M.A.

QUIZ BEE
Know your ABC

1. The following tasks are associated with an activity-based costing

system:

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1Calculation of cost application rates

2Identification of cost drivers
3Assignment of cost to products
4Identification 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.

Which of the following is not a broad, cost classification

category typically used in activity-based costing?
A. Management-level.
B. Batch-level.
C. Product-sustaining level.
D. Unit-Level.
2.

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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.
3.

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4. 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. Property taxes.
D. Production setup.

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5. 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.

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6. 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 overcosted by
traditional costing systems.
D. typically use fewer cost drivers than more traditional costing systems.

7. Which of the following activity cost pools and activity

measures likely has the lowest degree of correlation?

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Activity Cost Pool

A. Order department
B. Sales management
C. Accounts receivable
processing
D. Employee travel to job
sites (sites are within 100mile radius of company
headquarters)

Activity Measure
Number of orders processed
Time spent by managers in each
sales territory
Number of customers
Number of employees

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8. 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 nonunit-level activities.
B.
product-line diversity or a large proportion of nonunit-level
activities.
C.
minimal product-line diversity and a small proportion of
nonunit- level activities.
D. existing variances from budgeted amounts.

5 minutes

9. BFC's 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.

5 minutes

10. Boac 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:

Wages and salaries

Other overhead

Bouquet
Production
60%
50%

Delivery
30%
35%

Other
10%
15%

Riverside 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.

M.A. QUIZ BEE

PART 2
Know your ABC

5 minutes

Sta. Cruz Cellars produces wine in Marinduque Province. Consider the

following selected costs that arose during the current year:
1. Safety costs at winery
2. Truckload shipping costs
3. Building maintenance costs
4. Bottle and cork cost
5. Development cost of new, after-dinner wine
6. Tasting and testing costs
Classify the six costs listed as arising from a unit-level, batch-level, productsustaining, or facility-level activity.

2. Gasan Co. manufactures hand-made storage boxes for a variety of clients. As

production manager, you have developed the following value chart:
Operation
Average Number of Days
Receiving materials
1
Storing materials
2
Handling materials
3
Cutting/measuring materials 6
Assembling materials
4
Building boxes
7
Attaching hinges
2
Inspection
1

5 minutes

a.
time.
b.
total time.
c.

Determine the value-added activities and their total

Determine the non-value-added activities and their
Calculate the manufacturing cycle efficiency.

3. MA Accounting performs two types of services, Tax and Consulting. MAs overhead costs consist of computer support,
200,000; and legal support, 100,000. Information on the two services is:

5 minutes

Tax
Consulting
Direct labor cost
50,000
100,000
CPU minutes
40,000
10,000
Legal hours used
200
800
1. Overhead applied to tax services using traditional costing is
a. 100,000.
b. 120,000.
c. 180,000.
d. 200,000.
2. Overhead applied to consulting services using traditional costing is
a. 100,000.
b. 120,000.
c. 180,000.
d. 200,000.
3. Overhead applied to tax services using activity-based costing is
a. 100,000.
b. 120,000.
c. 180,000.
e. 200,000.
4. Overhead applied to consulting services using activity-based costing is
a. 100,000.
b. 120,000.
c. 180,000.
f. 200,000.
5. MA Accounting performs tax services for Vince Morelli. Direct labor cost is 1,200; 600 CPU minutes were
used; and 1 legal hour was used. What is the total cost of the Morelli job?
a. 2,400
b. 2,500
c. 3,600
d. 3,700

Thank you.