Accounting Chapter 10 2 The Degree Which Good Service Meets

38. A company has high winter demand and low summer demand for its services. The cost of

the unused summer capacity should be allocated:

39. Which of the following statements regarding quality costs is(are) false?

(A) In a cost of quality system, internal and external failure costs are called

conformance

costs.

(B) Prevention costs are costs incurred to detect individual units of product that do not conform to

its specifications.

40. The degree to which a good or service meets specifications is called:

41. Which of the following is not an example of a

prevention cost

?

42. Which of the following is an example of a

prevention cost

?

43. Which of the following is an example of

an internal failure cost

?

44. Which of the following is not an example of an

external failure cost

?

45. Which of the following statements regarding the trade-off between conformance and

nonconformance costs is(are) false?

(A) The optimal level for a company’s quality control program occurs when its conformance costs

equal its nonconformance costs.

(B) There is an inverse relationship between the costs spent on nonconformance costs and the

level of quality achieved.

46. Which of the following items is included in almost all quality control systems?

47. Beta Company is preparing its annual profit plan. As part of its analysis of the profitability

of its customers, management estimates that the $12,000 for sales support should be assigned to

the individual customers from the information given as follows:

What is the amount of the sales support costs that should be allocated to Customer A assuming

Beta uses units purchased to compute activity-based costs?

48. Beta Company is preparing its annual profit plan. As part of its analysis of the profitability

of its customers, management estimates that the $12,000 for sales support should be assigned to

the individual customers from the information given as follows:

What is the amount of the sales support costs that should be allocated to Customer B, assuming

Beta uses units purchased to compute activity-based costs?

49. Beta Company is preparing its annual profit plan. As part of its analysis of the profitability

of its customers, management estimates that the $12,000 for sales support should be assigned to

the individual customers from the information given as follows:

What is the amount of the sales support costs that should be allocated to Customer A, assuming

Beta uses purchases orders to compute activity-based costs?

50. Beta Company is preparing its annual profit plan. As part of its analysis of the profitability

of its customers, management estimates that the $12,000 for sales support should be assigned to

the individual customers from the information given as follows:

What is the amount of the sales support costs that should be allocated to Customer B, assuming

Beta uses purchases orders to compute activity-based costs?

51. Yellow Industries decides to price delivery service according to the results of a recent

activity-based costing (ABC) study. The study indicates Yellow should charge $8 per order, 2% of

the order’s value for general delivery costs, $1.25 per item, and $30 for delivery.

A year later, Yellow collected the following information for two of its best customers:

What are the total delivery costs charged to Customer D during the year?

52. Yellow Industries decides to price delivery service according to the results of a recent

activity-based costing (ABC) study. The study indicates Yellow should charge $8 per order, 2% of

the order’s value for general delivery costs, $1.25 per item, and $30 for delivery.

A year later, Yellow collected the following information for two of its best customers:

What are the total delivery costs charged to Customer C during the year?

53. Gundy Press reports the following information about resources. At the beginning of the

year, Gundy estimated it would spend $42,000 for setups and $21,000 for clerical.

Compute unused resource capacity for setups for Gundy Press.

54. Gundy Press reports the following information about resources. At the beginning of the

year, Gundy estimated it would spend $42,000 for setups and $21,000 for clerical.

Compute unused resource capacity for clerical for Gundy Press.