Test Bank for Accounting Principles 14th Edition by Jerry J. Weygandt, Paul D. Kimmel

Test Bank For Accounting Principles 14th Edition By Jerry J. Weygandt, Paul D. Kimmel lOMoAR cPSD| Test Bank For Managerial Accounting Tools For Business Decision Making 7th Edition Jerry J Structure aanalysis 1 (Middle East University Jordan) lOMoAR cPSD| Test Bank For Managerial Accounting: Tools For Business Decision Making, 7 th Edition By Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso Solutions Manual, Instructor' s Manual, Answer key for all chapters, Other solutions, Excel solutions Weygandt Managerial Accounting: Tools for Busine ss Decision Making, 7 th Edition Download: CHAPTER 4 ACTIVITY-BASED COSTING SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S TAXONOMY Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT True-False Statements 1. 1 2. 1 3. 1 4. 1 5. 1 6. 1 K K K C C K 7. 2 8. 2 9. 3 10. 3 11. 3 12. 3 C K C K K K 13. 3 14. 3 15. 3 16. 3 17. 3 18. 3 K C K K K K 19. 3 20. 3 21. 3 22. 3 23. 3 24. 4 K K C K K K 25. 4 26. 4 a27. 5 a28. 5 a29. 5 a30. 5 K K K C K K Multiple Choice Questions 31. 1 32. 1 33. 1 34. 1 35. 1 36. 1 37. 1 38. 1 39. 1 40. 1 41. 1 42. 1 43. 1 44. 1 45. 2 46. 2 47. 1 48. 2 49. 1 K K K C K K K C K K K K AP AP AP AP AP AP K 58. 2 59. 2 60. 2 61. 2 62. 2 63. 2 64. 2 65. 2 66. 2 67. 2 68. 2 69. 2 70. 2 71. 2 72. 2 73. 2 74. 2 75. 2 76. 2 K K K K K K K K K AP AP AP AP AP AP AP AP AP AP 85. 2 86. 2 87. 2 88. 2 89. 2 90. 2 91. 2 92. 2 93. 2 94. 2 95. 2 96. 2 97. 3 98. 3 99. 3 100. 3 101. 3 102. 3 103. 3 AP AP AP AP AP AP AP AP AP AP AP AP K C K C K K C 112. 3 113. 3 114. 3 115. 3 116. 3 117. 3 118. 3 119. 3 120. 3 121. 3 122. 3 123. 3 124. 3 125. 3 126. 3 127. 3 128. 3 129. 3 130. 3 K K K K K C C C C K K C C C C C K K K 139. 4 140. 4 141. 4 142. 4 143. 4 144. 4 145. 4 146. 4 147. 4 148. 4 149. 4 150. 4 151. 4 a152. 5 a153. 5 a154. 5 a155. 5 a156. 5 a157. 5 K K K AP AP AP AP AP AP K K K C K K K K K K lOMoAR cPSD| 4 - 2 Test Bank for Managerial Accounting, Seventh Edition 50. 1 51. 2 52. 2 53. 2 54. 2 55. 2 56. 2 57. 2 K K K K AP K AP K 77. 2 78. 2 79. 2 80. 2 81. 2 82. 2 83. 2 84. 2 AP AP AP AP AP C K AP 104. 3 105. 3 106. 3 107. 3 108. 3 109. 3 110. 3 111. 3 K K K K K C K K 131. 3 132. 3 133. 3 134. 3 135. 3 136. 3 137. 3 138. 4 K K K K K K K K a158. a159. a160. a161. a162. 5 5 5 5 5 K K C K K Brief Exercises 163. 1 AP 165. 2 AP 167. 2 AP 169. 2 AP 171. 3 C 164. 2 AP 166. 2 AP 168. 2 K 170. 3 C lOMoAR cPSD| Activity-Based Costing 4 - 3 Exercises 172. 1,2 173. 1,2 174. 2 175. 2 AP AP AP K 176. 2 177. 2 178. 2 C C AP 179. 2 180. 2 181 2 E AP C 182. 2,3 183. 3 184. 3 AP C C 185. 3 186. 3 187. 4 C C AP Completion Statements 188. 1 189. 1 190. 1 K K K 191. 2 192. 3 193. 3 K K K 194. 3 195. 3 196. 3 K K K a197. 5 a198. 5 K K a This question covers a topic in an Appendix to the chapter. SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE Item Type Item Type Item Type Item Type Item Type Item Type Item Type Learning Objective 1 1. TF 2. TF 3. TF 4. TF 5. TF 6. TF 31. MC 32. MC 33. MC 34. MC 35. MC 36. MC 37. MC 38. MC 39. MC 40. MC 41. MC 42. MC 43. MC 44. MC 47. MC 49. MC 50. MC 163. BE 172. Ex 173. Ex 188. C 189. C 190. C Learning Objective 2 7. TF 8. TF 45. MC 46. MC 48. MC 51. MC 52. MC 53. MC 54. MC 55. MC 56. MC 57. MC 58. MC 59. MC 60. MC 61. MC 62. MC 63. MC 64. MC 65. MC 66. MC 67. MC 68. MC 69. MC 70. MC 71. MC 72. MC 73. MC 74. MC 75. MC 76. MC 77. MC 78. MC 79. MC 80. MC 81. MC 82. MC 83. MC 84. MC 85. MC 86. MC 87. MC 88. MC 89. MC 90. MC 91. MC 92. MC 93. MC 94. MC 95. MC 96. MC 164. BE 165. BE 166. BE 167. BE 168. BE 169. BE 172. Ex 173. Ex 174. Ex 175. Ex 176. Ex 177. Ex 178. Ex 179. Ex 180. Ex 181. Ex 182. Ex 191. C Learning Objective 3 9. TF 10. TF 11. TF 12. TF 13. TF 14. TF 15. TF 16. TF 17. TF 18. TF 19. TF 20. TF 21. TF 22. TF 23. TF 97. MC 98. MC 99. MC 100. MC 101. MC 102. MC 103. MC 104. MC 105. MC 106. MC 107. MC 108. MC 109. MC 110. MC 111. MC 112. MC 113. MC 114. MC 115. MC 116. MC 117. MC 118. MC 119. MC 120. MC 121. MC 122. MC 123. MC 124. MC 125. MC 126. MC 127. MC 128. MC 129. MC 130. MC 131. MC 132. MC 133. MC 134. MC 135. MC 136. MC 137. MC 170. BE 171. BE 182. Ex 183. Ex 184. Ex 185. Ex 186. Ex 192. C 193. C 194. C 195. C 196. C Learning Objective 4 24. TF 25. TF 26. TF 138. MC 139. MC 140. MC 141. MC 142. MC 143. MC 144. MC 145. MC 146. MC 147. MC 148. MC 149. MC 150. MC 151. MC 187. Ex FOR INSTRUCTOR USE ONLY lOMoAR cPSD| 4 - 4 Test Bank for Managerial Accounting, Seventh Edition Learning Objective a5 