activities that are performed each time a unit is produced. Show nonunit-level activity drivers factors that measure the consumption of nonunit-level activities by products and other cost objects. unit-level activity drivers factors that measure the consumption of unit-level activities by products and other cost objects. factors that measure the consumption of activities by products and other cost objects. the situation present when products consume overhead in different proportions. the proportion of an overhead activity consumed by a product. Activity-based costing (ABC) system a cost assignment approach that first uses direct and driver tracing to assign costs to activities and then uses drivers to assign costs to cost objects. action taken or work performed by equipment or people for other people. factors that measure the consumption of resources by activities. identifies the amount of labor consumed by each activity and is derived from the interview process (or a written survey). Activity-based management a systemwide, integrated approach that focuses management's attention on activities with the objective of improving customer value and the profit achieved by providing this value. It includes driver analysis, activity analysis, and performance evaluation, and draws on activity-based costing as a major source of information. an approach that focuses on processes and activities and emphasizes systemwide performance instead of individual performance. the resources consumed by an activity in producing its output. (They are the factors that enable the activity to be performed.) the result or product of an activity the number of times an activity is performed. It is the quantifiable measure of the output. the effort expended to identify those factors that are the root causes of activity costs. the process of identifying, describing, and evaluating the activities an organization performs. activities that are necessary for a business to achieve corporate objectives and remain in business. costs caused by value-added activities. nonvalue-added activities all activities other than those that are absolutely essential to remain in business. costs that are caused either by nonvalue-added activities or by the inefficient performance of value-added activities. the process of eliminating nonvalue-added activities. decreasing the time and resources required by an activity. increasing the efficiency of necessary activities by using economies of scale. the length of time required to produce one unit of a product. the number of units that can be produced in a given period of time (e.g., output per hour). consume the nonunit-level activities in proportions significantly different than the unit-level activities. For unit-level overhead rates to fail, products must In the activity-based costing hierarchy, costs that vary with output volume are categorized as: a.facility-sustaining costs. The purpose of interviewing managers or representatives of functional work areas is to: a.identify customers. Wave Crest Cosmetics produces cosmetic products for 11 major buyers. One customer accounts for ½ of the sales, the other 10 customers account for the remaining sales. The 10 smaller customers place orders of about equal size. The large customer purchases 1,000,000 units per year by placing 4 orders per year, and the 10 smaller customers order 1,000,000 units in total by placing 500 orders per year. Order filling costs total $957,600 per year. How much would be assigned to the large customer as ordering costs using activity-based customer costs? a.$7,000b.$478,800c.$7,600d.$950,000 The whale curve of cumulative customer profitability: Which of the following is an example of a value-added activity? a.Inspection Activity drivers can be classified as: a.only non-unit based. Which of the following is an example of a customer-driven activity? a.Expediting products Which of the following cost reduction techniques focuses on nonvalue-added activities as a measure to reduce costs? a.Activity selection In an activity-based customer costing system, the cost of the resources consumed is assigned to: a.customers. Which of the following is true of activity-based costing? a.It uses a single, plantwide rate to assign overhead costs to the products. b.It is used by organizations that manufacture only one product. c.It applies only before the production section of the value chain. d.It is used to determine only the downstream costs of customers. Which of the following statements is true of facilities-sustaining costs? a. Facilities-sustaining costs vary with the output volume and include only indirect costs. Which of the following statements is true of product diversity? a. Costs related to setups, material handling, and inspection are all possible examples of costs of product diversity. A company had a total of 500 sales orders for a period. The company incurred $162,500 as costs of
processing these orders for the period. The company made 1,000 sales calls during this period. Calculate the activity rate for processing sales orders of the company for the period. a. $295.00 per order Which of the following statements is true of an activity-based costing (ABC) system? a. An activity-based costing system focuses only on directly tracing the cost
factors to the units produced. Which of the following statements is true of
resource drivers? a. They measure the consumption of resources by activities. A company produced 12,000 units of a product. The prime cost was $407,000. In total, 2,200 machine hours were used to produce the product. Setup hours for the period were 1,400. The
activity rates were $45 per machine hour and $110 per setup hour. What is the unit cost of the product using overhead rates based on machine hours and setup hours? a. $42 Which of the following could be an example of a value-added activity? a. Inspection of products produced to ensure that the product meets customer specifications The number of units that can be produced in a given period of time is termed as _____. a. velocity Assume that a company takes 7,000 hours to produce 21,000 units of a product. What is the cycle time in minutes? a. 3 Which of the following measures activity performance? a. Efficiency A duration driver is: A transaction driver is: -driver analysis -activity analysis -performance measurement process-value analysis is concerned with: depicts this interesting yet common relationship between customers and their contribution to company profitability vary with the diversity of the product or service line vary with the volume of output vary with the number of groups or batches that are run facility-sustaining costs do not vary with any factor but are necessary in operating the plant. nonunit level activity (same equipment is usually used and setup is needed to prepare it for a particular type of product) setting up equipment is an example of a? The relevant range is What are unitUnit-level activity drivers are factors that cause changes in cost as the number of units produced changes. Examples of unit-level drivers include units produced, direct labor hours, and machine hours.
Which is an example of a unitUnit‐level activities occur every time a service is performed or a product is made. The costs of direct materials, direct labor, and machine maintenance are examples of unit‐level activities.
What are the two classifications of activity drivers?Summary. Activity cost drivers are actions that cause costs to increase or decrease. Activity cost drivers are used in activity-based accounting (ABC).
What is product level activity?What is a Product-Level Activity? A product-level activity is an action taken in support of a specific product or activity. These actions are taken irrespective of the amount of production or service volume associated with a product.
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What refers to the factors that measure the consumption of activities can be classified as either unit level or Nonunit level?
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