Question 1

What is the firststep in the activity analysis process used to implement Activity Based Management?
A)Chart,from start to finish,the activities used to complete the product or service
B)Classify activities as value-added or non-value-added
C)Eliminate non-value-added activities
D)Continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities

Accepted Answer

The first step in the activity analysis process used to implement Activity-Based Management is to chart, from start to finish, the activities used to complete the product or service. This involves creating a detailed process map or flowchart that outlines each step in the process. Only after this step can the other steps, such as classifying activities as value-added or non-value-added and eliminating non-value-added activities, be taken.

Question 2

Which of the following is a non-value added cost?
A)Running machines.
B)Performing surgeries.
C)Waiting for work.
D)Speaking to customers.

Accepted Answer

Waiting for work does not add value to the end product or service and therefore is considered a non-value added cost. Running machines, performing surgeries, and speaking to customers are all activities that contribute to the final product or service and are considered value added costs.

Question 3

Activity-based costing assigns more costs to items produced in __________ than traditional methods do.
A)small runs
B)medium runs
C)large runs
D)extra large runs

Accepted Answer

Activity-based costing focuses on identifying specific activities that contribute to the cost of producing a product. In small runs, there are likely to be more unique activities required to produce each item, resulting in higher costs being assigned to these items under activity-based costing compared to traditional methods.

Question 4

Activity-based management starts with which of the following?
A)activity benefit analysis.
B)activity cost cutting.
C)activity-based costing.
D)activity analysis.

Accepted Answer

Activity-based management begins with activity analysis, which involves identifying and dissecting the activities or processes that go into producing a product or service. This analysis forms the foundation for activity-based costing and provides insights into how to reduce costs and improve operations through activity optimization.

Question 5

The value chain begins with which of the following?
A)supplier.
B)research and development.
C)design.
D)production.

Accepted Answer

The value chain begins with the suppliers who provide raw materials or components to the company.

Question 6

What is the final step in the activity analysis process used to implement Activity Based Management?
A)Chart,from start to finish,the activities used to complete the product or service.
B)Classify activities as value-added or non-value-added.
C)Eliminate non-value-added activities.
D)Continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities.

Accepted Answer

The final step in the activity analysis process used to implement Activity Based Management is to continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities. This step ensures that the organization remains competitive and maintains a sustainable advantage in the market. The other options, while important, fall earlier in the process and do not represent the final step.

Question 7

What do managers use to analyze the cost-generating and revenue-generating components of a company's activities?
A)Low cost solution
B)Critical path
C)Value chain
D)Optimal solution

Accepted Answer

Managers use the value chain to analyze the cost-generating and revenue-generating components of a company's activities. The value chain breaks down the activities of a company into primary activities (such as production, marketing, and sales) and support activities (such as procurement, technology development, and human resource management) to identify areas where costs can be reduced and revenue can be increased. Option A, B, and D do not address or provide frameworks for analyzing cost-generating and revenue-generating components of a company's activities.

Question 8

Activity-based management starts with activity analysis.The four steps in activity analysis are:

The value-added activities identified in Step 2 make up the
A)low cost solution.
B)critical path.
C)value chain.
D)optimal solution.

Accepted Answer

The value-added activities identified in Step 2 make up the value chain. Activity-based management aims to identify and eliminate non-value added activities in order to streamline processes and reduce costs. The value chain refers to the sequence of activities that contribute to the creation and delivery of a product or service, and identifying value-added activities within the value chain is a crucial step in optimizing business processes. Therefore, choice C is the best answer.

Question 9

Which of the following is an example of non-value added activities?
A)Storage.
B)Moving items.
C)Waiting for work.
D)All of the answers are correct.

Accepted Answer

All of the listed activities - storage, moving items, and waiting for work - do not directly add value to the final product or service, making them examples of non-value added activities.

Question 10

Which of the following are not examples of non-value-added costs?
A)Storage
B)Moving items
C)Waiting for work
D)Production

Accepted Answer

Production is a value-added cost as it directly contributes to the creation of a product or service. Storage, moving items, and waiting for work are all examples of non-value-added costs.

Question 11

The value chain is a linked set of value-creating activities leading from
A)supplier to marketing.
B)research and development to distribution.
C)design to customer service.
D)raw material sources to the ultimate end use of the goods or services produced.

Accepted Answer

The value chain encompasses all activities from the initial raw material sources to the final end use of the goods or services produced. It includes activities such as production, marketing, distribution, research and development, design, and customer service. Therefore, option D is the best choice as it describes the complete value creation process.

Question 12

Which of the following is an example of a non-value-added cost?
A)Storage
B)Moving items
C)Waiting for work
D)All of the above are non-value-added costs.

Accepted Answer

All of the given options - storage, moving items, and waiting for work - are examples of non-value-added costs. These activities do not directly add value to the end product or service and, therefore, should be eliminated or reduced as much as possible to improve efficiency and reduce costs.

Question 13

The value chain ends with which of the following?
A)production.
B)marketing.
C)distribution.
D)customer service.

