Question : 21) A division of a company manufactures two products, which : 1186293

21) A division of a company manufactures two products, which are in high demand in the defence industry. Product A is stamped out in a machine press, at the rate of 10,000 per hour. Product B is identical to product A, with the exception that it is made from thicker steel, and requires the machine press to be recalibrated. Product A is produced on the day shift and product B is produced on the afternoon shift, allowing set up changes to be done between shifts.

In this case, set up hours are related to which of the following?

A) units of output

B) batches of output

C) the number of customers

D) machine hours

E) labour hours

22) Resources sacrificed on activities that cannot be traced to individual products or services, but which support the organization as a whole are which of the following?

A) output unit-level costs

B) service-sustaining costs

C) batch-level costs

D) product-sustaining costs

E) facility-sustaining costs

23) The costs of hiring building security would be which of the following?

A) output unit-level costs

B) batch-level costs

C) general-level costs

D) product-sustaining costs

E) facility-sustaining costs

24) Activity-based cost systems create

A) one large cost pool.

B) homogeneous activity-related cost pools.

C) activity-cost pools with a broad focus.

D) activity-cost pools containing many direct costs.

E) heterogenous activity-related cost pools.

25) Activity-based cost systems

A) apply average support costs to each unit of product.

B) limit cost drivers to units of output.

C) allocate costs based on the overall level of activity.

D) generally undercost complex products.

E) highlight the different levels of activities.

26) With traditional costing systems, products manufactured in small batches and in small annual volumes may be ________ because batch-related and product-sustaining costs are assigned using unit-related drivers.

A) overcosted

B) fairly costed

C) costed the same as in activity-based costing

D) undercosted

E) ignored

Answer the following question(s) using the information below.

Products S5 and CP8 each are assigned $50.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, S5 requires 45 minutes less setup time than CP8.

27) Compared to an activity-based cost system, CP8 is ________ under the traditional system.

A) undercosted

B) overcosted

C) fairly costed

D) accurately costed

E) costed the same

28) According to an ABC system, S5 uses a disproportionately

A) smaller amount of unit-level costs.

B) larger amount of unit-level costs.

C) smaller amount of product-sustaining costs.

D) larger amount of batch-level costs.

E) smaller amount of batch-level costs.

29) A cost hierarchy describes

A) a technique for direct cost tracing.

B) the process of arranging costs by importance.

C) the logic of segregating costs by value-chain classification.

D) the logic of separating one indirect cost pool into multiple pools according to activity level.

E) a technique of differentiating fixed and variable costs.

30) Which of the following is not a characterization of activity-based costing?

A) identification of only variable costs

B) a focus on both operating and strategic decisions

C) identifying all resources used by activities regardless of how individual costs behave in the short run

D) using the cost hierarchy to allocate costs to products

E) identification of all costs used by activities