or non-unit based.
✔✔Activity attributes are:
a.financial and nonfinancial information items that describe a set of activities.
b.financial and nonfinancial information items that describe individual activities.
c.only nonfinancial information items that describe a set of activities.
d.only nonfinancial information items that describe individual activities. - ✔✔b.financial
and nonfinancial information items that describe individual activities.
✔✔Which of the following stages are a part of activity-based costing? I.Trace costs to
activities
II.Overhead costs are assigned to cost objects
III.Trace costs to cost objects
IV.Overhead costs are assigned to a plant or department - ✔✔I & III
✔✔Ace Manufacturing identifies the following activities and drivers for its operations:
Activity Activity Driver Driver Quantity
Moving Materials. Number of moves. 100
Machining. Machine hours. 10,000
Ace estimates Moving Materials and Machining will cost $700,000 and $4,000,000
respectively. Ace's activity rates are:
, a.$7,000 per move and $400 per machine hour.
b.$7 per move and $40 per machine hour.
c.$70 per move and $4 per machine hour.
d.$700 per move and $4,000 per machine hour - ✔✔a.$7,000 per move and $400 per
machine hour.
Moving Materials $7,000 ($700,) and Machining $400 ($4,000,,000)
✔✔Which of the following is an example of a customer-driven activity?
a.Expediting products
b.Order picking
c.Reworking products
d.Warranty work - ✔✔b.Order picking
✔✔The whale curve of cumulative customer profitability:
a.identifies customers to the far right of the curve who severely decrease the firm's
profitability and should be terminated.
b.takes the shape of a "U" when the firm is profitable.
c.depicts cumulative costs compared against cumulative customers.
d.depicts activity-based costing compared against revenues of the firm. - ✔✔a.identifies
customers to the far right of the curve who severely decrease the firm's profitability and
should be terminated.
✔✔Wave Crest Cosmetics produces cosmetic products for 11 major buyers. One
customer accounts for ½ of the sales, the other 10 customers account for the remaining
sales. The 10 smaller customers place orders of about equal size. The large customer
purchases 1,000,000 units per year by placing 3 orders per year, and the 10 smaller
customers order 1,000,000 units in total by placing 500 orders per year. Order filling
costs total $1,156,900 per year. How much would be assigned to the large customer as
ordering costs using activity-based customer costs?
a.$1,150,000
b.$578,450
c.$6,900
d.$6,400 - ✔✔c.$6,900
Total ordering filling cost = $1,156, orders = $2,300 per order
$2,300 x 3 = $6,900
✔✔Which of the following best describes driver analysis?
a.The analysis of high activity costs under activity-based costing
b.The analysis of the inefficient use of activity costs
c.The analysis of the activities under activity-based costing
d.The analysis of the factors that cause activity costs - ✔✔d.The analysis of the factors
that cause activity costs
SOLUTIONS RATED A+
✔✔Steven Co. has two products: A and B. The following is information about the
assembly activity in its factory:
Estimated Cost. Estimated Activity
A. B. Total
Assembly $15,000. 490. 260. 750
The activity rate for the Assembly Department is closest to:
a.$62.90.
b.$20.00.
c.$55.81.
d.$25.06. - ✔✔b.$20.00.
$15, = $20.00
✔✔Activity drivers can be classified as:
a.only non-unit based.
b.either unit based or diversity based.
c.only unit based.
d.either unit based or non-unit based. - ✔✔d.either unit based or non-unit based.
✔✔Activity attributes are:
a.financial and nonfinancial information items that describe a set of activities.
b.financial and nonfinancial information items that describe individual activities.
c.only nonfinancial information items that describe a set of activities.
d.only nonfinancial information items that describe individual activities. - ✔✔b.financial
and nonfinancial information items that describe individual activities.
✔✔Which of the following stages are a part of activity-based costing? I.Trace costs to
activities
II.Overhead costs are assigned to cost objects
III.Trace costs to cost objects
IV.Overhead costs are assigned to a plant or department - ✔✔I & III
✔✔Ace Manufacturing identifies the following activities and drivers for its operations:
Activity Activity Driver Driver Quantity
Moving Materials. Number of moves. 100
Machining. Machine hours. 10,000
Ace estimates Moving Materials and Machining will cost $700,000 and $4,000,000
respectively. Ace's activity rates are:
, a.$7,000 per move and $400 per machine hour.
b.$7 per move and $40 per machine hour.
c.$70 per move and $4 per machine hour.
d.$700 per move and $4,000 per machine hour - ✔✔a.$7,000 per move and $400 per
machine hour.
Moving Materials $7,000 ($700,) and Machining $400 ($4,000,,000)
✔✔Which of the following is an example of a customer-driven activity?
a.Expediting products
b.Order picking
c.Reworking products
d.Warranty work - ✔✔b.Order picking
✔✔The whale curve of cumulative customer profitability:
a.identifies customers to the far right of the curve who severely decrease the firm's
profitability and should be terminated.
b.takes the shape of a "U" when the firm is profitable.
c.depicts cumulative costs compared against cumulative customers.
d.depicts activity-based costing compared against revenues of the firm. - ✔✔a.identifies
customers to the far right of the curve who severely decrease the firm's profitability and
should be terminated.
✔✔Wave Crest Cosmetics produces cosmetic products for 11 major buyers. One
customer accounts for ½ of the sales, the other 10 customers account for the remaining
sales. The 10 smaller customers place orders of about equal size. The large customer
purchases 1,000,000 units per year by placing 3 orders per year, and the 10 smaller
customers order 1,000,000 units in total by placing 500 orders per year. Order filling
costs total $1,156,900 per year. How much would be assigned to the large customer as
ordering costs using activity-based customer costs?
a.$1,150,000
b.$578,450
c.$6,900
d.$6,400 - ✔✔c.$6,900
Total ordering filling cost = $1,156, orders = $2,300 per order
$2,300 x 3 = $6,900
✔✔Which of the following best describes driver analysis?
a.The analysis of high activity costs under activity-based costing
b.The analysis of the inefficient use of activity costs
c.The analysis of the activities under activity-based costing
d.The analysis of the factors that cause activity costs - ✔✔d.The analysis of the factors
that cause activity costs