Accepted Answer

The value chain includes all activities involved in producing and delivering a product or service to customers, from raw materials to production, marketing, distribution, and customer service. Customer service is the final stage of the value chain where a company interacts directly with its customers, providing support, addressing complaints, and ensuring customer satisfaction. Therefore, the value chain ends with customer service.

Question 14

What is the thirdstep in the activity analysis process used to implement Activity Based Management?
A)Chart,from start to finish,the activities used to complete the product or service.
B)Classify activities as value-added or non-value-added.
C)Eliminate non-value-added activities.
D)Continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities.

Accepted Answer

Eliminating non-value-added activities is the third step in the activity analysis process used to implement Activity Based Management.

Question 15

For which one of the following activities is it more difficult to obtain reasonable measures to allocate the costs?
A)Indirect labor
B)Machine setups
C)Plant administration
D)Quality control inspections

Accepted Answer

Plant administration costs are more difficult to allocate because they are not directly tied to production activities, making it challenging to assign these costs to specific products or services accurately.

Question 16

What provides a systematic way for organizations to evaluate the processes that they use to produce goods and services for their customers?
A)Cost-benefit analysis
B)Activity analysis
C)Process evaluation and review technique
D)Flow charting

Accepted Answer

Activity analysis provides a systematic way for organizations to evaluate the processes they use to produce goods and services by examining each activity involved.

Question 17

Which of the following is a systematic way for organizations to identify and eliminate activities that add costs but not value to the product?
A)customer profitability analysis.
B)activity analysis.
C)systems analysis.
D)cost-based analysis.

Accepted Answer

Activity analysis is a systematic approach to identify and eliminate non-value-added activities that contribute to the cost of production but do not add value to the product. It helps organizations to streamline their operations and reduce costs, thus improving their profitability. Customer profitability analysis is a different approach that focuses on identifying the most profitable customers for the organization. Systems analysis is a method of studying the overall structure and functioning of a system, while cost-based analysis is a technique for determining the cost of producing goods or services based on the actual expenses incurred.

Question 18

Bush Enterprises adopts Strategic activity-based costing and management techniques which would most likely shift the mix of activities and products away from
A)less profitable to more profitable applications.
B)less complex to more complex applications.
C)high volume to low volume applications.
D)less prestigious to more prestigious applications.

Accepted Answer

Strategic activity-based costing and management techniques focus on identifying the most profitable activities and products, and then allocating resources accordingly. Therefore, it is likely that the mix of activities and products will shift towards more profitable applications.

Question 19

What is the secondstep in the activity analysis process used to implement Activity Based Management?
A)Chart,from start to finish,the activities used to complete the product or service.
B)Classify activities as value-added or non-value-added.
C)Eliminate non-value-added activities.
D)Continuously improve and reevaluate the efficiency of value-added activities or replace them with more efficient activities.

Accepted Answer

Classifying activities as value-added or non-value-added is the second step in the activity analysis process. This step is crucial for identifying which activities contribute directly to the customer's value and which do not, setting the stage for further analysis and improvement in the Activity Based Management process.

Question 20

Which term describes the costs of activities that the company can eliminate without reducing product quality,performance,or value?
A)non-value-performance-quality-added costs.
B)non-value-added costs.
C)non-performance-added costs.
D)non-quality-added costs.

Accepted Answer

Non-value-added costs are costs that can be eliminated without affecting the quality, performance, or value of the product. These costs are considered to be unnecessary and only add to the overall cost without adding any value to the product or service. By identifying and eliminating these costs, companies can improve efficiency and profitability. Option A, C, and D are not commonly used terms in the context of cost management.

Quiz 3: Activity-Based Management

What is the firststep in the activity analysis process used to implement Activity Based Management?

Which of the following is a non-value added cost?

Activity-based costing assigns more costs to items produced in __________ than traditional methods do.

Activity-based management starts with which of the following?

The value chain begins with which of the following?

What is the final step in the activity analysis process used to implement Activity Based Management?

What do managers use to analyze the cost-generating and revenue-generating components of a company's activities?

Activity-based management starts with activity analysis.The four steps in activity analysis are: The value-added activities identified in Step 2 make up the

Which of the following is an example of non-value added activities?

Which of the following are not examples of non-value-added costs?

The value chain is a linked set of value-creating activities leading from

Which of the following is an example of a non-value-added cost?

The value chain ends with which of the following?

What is the thirdstep in the activity analysis process used to implement Activity Based Management?

For which one of the following activities is it more difficult to obtain reasonable measures to allocate the costs?

What provides a systematic way for organizations to evaluate the processes that they use to produce goods and services for their customers?

Which of the following is a systematic way for organizations to identify and eliminate activities that add costs but not value to the product?

Bush Enterprises adopts Strategic activity-based costing and management techniques which would most likely shift the mix of activities and products away from

What is the secondstep in the activity analysis process used to implement Activity Based Management?

Which term describes the costs of activities that the company can eliminate without reducing product quality,performance,or value?