Deck 5: Activity-Based Costing and Management

Question 1

Traditional product-costing systems are structured on multiple, volume-based cost drivers.

Answer 1

False

Question 2

One of the important factors when selecting appropriate cost drivers is the ability to overcost related services.

Answer 2

False

Question 3

A version of ABC that has found wide acceptance in service-industry settings is called volume-based activity-costing.

Answer 3

False

Question 4

There are six important factors when selecting appropriate cost drivers.

Question 5

Customer-profitability analysis uses activity-based costing to determine the activities, costs, and profit associated with serving particular customers.

Question 6

A product's cost is the sum of its direct-material cost, its direct-labor cost, and its overhead cost, which is the accumulation of all the resource costs driven to the product by the various cost drivers selected for the ABC system.

Question 7

Engineering design costs are typically known as batch-level activities.

Question 8

In the first stage of ABC, a cost driver is selected for each activity cost pool.

Question 9

A bill of activities is a complete listing of the activities identified and used in the ABC analysis.

Question 10

Simplified forms of ABC use time-driven elements for service companies that are well aligned with the resources deployed in terms of units of time of labor.

Question 11

In an activity-based costing system, direct materials used would typically be classified as a unit-level cost.

Question 12

An example of a customer-value-added activity is final painting and polishing of the product.

Question 13

When using ABC, overhead costs assigned to each activity comprise an activity cost pool.

Question 14

Consumption ratios are useful in determining the existence of product-line diversity.

Question 15

Non-value-added activities are the events that trigger activities and linkages among activities.

Question 16

Activity-based costing systems have a tendency to distort product costs.

Question 17

Generally speaking, companies prefer doing business with customers who order small quantities rather than large quantities.

Question 18

The pool rate is defined as the cost per unit of the cost driver for a particular activity cost pool.

Question 19

Storyboarding may be used to develop a detailed process flowchart.

Question 20

Because labor hours are related closely to the volume of activity in the factory, these traditional product-costing systems often are said to be volume-based costing systems.

Question 21

Which of the following tasks is not normally associated with an activity-based costing system?

A) Calculation of pool rates.
B) Identification of cost pools.
C) Preparation of allocation matrices.
D) Identification of cost drivers.
E) Assignment of cost to products.

Question 22

The salaries of a manufacturing plant's management are said to arise from:

A) unit-level activities.
B) batch-level activities.
C) product-sustaining activities.
D) facility-level activities.
E) direct-cost activities.

Question 23

Which of the following is the proper sequence of events in an activity-based costing system?

A) Identification of cost drivers, identification of cost pools, calculation of pool rates, assignment of cost to products.
B) Identification of cost pools, identification of cost drivers, calculation of pool rates, assignment of cost to products.
C) Assignment of cost to products, identification of cost pools, identification of cost drivers, calculation of pool rates.
D) Calculation of pool rates, identification of cost drivers, identification of cost pools, assignment of cost to products.
E) None of the answers is correct.

Question 24

Carlin and Marley, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $270,000) has been allocated to services on this basis of billable hours to clients. A recent analysis found that 55% of the firm's billable hours to clients resulted from tax planning services, while 45% resulted from consulting services.
The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows:

A recent analysis of staff support found a strong correlation with the number of clients served. In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting clients served totaled 35% of the total client base, consumed 30% of the firm's computer hours, and accounted for 20% of the total client transactions.
If Carlin and Marley switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would:

A) decrease by $32,500.
B) increase by $32,500.
C) decrease by $59,500.
D) change by an amount other than those listed.
E) change, but the amount cannot be determined based on the information presented.

Question 25

Which of the following is not a broad, cost classification category typically used in activity-based costing?

A) Unit-level.
B) Batch-level.
C) Product-sustaining level.
D) Facility-level.
E) Management-level.

Question 26

Consider the following statements regarding traditional costing systems:
I) Overhead costs are applied to products on the basis of volume-related measures.
II) All manufacturing costs are easily traceable to the goods produced.
III) Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements.
Which of the above statements is (are) true?

