Question 1

The time from initiating production to delivering the goods to the customer is referred to as

Accepted Answer

Production cycle time refers to the time it takes from beginning production to delivering the finished goods to the customer. Just-in-time refers to a production philosophy that emphasizes producing only what is needed when it is needed, and non-value-added time refers to any time in the production process that does not add value to the final product. Cost measuring time is not a commonly used term in production management.

Question 2

If the step-down method is used and the costs of the service department with the greatest total cost are allocated first, Department B costs allocated to Department D would be

Accepted Answer

The answer of If the step-down method is used and...

Question 3

A method of allocating service costs that ignores any interactions that may exist among support departments.

Accepted Answer

The answer of A method of allocating service costs that...

Question 4

A method of allocating support department costs that gives partial consideration to interactions among support departments.

Accepted Answer

The answer of A method of allocating support department costs...

Question 5

The time from initiating production to delivering the goods to the customer.

Accepted Answer

The answer of The time from initiating production to delivering...

Question 6

A unit within an organization that provides essential support services for producing departments.

Accepted Answer

The answer of A unit within an organization that provides...

Question 7

A unit within an organization responsible for producing the products or services that are sold to customers.

Accepted Answer

The answer of A unit within an organization responsible for...

Question 8

Which of the following is NOT an example of a non-value-added cost?

Accepted Answer

Assembling raw materials is a value-added activity as it transforms the raw materials into a finished product. Receiving inventory, transporting work-in-process, and warehousing inventory are examples of non-value-added activities as they are necessary but do not directly add value to the product itself.

Question 9

Use the following information to answer item(s) below.
Meesen Inc. operates two support departments (A and B) and two producing departments (C and D). Budgeted costs and normal activity levels are given below.  The costs of Department A are allocated on the basis of number of employees, and the costs of Department B are allocated on the basis of maintenance hours.
-If Department C uses machine hours to allocate overhead to units of product, the overhead rate per machine hour for Department C would be

Accepted Answer

The answer of Use the following information to answer item(s)...

Question 10

If the step-down method is used, Department A costs allocated to Department C would be

Accepted Answer

The answer of If the step-down method is used, Department...

Question 11

The techniques used to determine the cost of a product or service by collecting and classifying costs and assigning them to cost objectives.

Accepted Answer

The answer of The techniques used to determine the cost...

Question 12

Identifies how management's decisions affect costs, by first measuring the resources used in performing the organization's activities and then assessing the effects on costs of changes in those activities.

Accepted Answer

The answer of Identifies how management's decisions affect costs, by...

Question 13

Use the following information to answer item(s) below.
Meesen Inc. operates two support departments (A and B) and two producing departments (C and D). Budgeted costs and normal activity levels are given below.  The costs of Department A are allocated on the basis of number of employees, and the costs of Department B are allocated on the basis of maintenance hours.
-If Department D uses direct labour hours to allocate overhead to units of product, the overhead rate per direct labour hour for Department D would be

Accepted Answer

Department D uses direct labour hours to allocate overhead to units of product. So, the overhead rate per direct labour hour for Department D would be $22.93.

Question 14

Estimates relating to a job that Meesen Inc. plans to bid on are as follows:  The estimate for the cost of the job would be

Accepted Answer

The answer of Estimates relating to a job that Meesen...

Question 15

A method that simultaneously allocates service costs to all user departments. It gives full consideration to interactions among support departments.

Accepted Answer

The answer of A method that simultaneously allocates service costs...

Question 16

Two dimensions are important in flexible production operations:

Accepted Answer

Flexible production operations require employee flexibility to adapt to different tasks and facilities flexibility to accommodate various production processes.

Question 17

A system that first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity.

Accepted Answer

The answer of A system that first accumulates overhead costs...

Question 18

The necessary cost of an activity that cannot be eliminated without affecting a product's value to the customer is a

Accepted Answer

A value-added cost is necessary for the production process and directly contributes to the product's value to the customer.

Question 19

In a just-in-time production system,

Accepted Answer

In a just-in-time production system, production is driven by customer orders. This means that goods are only produced when the customer has placed an order, rather than being produced ahead of time in anticipation of demand. This is the opposite of option C, where goods are produced ahead of time to protect against stockouts. Option B is also incorrect because just-in-time production typically involves purchasing materials in smaller quantities and more frequently, rather than in large quantities for quantity discounts. Option D is also incorrect because just-in-time production systems aim to minimize inventory levels.

Question 20

Which of the following is NOT a factor to the success of just-in-time systems?

Accepted Answer

Inflexible production operations are actually a hindrance to the success of just-in-time systems, as the key to its success lies in its ability to quickly adapt to changes in demand and production needs. Therefore, the correct answer is B, which is the only factor listed that is not a contributor to the success of just-in-time systems.

Quiz 5: Cost Allocation and Activity-Based Costing Systems