Topic 4 - Practice Questions

Topic 4 - Practice Questions - Question 1 Question 1...

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Unformatted text preview: Question 1 Question 1 (intense competition) An accelerated need for refined cost systems is due to: Answer glob al mon opoli es risin g pric es inte nse com petit ion a shift towa rd incr ease d dire ct cost s Question 2 Question 2 ( The costing results for chess pieces under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system) Answer the following questions using the information below: Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours), the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set. Given this change in the cost structure: Answer The costi ng resu lts for ches s piec es und er the new syst em depe nd on the adeq uacy and qual ity of the esti mat ed cost driv ers and cost s used by the syst em. Question 3 Question 3 ( NOT “ accessible accounting and information systems expertise to maintain the system”) Activity- based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT: Answer num erou s prod ucts that cons ume diffe rent amo unts of reso urce s oper atio ns that rem ain fairl y cons iste nt a high ly com petit ive envi ron Question 4 Question 4 ( $1,495.00) Answer the following questions using the information below: Wallace Printing has contracts to complete weekly supplements required by forty-six customers. For the year 20X5, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages. For 20X5 Wallace Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis: Using the activity- cost driver rates determined in the previous question, what is the manufacturing overhead cost estimate for Health Systems during 20X5? Answer $3,1 13.7 5 $1,4 95.0 0 $2,0 68.0 0 $3,4 12.5 0 Question 5 Question 5 ( that a cause-and-effect relationship exists between resource costs and individual activities) Design of an ABC system requires: Answer that the job bid proc ess be rede sign ed that a caus e- and- effec t relat ions hip exist s betw een reso urce cost s and indi vidu al activ ities an Question 6 Question 6 ( NOT “ allocates costs in proportion to the benefits received”) To guide cost allocation decisions the ability to bear criterion: Answer is likel y to be the most cred ible to oper atin g pers onne l alloc ates cost s in prop ortio n to the bene fits recei ved resu lts in subs idisi ng prod ucts Question 7...
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This note was uploaded on 08/31/2010 for the course ACCT 1000 taught by Professor N/a during the Spring '10 term at Arizona.

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Topic 4 - Practice Questions - Question 1 Question 1...

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