A) I only.
B) II only.
C) III only.
D) I and III.
E) II and III.

Question 27

In an activity-based costing system, materials receiving would typically be classified as a:

A) unit-level activity.
B) batch-level activity.
C) product-sustaining activity.
D) facility-level activity.
E) period-level activity.

Question 28

Which of the following is least likely to be classified as a batch-level activity in an activity-based costing system?

A) Shipping.
B) Receiving and inspection.
C) Production setup.
D) Property taxes.
E) Quality assurance.

Question 29

Rosen, Inc., an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a:

A) unit-level activity.
B) batch-level activity.
C) product-sustaining activity.
D) facility-level activity.
E) competitive-level activity.

Question 30

Use this information to answer the following Questions
Rocket Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-Assume that Rocket is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Deluxe product line is closest to:

A) $456,471.
B) $646,471.
C) $961,176.
D) $1,141,176.
E) None of the answers is correct.

Question 31

Which of the following is least likely to be classified as a facility-level activity in an activity-based costing system?

A) Plant maintenance.
B) Property taxes.
C) Machine processing cost.
D) Plant depreciation.
E) Plant management salaries.

Question 32

Consider the following statements regarding product-sustaining activities:
I) They must be performed for each batch of product that is made.
II) They must be performed for each unit of product that is made.
III) They are needed to support an entire product line.
Which of the above statements is (are) true?

A) I only.
B) II only.
C) III only.
D) I and II.
E) II and III.

Question 33

Use the following information to answer the following Questions
St. Vincent’s, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.



-The overhead cost allocated to Beta by using traditional costing procedures would be:

A) $240,000.
B) $356,000.
C) $444,000.
D) $560,000.
E) None of the answers is correct.

Question 34

In an activity-based costing system, direct materials used would typically be classified as a:

A) unit-level cost.
B) batch-level cost.
C) product-sustaining cost.
D) facility-level cost.
E) matrix-level cost.

Question 35

Many traditional costing systems:

A) trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates.
B) write off manufacturing overhead as an expense of the current period.
C) combine widely varying elements of overhead into a single cost pool.
D) use a host of different cost drivers (e.g., number of production setups, inspection hours, orders processed) to improve the accuracy of product costing.
E) produce results far superior to those achieved with activity-based costing.

Question 36

Use this information to answer the following Questions
Rocket Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-Assume that Rocket is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Standard product line is closest to:

A) $456,471.
B) $646,471.
C) $961,176.
D) $1,141,176.
E) None of the answers is correct.

Question 37

Use the following information to answer the following Questions
St. Vincent’s, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.



-The overhead cost allocated to Zeta by using traditional costing procedures would be:

A) $240,000.
B) $356,000.
C) $444,000.
D) $560,000.
E) None of the answers is correct.

Question 38

The following tasks are associated with an activity-based costing system:
1- Assignment of cost to products
2- Calculation of pool rates
3- Identification of cost drivers
4- Identification of cost pools
Which of the following choices correctly expresses the proper order of the preceding tasks?

A) 1, 2, 3, 4.
B) 2, 4, 1, 3.
C) 3, 4, 2, 1.
D) 4, 2, 1, 3.
E) 4, 3, 2, 1.

Question 39

Use the following information to answer the following Questions
St. Vincent’s, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.



-The overhead cost allocated to Beta by using activity-based costing procedures would be:

A) $240,000.
B) $356,000.
C) $444,000.
D) $560,000.
E) None of the answers is correct.

Question 40

Use the following information to answer the following Questions
St. Vincent’s, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.



-The overhead cost allocated to Zeta by using activity-based costing procedures would be:

A) $240,000.
B) $356,000.
C) $444,000.
D) $560,000.
E) None of the answers is correct.

Question 41

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-What is Barnett's pool rate for the material-handling activity?

A) $1.00 per part.
B) $2.25 per part.
C) $6.62 per labor hour.
D) $13.23 per part.
E) None of the answers is correct.