27. TF 28. TF 29. TF 30. TF 152. MC 153. MC 154. MC 155. MC 156. MC 157. MC 158. MC 159. MC 160. MC 161. MC 162. MC 197. C 198. C Note: TF = True-False BE = Brief Exercise C = Completion MC = Multiple Choice Ex = Exercise The chapter also contains one set of ten Matching questions and three Short-Answer Essay questions. CHAPTER LEARNING OBJECTIVES 1. Discuss the difference between traditional costing and activity-based costing. A traditional costing system allocates overhead to products on the basis of predetermined plantwide or departmentwide rates such as direct labor or machine hours. An ABC system allocates overhead to identified activity cost pools, and then assigns costs to products using related cost drivers that measure the activities (resources) consumed. The development of an activity-based costing system involves the following four steps. (1) Identify and classify the major activities involved in the manufacture of specific products and assign overhead to cost pools. (2) Identify the cost driver that has a strong correlation to the costs accumulated in each cost pool. (3) Compute the activity-based overhead rate for each cost pool. (4) Allocate overhead costs to products using the overhead rates determined for each cost pool. 2. Apply activity-based costing to a manufacturer. To identify activity cost pools, a company must perform an analysis of each operation or process, documenting and timing every task, action, or transaction. Cost drivers identified for assigning activity cost pools must (a) accurately measure the actual consumption of the activity by the various products and (b) have related data easily available. The overhead assigned to each activity cost pool is divided by the expected use of cost drivers to determine the activity-based overhead rate for the each pool. Overhead is allocated to products by multiplying a particular product’s expected use of a cost driver by the activity-based overhead rate. This is done for each activity cost pool and then summed. 3. Explain the benefits and limitations of activity-based costing. Features of ABC that make it a more accurate product costing system include (1) the increased number of cost pools used to assign overhead (including use of the activity-level hierarchy), (2) the enhanced control over overhead costs (including identification of non-value-added activities), and (3) the better management decisions it makes possible. The limitations of ABC are (1) the higher analysis and measurement costs that accompany multiple activity centers and cost drivers, and (2) the necessity still to allocate some costs arbitrarily. 4. Apply activity-based costing to service industries. The overall objective of using ABC in service industries is no different than for manufacturing industries—that is, improved costing of services performed (by job, service, contract, or customer). The general approach to costing is the same: analyze operations, identify activities, accumulate overhead costs by activity cost pools, and identify and use cost drivers to assign the cost pools to the services. a5. Explain just-in-time (JIT) processing. JIT is a processing system dedicated to having on hand the right materials and products just at the time they are needed, thereby reducing the amount of inventory and the time inventory is held. One of the principal accounting effects is that one account, Raw and In-Process Inventory, replaces both the raw materials and work in process inventory accounts. lOMoAR cPSD| Activity-Based Costing TRUE-FALSE STATEMENTS 1. Traditional costing systems use multiple predetermined overhead rates. 4 - 5 Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 2. Traditionally, overhead is allocated based on direct labor cost or direct labor hours. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 3. Current trends in manufacturing include less direct labor and more overhead. Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 4. Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers. Ans: T, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 5. A cost driver does not generally have a direct cause-effect relationship with the resources consumed. Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 6. The first step in activity-based costing is to assign overhead costs to products, using cost drivers. Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 7. To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool. Ans: T, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 8. Low-volume products often require more special handling than high-volume products. Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 9. When overhead is properly assigned in ABC, it will usually decrease the unit cost of highvolume products. Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 10. ABC leads to enhanced control over overhead costs. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 11. ABC usually results in less appropriate management decisions. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 12. ABC is generally more costly to implement than traditional costing. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 13. ABC eliminates all arbitrary cost allocations. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt FOR INSTRUCTOR USE ONLY lOMoAR cPSD| 4 - 6 Test Bank for Managerial Accounting, Seventh Edition 14. ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity. Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 15. ABC is particularly useful when overhead costs are an insignificant portion of total costs. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 16. Activity-based management focuses on reducing costs and improving processes. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 17. Any activity that increases the cost of producing a product is a value-added activity. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 18. Engineering design is a value-added activity. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 19. Non-value-added activities increase the cost of a product but not its perceived value. Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 20. Machining is a non-value-added activity. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 21. Not all activities labeled non-value-added are totally wasteful, nor can they be totally eliminated. Ans: T, LO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 22. Plant management is a batch-level activity. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 23. Painting is a product-level activity. Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 24. The overall objective of installing ABC in service firms is no different than it is in a manufacturing company. Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 25. What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs. Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 26. The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company. Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt lOMoAR cPSD| Activity-Based Costing 4 - 7 a27. Just-in-time strives to eliminate inventories by using a pull approach. Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt a28. Quality control is less important in just-in-time than in traditional manufacturing philosophies. Ans: F, LO: 5, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt a29. Inventory storage costs are reduced in just-in-time processing. Ans: T, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt a30. Rework costs typically increase in just-in-time processing. Ans: F, LO: 5, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt Answers to True-False Statements Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. 1. F 6. F 11. F 16. T 21. T 26. T 2. T 7. T 12. T 17. F 22. F a27. T 3. T 8. T 13. F 18. T 23. F a28. F 4. T 9. T 14. T 19. T 24. T a29. T 5. F 10. T 15. F 20. F 25. F a30. F MULTIPLE CHOICE QUESTIONS 31. Which of the following is not typical of traditional costing systems? a. Use of a single predetermined overhead rate. b. Use of direct labor hours or direct labor cost to assign overhead. c. Assumption of correlation between direct labor and incurrence of overhead cost. d. Use of multiple cost drivers to allocate overhead. Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 32. In traditional costing systems, overhead is generally applied based on a. direct labor. b. machine hours. c. direct material dollars. d. units of production. Ans: a, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt 33. An activity that has a direct cause-effect relationship with the resources consumed is a(n) a. cost driver. b. overhead rate. c. cost pool. d. product activity. Ans: a, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: Reflective, AICPA BB: Industry/Sector Perspective, AICPA FN: Measurement, AICPA PC: Problem Solving, IMA: Cost Mgmt FOR INSTRUCTOR USE ONLY lOMoAR cPSD| 4 - 8 Test Bank for Managerial Accounting, Seventh Edition 34. Which best describes the flow of overhead costs in an activity-based costing system? a. Overhead costs