Which of these statement is TRUE for a standard cost system? A) Standard cost systems help managers ensure the accuracy of financial records. B) Firms can use time-motion studies and industry benchmarks to set standards. C) The Production Department sets all standards and does not need input from other departments. D) The standards used are the actual costs incurred to produce a product.

Which of these statement is TRUE for a standard cost system? A) Standard cost systems help managers ensure the accuracy of financial records. B) Firms can use time-motion studies and industry benchmarks to set standards. C) The Production Department sets all standards and does not need input from other departments. D) The standards used are the actual costs incurred to produce a product.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 10MC: What is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to...

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Explain why the Accounting Department should be responsible for producing quality cost reports.
The following items are associated with a traditional cost accounting information system, an activity-based cost accounting information system, or both (that is, some elements are common to the two systems): a. Usage of direct materials b. Direct materials cost assigned to products using direct tracing c. Direct labor cost incurrence d. Direct labor cost assigned to products using direct tracing e. Setup cost incurrence f. Setup cost assigned using number of setups as the activity driver g. Setup cost assigned using direct labor hours as the activity driver h. Cost accounting personnel i. Submission of a bid, using product cost plus 25 percent j. Purchasing cost incurrence k. Purchasing cost assigned to products using direct labor hours as the activity driver l. Purchasing cost assigned to products using number of orders as the activity driver m. Materials handling cost incurrence n. Materials handling cost assigned using the number of moves as the activity driver o. Materials handling cost assigned using direct labor hours as the activity driver p. Computer q. Costing out of products r. Decision to continue making a part rather than buying it s. Printer t. Customer service cost incurred u. Customer service cost assigned to products using number of complaints as the activity driver v. Report detailing individual product costs w. Commission cost x. Commission cost assigned to products using units sold as the activity driver y. Plant depreciation z. Plant depreciation assigned to products using direct labor hours Required: 1. For each cost system, classify the relevant items into one of the following categories: a. Interrelated parts b. Processes c. Objectives d. Inputs e. Outputs f. User actions 2. Explain the choices that differ between the two systems. Which system will provide the best support for the user actions? Explain. 3. Draw an operational model that illustrates each cost accounting systemwith the items that belong to the system used as examples for each component of the model. 4. Based on the operational models, comment on the relative costs and benefits of the two systems. Which system should be chosen?
How are cost of production reports used for controlling and improving operations?
What is the proper order of tasks In an ABC system? identify the cost drivers, assign the costs to the products, calculate the overhead application rate for each cost pool, identify the cost pools assign the costs to the products, identify the cost drivers, calculate the overhead application rate for each cost pool, identify the cost pools identify the cost drivers, identify the cost pools, calculate the overhead application rate for each cost pool, assign the costs to the products identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products
Walsh & Coggins, a professional accounting firm, collects cost information about the services they provide to their clients. Describe the types of cost data they would collect and explain the importance of analyzing this cost data.
Of the following processes, which is chiefly concerned with products and services that have not yet been developed? O Total quality management. O Target costing. O Just-in-time manufacturing. O Activity-based management.
Which of the following must be known about a production process in order to institute avariable costing system?a. The variable and fixed components of all costs related to production.b. The controllable and uncontrollable components of all costs related to productionc. Standard production rates and times for all elements of production.d. Contribution margin and breakeven point for all goods in production.
Draw a diagram illustrating how direct, indirect, sales and administration costs contribute to the overall cost of a product in a manufacturing company (a) Outline the characteristics ofvariable, fixed. mixed and step costs, and write a note on a potential cause of particular cost behaviour. (b) (c) Discuss the salient features of both the engineering and historical cost estimation techniques, especially with regard to the cost activity base.
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You mention changes and revisions to the standard cost systems. If you were the Operations manager of a manufacturing firm, what control would you have in place to assure those changes were proper and accurate? What assertions would apply here?
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