Question 42

Baxter customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company's wholesale operation; the remainder was for the retail division. Costs allocated to the retail division are:

A) $0.
B) $31,200.
C) $118,560.
D) $193,440.
E) $203,000.

Question 43

Use the following information to answer the following Questions
Bridges and Lloyd, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $250,000) has been allocated to services on the basis of billable hours to clients. A recent analysis found that 65% of the firm's billable hours to clients resulted from tax planning services, while 35% resulted from consulting services.
The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows:

A recent analysis of staff support found a strong correlation between the number of staff personnel and the number of clients served (consulting, 20; tax planning, 60). In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting consumed 30% of the firm's computer hours and had 20% of the total client transactions.

-Assuming the use of activity-based costing, the proper percentage to use in allocating staff support costs to tax planning services is:

A) 20%.
B) 60%.
C) 65%.
D) 75%.
E) 80%.

Question 44

Pound Industries' customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to:

A) $0.
B) $29.
C) $85,260.
D) $117,740.
E) $203,000.

Question 45

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-What is Barnett's pool rate for the material-insertion activity?

A) $11.00 per part.
B) $49.50 per part.
C) $16.18 per labor hour.
D) $1.00 per part.
E) None of the answers is correct.

Question 46

Use the following information to answer the following Questions
Bridges and Lloyd, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $250,000) has been allocated to services on the basis of billable hours to clients. A recent analysis found that 65% of the firm's billable hours to clients resulted from tax planning services, while 35% resulted from consulting services.
The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows:

A recent analysis of staff support found a strong correlation between the number of staff personnel and the number of clients served (consulting, 20; tax planning, 60). In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting consumed 30% of the firm's computer hours and had 20% of the total client transactions.

-If Bridges and Lloyd switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would:

A) decrease by $23,500.
B) increase by $23,500.
C) decrease by $32,500.
D) change by an amount other than those listed.
E) change, but the amount cannot be determined based on the information presented.

Question 47

Use the following information to answer the following Questions
Skyline Florists uses an activity-based costing system to compute the cost of making floral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $180,000 typically perform both tasks; other firm-wide overhead is expected to total $70,000. These costs are allocated as follows:

Skyline anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year.

-The cost of wages and salaries and other overhead that would be charged to each bouquet made is:

A) $7.15.
B) $8.75.
C) $12.50.
D) $13.75.
E) None of the answers is correct.

Question 48

Activity-based costing systems:

A) use a single, volume-based cost driver.
B) assign overhead to products based on the products' relative usage of direct labor.
C) often reveal products that were under- or over-costed by traditional costing systems.
D) typically use fewer cost drivers than more traditional costing systems.
E) have a tendency to distort product costs.

Question 49

The division of activities into unit-level, batch-level, product-sustaining level, and facility-level categories is commonly known as a cost:

A) object.
B) application method.
C) hierarchy.
D) estimation method.
E) classification scheme that is useful in traditional, volume-based systems.

Question 50

Pound Industries' customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the wholesale operation should amount to:

A) $0.
B) $29.
C) $85,260.
D) $117,740.
E) $203,000.

Question 51

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-What is Barnett's pool rate for the automated machinery activity?

A) $24.00 per machine hour.
B) $24.50 per labor hour.
C) $49.42 per unit.
D) $50.00 per machine hour.
E) None of the answers is correct.

Question 52

Starwatch Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 520 revealed a traditionally-derived total cost of $1,623 and a selling price of $1,850 based on that figure. A newly computed activity-based total cost is $1,215. Which of the following statements is true?

A) All other things being equal, Starwatch should consider increasing its sales price.
B) Dawn should increase the product's selling price to maintain the same markup percentage.
C) Product no. 520 could be labeled as being overcosted by Starwatch's traditional costing procedures.
D) If product no. 520 is undercosted by traditional accounting procedures, then all of Starwatch's other products must be undercosted as well.
E) Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure.

Question 53

Flavorful Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 519 revealed a traditionally-derived total cost of $1,019, a selling price of $1,850 based on that figure, and a newly computed activity-based total cost of $1,215. Which of the following statements is true?

