Cost Measurement Paper 4

1

Which of the following would be a reasonable basis for allocating the material handling costs to the units produced in an activity-based costing system?






2

Which of the following would be a reasonable basis for allocating the material handling costs to the units produced in an activity-based costing system?






3

An assembly plant accumulates its variable and fixed manufacturing overhead costs in a single cost pool which are then applied to work in process using a single application base. The assembly plant management wants to estimate the magnitude of the total manufacturing overhead costs for different volume levels of the application activity base using a flexible budget formula. If there is an increase in the application activity base that is within the relevant range of activity for the assembly plant, which one of the following relationships regarding variable and fixed costs is correct?






4

In Belk Co.’s just-in-time production system, costs per setup were reduced from $28 to $2. In the process of reducing inventory levels, Belk found that there were fixed facility and administrative costs that previously had not been included in the carrying cost calculation. The result was an increase from $8 to $32 per unit per year. What were the effects of these changes on Belk’s economic lot size and relevant costs?
Lot size . . . Relevant costs






5

What is the normal effect on the numbers of cost pools and allocation bases when an activity-based cost (ABC) system replaces a traditional cost system?
Cost pools . . . Allocation bases






6

Which of the following is true about activity-based costing?






7

Which of the following is true about activity-based costing?






8

In an activity-based costing system, what should be used to assign a department’s manufacturing overhead costs to products produced in varying lot sizes?






9

In an activity-based costing system, cost reduction is accomplished by identifying and eliminating
All cost drivers . . .Non-value-adding activities






10

Nile Co.’s cost allocation and product costing procedures follow activity-based costing principles. Activities have been identified and classified as being either value-adding or nonvalue- adding as to each product. Which of the following activities, used in Nile’s production process, is non-value-adding?






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