Ch.7 Activity-Based Costing

An Activity Measure is...

• a type of duration driver used in activity-based costing systems.

• an allocation base in an activity-based costing system.

• an event that causes the consumption of overhead resources.

• a "bucket" in which costs are accumulated in an activity-based costing system.

Relying exclusively on unit-level overhead allocation is most likely to:

• Overcost all Products

• Undercost all Products

• Overcost Low-Volume Products

• Overcost High-Volume Products

Which of the following is true regarding Organization-Sustaining Activity Costs?

• Organization-sustaining activity costs should be allocated to products using an organization-level activity measure.

• Organization-sustaining activity costs should be allocated to products using a batch-level activity measure.

• Organization-sustaining activity costs should be allocated to products using a product-level activity measure.

• Organization-sustaining activity costs should not be allocated to products.

Two Common types of Activity Measures are...

• Time Driver and Money Driver

• Transaction Driver and Duration Driver

• Length Driver and Utility Driver

• Cost Driver and Unit Driver

What is the capacity used in minutes?

• 955,000

• 1,055,000

• 1,155,000

• 1,255,000

If the company uses number of setup hours as the activity measure, what is the activity rate for machine setups?

• $100

• $150

• $200

• $250

How much total activity cost would be assigned to Customer A from the company's three activities?

• $2275

• $2864

• $1835

• $1575

Using Activity Based Costing, what is the product margin for Product A?

• $96500

• $100500

• $112000

• $139000

What % of the company's total Machine Setup activity cost would be allocated to Product C?

• 20%

• 25%

• 45%

• 50%

How much cost would be assigned from the Bid Evaluation activity to Job A?

• $19

• $20

• $21

• $22