A) All other things being equal, the company should consider a drop in its sales price.
B) The company may have been extremely competitive in the marketplace from a price perspective.
C) Product no. 519 could be labeled as being overcosted by the firm's traditional costing procedures.
D) If product no. 519 is undercosted by traditional accounting procedures, then all of the company's other products must be undercosted as well.
E) Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure.

Question 54

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-Under Barnett's activity-based costing system, what is the per-unit overhead cost of Standard?

A) $164.
B) $228.
C) $272.
D) $282.
E) None of the answers is correct.

Question 55

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-What is Barnett's pool rate for the packaging activity?

A) $4.86 per machine hour.
B) $5.00 per labor hour.
C) $10.00 per part.
D) $100.00 per order shipped.
E) None of the answers is correct.

Question 56

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-Under Barnett's activity-based costing system, what is the per-unit overhead cost of Deluxe?

A) $272.
B) $282.
C) $320.
D) $440.
E) None of the answers is correct.

Question 57

Use the following information to answer the following Questions
Skyline Florists uses an activity-based costing system to compute the cost of making floral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $180,000 typically perform both tasks; other firm-wide overhead is expected to total $70,000. These costs are allocated as follows:

Skyline anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year.

-The cost of wages and salaries and other overhead that would be charged to each delivery is closest to:

A) $19.63.
B) $20.31.
C) $26.75.
D) $40.63.
E) None of the answers is correct.

Question 58

Pound Industries' customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company's wholesale operation; the remainder was for the retail division. Costs allocated to the wholesale operation are:

A) $0.
B) $31,200.
C) $118,560.
D) $193,440.
E) $203,000.

Question 59

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-What is Barnett's pool rate for the finishing activity?

A) $5.00 per labor hour.
B) $5.00 per machine hour.
C) $5.00 per unit.
D) $7.50 per unit.
E) None of the answers is correct.

Question 60

Use the following information to answer the following Questions
Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.



-Under Barnett's activity-based costing system, what is the per-unit overhead cost of Economy?

A) $141.
B) $164.
C) $225.
D) $228.
E) None of the answers is correct.

Question 61

Magnolia Industries combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours. Activity-based costing would likely show that with Magnolia's current procedures that:

A) all of the company's products are undercosted.
B) the company's high-volume products are undercosted.
C) all of the company's products are overcosted.
D) the company's high-volume products are overcosted.
E) the company's low-volume products are overcosted.

Question 62

An example of a customer-value-added activity is:

A) final painting and polishing of the product.
B) installation of a computerized human resource management module.
C) shortening the customers' billing cycle.
D) addition of an employee hotline for workplace complaints.
E) maintenance of an adequate safety stock.

Question 63

Successful adoptions of activity-based costing typically occur when companies rely heavily on:

A) finance personnel.
B) accounting personnel.
C) manufacturing personnel.
D) office personnel.
E) multidisciplinary project teams.

Question 64

In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:

A) a large proportion of non-unit-level activities.
B) product-line diversity.
C) minimal product-line diversity and a small proportion of non-unit-level activities.
D) existing variances from budgeted amounts.
E) product-line diversity and a large proportion of non-unit-level activities.

Question 65

Flagler Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company's competitor can accomplish the same process in six hours, Flagler's non-value-added cost would be:

A) $0.
B) $150.
C) $300.
D) $900.
E) $1,200.

Question 66

Towler Inc. manufactures products J and K, applying overhead on the basis of labor hours. J, a low-volume product, requires a variety of complex manufacturing procedures. K, on the other hand, is both a high-volume product and relatively simplistic in nature. What would an activity-based costing system likely disclose about products J and K as a result of Towler's current accounting procedures?

Question 67

Consider the following statements:
I) Product diversity creates costing problems because diverse products tend to utilize manufacturing activities in different ways.
II) Overhead costs that are not incurred at the unit level create costing problems because such costs do not vary with traditional application bases such as direct labor hours or machine hours.
III) Product diversity typically exists when a single product (e.g., a ballpoint pen) is made in different colors.
Which of the above statements is (are) true?

