Test Bank For Managerial Accounting Tools For Business Decision Making 7th Edition Jerry J PDF

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Test Bank For Manageria l A ccountin g: Tools For Business Decision Making, 7th Edition By Jerry J. Weygandt, Paul D. Kim m el, Donald E. Kieso https://testbankarea.com/download/managerial-accounting-tools-businessdecision-making-7th-edition-test-bank-weygandt-kimmel-kieso/ S olutions Manual, Inst ructor's Manual, A nswer key for a ll ch apters, Other solutions, Excel solu tion s Weyga ndt Managerial A ccounting: Tools for Busine ss Decision Making, 7t h Edition Download: https://testbankarea.com/download/managerial-accounting-tools-businessdecision-making-7th-edition-solutions-manual-weygandt-kimmel-kieso/

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

3 3 3 3 3 4

K K C K K K

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

K K K K K C C C C K K C C C C C K K K

Item

LO

BT

25. 26. a 27. a 28. a 29. a 30.

4 4 5 5 5 5

K K K C K K

139. 140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150. 151. a 152. a 153. a 154. a 155. a 156. a 157.

4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5

K K K AP AP AP AP AP AP K K K C K K K K K K

True-False Statements 1. 2. 3. 4. 5. 6.

1 1 1 1 1 1

K K K C C K

7. 8. 9. 10. 11. 12.

2 2 3 3 3 3

C K C K K K

13. 14. 15. 16. 17. 18.

3 3 3 3 3 3

K C K K K K

19. 20. 21. 22. 23. 24.

Multiple Choice Questions 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.

1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 1 2 1

K K K C K K K C K K K K AP AP AP AP AP AP K

58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76.

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

K K K K K K K K K AP AP AP AP AP AP AP AP AP AP

85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103.

2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3

AP AP AP AP AP AP AP AP AP AP AP AP K C K C K K C

112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130.

4-2 50. 51. 52. 53. 54. 55. 56. 57.

Test Bank for Managerial Accounting, Seventh Edition 1 2 2 2 2 2 2 2

K K K K AP K AP K

77. 78. 79. 80. 81. 82. 83. 84.

2 2 2 2 2 2 2 2

AP AP AP AP AP C K AP

104. 105. 106. 107. 108. 109. 110. 111.

3 3 3 3 3 3 3 3

K K K K K C K K

131. 132. 133. 134. 135. 136. 137. 138.

3 3 3 3 3 3 3 4

K K K K K K K K

169. 170.

2 3

AP C

a

158. 159. a 160. a 161. a 162.

5 5 5 5 5

K K C K K

171.

3

C

a

Brief Exercises 163. 164.

1 2

AP AP

165. 166.

2 2

AP AP

167. 168.

2 2

AP K

Activity-Based Costing

4-3

2,3 3 3

AP C C

C C AP

5 5

K K

Exercises 172. 173. 174. 175.

1,2 1,2 2 2

AP AP AP K

176. 177. 178.

2 2 2

C C AP

179. 180. 181

2 2 2

E AP C

182. 183. 184.

185. 186. 187.

3 3 4

Completion Statements 188. 189. 190. a

1 1 1

K K K

191. 192. 193.

2 3 3

K K K

194. 195. 196.

3 3 3

K K K

a a

197. 198.

This question covers a topic in an Appendix to the chapter.

SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE Item

1. 2. 3. 4. 5. 7. 8. 45. 46. 48. 51. 52. 53. 54. 55. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 24. 25. 26.

Type

TF TF TF TF TF TF TF MC MC MC MC MC MC MC MC TF TF TF TF TF TF TF TF TF TF TF TF TF

Item

6. 31. 32. 33. 34. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 19. 20. 21. 22. 23. 97. 98. 99. 100. 101. 138. 139. 140.

Type

TF MC MC MC MC MC MC MC MC MC MC MC MC MC MC TF TF TF TF TF MC MC MC MC MC MC MC MC

Item

Type

Item

Type

Item

Type

Item

Type

35. 36. 37. 38. 39.

Learning Objective 1 MC 40. MC 47. MC 41. MC 49. MC 42. MC 50. MC 43. MC 163. MC 44. MC 172.

MC MC MC BE Ex

173. 188. 189. 190.

Ex C C C

66. 67. 68. 69. 70. 71. 72. 73. 74. 75.

Learning Objective 2 MC 76. MC 86. MC 77. MC 87. MC 78. MC 88. MC 79. MC 89. MC 80. MC 90. MC 81. MC 91. MC 82. MC 92. MC 83. MC 93. MC 84. MC 94. MC 85. MC 95.

MC MC MC MC MC MC MC MC MC MC

96. 164. 165. 166. 167. 168. 169. 172. 173. 174.

102. 103. 104. 105. 106. 107. 108. 109. 110. 111.

Learning Objective 3 MC 112. MC 122. MC 113. MC 123. MC 114. MC 124. MC 115. MC 125. MC 116. MC 126. MC 117. MC 127. MC 118. MC 128. MC 119. MC 129. MC 120. MC 130. MC 121. MC 131.

MC MC MC MC MC MC MC MC MC MC

141. 142. 143.

Learning Objective 4 MC 144. MC 147. MC 145. MC 148. MC 146. MC 149.

MC MC MC

FOR INSTRUCTOR USE ONLY

Item

Type

MC BE BE BE BE BE BE Ex Ex Ex

175. 176. 177. 178. 179. 180. 181. 182. 191.

Ex Ex Ex Ex Ex Ex Ex Ex C

132. 133. 134. 135. 136. 137. 170. 171. 182. 183.

MC MC MC MC MC MC BE BE Ex Ex

184. 185. 186. 192. 193. 194. 195. 196.

Ex Ex Ex C C C C C

150. 151. 187.

MC MC Ex

4-4

Test Bank for Managerial Accounting, Seventh Edition

27. 28. 29.

TF TF TF

30. 152. 153.

TF MC MC

154. 155. 156.

Note: TF = True-False MC = Multiple Choice

Learning Objective a5 MC 157. MC 160. MC 158. MC 161. MC 159. MC 162.

MC MC MC

197. 198.

BE = Brief Exercise Ex = Exercise

C C

C = Completion

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.

a

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.

5.

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.

Activity-Based Costing

4-5

TRUE-FALSE STATEMENTS 1.

Traditional costing systems use multiple predetermined overhead rates.

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

4-6 14.

Test Bank for Managerial Accounting, Seventh Edition 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

Activity-Based Costing a

27.

4-7

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 a

28.

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 a

29.

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 a

30.

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

1. 2. 3. 4. 5.

Ans.

F T T T F

Item

6. 7. 8. 9. 10.

Ans.

F T T T T

Item

11. 12. 13. 14. 15.

Ans.

F T F T F

Item

16. 17. 18. 19. 20.

Ans.

T F T T F

Item

21. 22. 23. 24. 25.

Ans.

T F F T F

Item

26. a 27. a 28. a 29. a 30.

Ans.

T T F T 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 ...