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ADMS 2510 Chapter Notes - Chapter 7: Activity-Based Costing, Cross-Functional Team, Cost Driver

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School
York University
Department
Administrative Studies
Course
ADMS 2510
Professor
Li Zhi Ma

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ADMS 2510 Full Course Notes
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ADMS 2510 Full Course Notes
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Document Summary

Adms 2510 ch 7 activity based costing: a tool to aid decision making. Will be using (cid:862)classic brass corp. (cid:863) as example. Activity based costing costing method designed to provide managers with cost information for strategic decisions that affect capacity, and fixed/variable cost. The treatment of cost under abc model: differs from traditional cost accounting. Non manufacturing/manufacturing cost assigned to products, but only on cause-and-effect basis. Some manufacturing cost excluded from product cost. Overhead rates may be based on level of activity at capacity rather than on budgeted level of activity: non-manufacturing costs and activity based costing. Product costs are all assigned to overhead cost that can reasonably be estimated to have caused: determine entire cost rather than only manufacturing, manufacturing cost excluded under abc cost. Assign cost to product only if there is good reason to believe that cost would affect decisions concerning product. Products are only charged for the costs of capacity they use.

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Related Questions

QUESTION 1

  1. Value stream costing eliminates most of the transactions associated with conventional cost accounting because it ...

    A.

    makes more extensive use of standard costing.
    B.

    gathers and reports financial data in summary form at the value stream level rather than for each production job or product.
    C.

    automates financial reporting processes.
    D.

    uses more detailed and accurate overhead cost allocations than standard costing.

1 points

QUESTION 2

  1. In value stream costing, the labor costs assigned to a value stream ...

    A.

    include the costs of all personnel assigned to the value stream, plus allocations for support staff in all departments that support the value stream.
    B.

    include the costs of all personnel assigned to the value stream, but few if any allocations for any support staff outside the value stream.
    C.

    include the costs of all direct and indirect labor hours in the value stream, plus allocations of staff outside the value stream providing production support; but exclude any sales, marketing, or administrative personnel in the value stream.
    D.

    include the costs of all direct and indirect labor hours in the value stream, but exclude the costs of any sales, marketing or administrative personnel in the value stream.

1 points

QUESTION 3

  1. Value stream costing simplifies accounting in part by ...

    A.

    centralizing and consolidating the purchasing function.
    B.

    increasing the number of cost centers to more easily expose cost overruns.
    C.

    allocating all overhead using actual direct labor hours or machine hours rather than relying on more complex calculations.
    D.

    eliminating detailed labor reporting, including the distinction between direct and indirect labor.

1 points

QUESTION 4

  1. When using value stream costing, managers evaluate decisions about product rationalization (keeping or dropping a product) by ...

    A.

    examining the effects on overall value stream results of continuing to produce and sell a product versus dropping it.
    B.

    comparing the production cost per unit of all products in the value stream.
    C.

    disregarding the financial impact, and examining instead the effects on the value stream operating measures shown in the box score of continuing to produce and sell a product versus dropping it.
    D.

    comparing the gross profit margins for all products.

1 points

QUESTION 5

  1. Exotic Chocolates had material costs of $24,000 and conversion costs of $18,000 in their most recent month containing 20 working days. At the end of the month, Exotic Chocolates had material on hand equal to six days of production, work-in-process equal to three days of production, and finished goods equal to eight days of production. The value for ending inventory using the “days of stock” method is ...

    A.

    $ 28,950
    B.

    $ 32,550
    C.

    $ 35,700
    D.

    $ 42,000

1 points

QUESTION 6

  1. Which of the following is an example of a good use of the value stream box score?

    A.

    Plant and division managers using the box score analyze variances from budgeted standard costs.
    B.

    Plant and division managers using the box score to encourage and evaluate the results of competition between their value streams for best overall performance.
    C.

    Value stream continuous improvement teams using the box score to design high-impact kaizen events and improvement plans.
    D.

    Employees in the production cells using the box score to manage daily performance.

1 points

QUESTION 7

  1. The box score measures three dimensions of performance in the value stream: operational, financial, and ...

    A.

    quality.
    B.

    capacity.
    C.

    flow.
    D.

    strategic.

1 points

QUESTION 8

  1. Displaying actual value stream results in a box score with a column for each week in a quarter is a good way to use the box score to ...

    A.

    show the effects of planned lean improvements.
    B.

    track value stream performance and continuous improvement.
    C.

    evaluate the effect of tactical decision alternatives, such as accepting a special order.
    D.

    evaluate the effect of management decision alternatives, such as adding a product line.

1 points

QUESTION 9

  1. Displaying current state performance and future states based on the expected results of pursuing different strategy alternatives. is a good way to use the box score to ...

    A.

    evaluate the effect of strategic decision alternatives, such as adding a product line.
    B.

    track value stream performance and continuous improvement.
    C.

    show the effects of planned lean improvements.
    D.

    show the impact of actual lean improvements.

1 points

QUESTION 10

  1. A good way to use the box score to evaluate the impact of lean improvements is to ...

    A.

    display current state performance and a future state based on planned improvements.
    B.

    display current state performance and future states based on the expected results of pursuing different strategy alternatives.
    C.

    display actual box score results for all the weeks in a quarter to show the trends in performance.
    D.

    display current performance for the most current week or month, without reference to expected future states or performance trends.