A) I only.
B) II only.
C) I and II.
D) I and III.
E) II and III.

Question 68

Willow Springs produces various wooden bookcases, tables, storage units, and chairs. Which of the following would be included in a listing of the company's non-value-added activities?

A) Assembly of tables.
B) Staining of storage units.
C) Transfer of chairs from the assembly line to the staining facility.
D) Storage of completed bookcases in inventory.
E) Transfer of chairs from the assembly line to the staining facility and storage of completed bookcases in inventory.

Question 69

The adoption of a 24/7 employee hotline for workplace complaints is an example of a:

A) business-value-added activity.
B) customer-value-added activity.
C) non-value-added activity.
D) batch-related activity.
E) product-sustaining activity.

Question 70

Customer profitability analysis is tied closely to:

A) just-in-time systems.
B) activity-based costing.
C) job costing.
D) process costing.
E) operation costing.

Question 71

Motor Mike builds recreational motor homes. All of the following activities add value to the finished product except:

A) installation of carpet.
B) assembly of the frame to the chassis.
C) storage of the vehicle in the sales area.
D) addition of exterior lights.
E) final painting and polishing.

Question 72

Consider the following factors:
I) The degree of correlation between consumption of an activity and consumption of a particular cost driver.
II) The likelihood that a particular cost driver will induce a desired behavioral effect.
III) The likelihood that a particular cost driver will cause an increase in the cost of measurement.
Which of these factors should be considered in the selection of a cost driver?

A) I only.
B) I and II.
C) I and III.
D) II and III.
E) I, II, and III.

Question 73

The adoption of a 24/7 customer service help line is an example of a:

A) business-value-added activity.
B) customer-value-added activity.
C) non-value-added activity.
D) batch-related activity.
E) product-sustaining activity.

Question 74

Consumption ratios are useful in determining:

A) the existence of product-line diversity.
B) overhead that is incurred at the unit level.
C) if overhead-producing activities are being utilized effectively.
D) if overhead costs are being applied to products.
E) if overhead-producing activities are being utilized efficiently.

Question 75

When determining customer profitability, activity-based costing can be used to analyze:

A) orders processed.
B) sales visits.
C) special packaging and handling.
D) billing and collections.
E) All of the answers are correct.

Question 76

Overton Enterprises is converting to an activity-based costing system It wishes to depict the various activities in its manufacturing process along with the activities' relationships. Which of the following is a tool that the company can use to accomplish this task?

A) Storyboards.
B) Activity relationship charts (ARCs).
C) Decision trees.
D) Simulation games.
E) Process organizers.

Question 77

Widely varying consumption ratios:

A) are reflective of product-line diversity.
B) indicate an out-of-control production environment.
C) dictate a need for traditional costing systems.
D) work against the implementation of activity-based costing.
E) create an unsolvable product-costing problem.

Question 78

Which of the following is not an example of a business-value-added activity?

A) Adopting bar-code technology in the receiving department.
B) Installation of a computerized human resource management module.
C) Shortening the customers' billing cycle.
D) Addition of an employee hotline for workplace complaints.
E) Final painting and polishing of the product.

Question 79

Which of the following statements is (are) true about non-value-added activities?
I) Non-value-added activities are often unnecessary and dispensable.
II) Non-value-added activities may be necessary but are being performed in an inefficient and improvable manner.
III) Non-value-added activities can be eliminated without deterioration of product quality, performance, or perceived value.

A) I only
B) II only.
C) III only.
D) I and II.
E) I, II, and III.

Question 80

During a recent accounting period, Falcon Express' shipping department processed 26 orders. Each order typically takes four hours to complete. However, the average time increased to five hours because of various departmental inefficiencies. If shipping labor is paid $14 per hour, the company's non-value-added cost would be:

A) $0.
B) $56.
C) $364.
D) $1,456.
E) $1,820.