Chapter 10 Fundamentals of Cost Management Answer Key
True / False Questions
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Multiple Choice Questions
21.
Which of the following statements about activity-based costing (ABC) is not true? (CIA
adapted)
22.
In an activity-based costing (ABC) system, cost reduction is accomplished by identifying
and eliminating: (CPA adapted)
All Cost Drivers
Non value-added Activities
A.
No
No
B.
Yes
Yes
C.
No
Yes
D.
Yes
No
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26.
Finesse is a specialty molder of plastic jar covers for the cosmetics industry. Because the
products sold are expensive cosmetics, the large cosmetic companies who purchase the
jar covers are highly sensitive to the appearance of the product. Any cuts, nicks, abrasions,
or pieces of dirt embedded will result in rejection of the units. The company spends a
significant amount of time in the quality control area. The following list of sub-activities
has been developed for quality control:
Number
Activity Description
3.1
Move units from production area to
inspection area
3.2
Quality Control inspector reviews lots
3.3
Quality Control inspector determines
lots to be inspected
3.4
Each unit is physically inspected
3.5
Defective units are returned to
production area for rework
3.6
Good units are sent to shipping for
packaging and shipment to final
customer
3.7
Record of units inspected is recorded in
production office
27.
Finesse is a specialty molder of plastic jar covers for the cosmetics industry. Because the
products sold are expensive cosmetics, the large cosmetic companies who purchase the
jar covers are highly sensitive to the appearance of the product. Any cuts, nicks, abrasions,
or pieces of dirt embedded will result in rejection of the units. The company spends a
significant amount of time in the quality control area. The following list of sub-activities
has been developed for quality control:
Number
Activity Description
3.1
Move units from production area to
inspection area
3.2
Quality Control inspector reviews lots
3.3
Quality Control inspector determines
lots to be inspected
3.4
Each unit is physically inspected
3.5
Defective units are returned to
production area for rework
3.6
Good units are sent to shipping for
packaging and shipment to final
customer
3.7
Record of units inspected is recorded in
production office
The sub-activities of this company indicate that:
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