Chapter 5
1. Unit-level activities are performed each time a unit is produced.
a. True
b. False
2. Factors that measure the consumption of activities by products and other cost objects are value-added costs.
a. True
b. False
3. Activity drivers should be classified as either unit-level or nonunit-level.
a. True
b. False
Chapter 5
4. Product diversity means that products consume overhead activities in systematically different proportions.
a. True
b. False
5. The consumption ratio is the amount of each activity consumed by a product.
a. True
b. False
Chapter 5
6. An activity-based costing system first assigns costs to activities and then to cost objects.
a. True
b. False
7. A volume-based costing system emphasizes direct tracing and driver tracing.
a. True
b. False
Chapter 5
8. An activity dictionary lists the activities in an organization along with some critical activity attributes.
a. True
b. False
9. Activity attributes are financial and nonfinancial information items that describe individual activities.
a. True
b. False
Chapter 5
10. A work distribution matrix is derived from an interview or a written survey.
a. True
b. False
11. Resource drivers are factors that measure the consumption of resources by product.
a. True
b. False
Chapter 5
12. To calculate an activity rate, the practical capacity of each activity must be determined.
a. True
b. False
13. Activity inputs are the resources consumed by the activity in producing its output.
a. True
b. False
Chapter 5
14. Activity analysis is the effort expended to identify those factors that are the root causes of activity costs.
a. True
b. False
15. One of the questions answered by activity analysis should be “What activities are done?“
a. True
b. False
Chapter 5
16. Activities necessary to remain in business are called valuable activities.
a. True
b. False
17. Discretionary activities are necessary to comply with legal mandates.
a. True
b. False
18. Costs that are caused by the inefficient performance of value-added activities are value added costs.
a. True
b. False
Chapter 5
19. The value-added standard is the waste-free component of the value-added activity.
a. True
b. False
20. One of the three major dimensions of measuring activity performance is quality.
a. True
b. False
Chapter 5
21. One way to improve efficiency is to produce higher activity output with higher cost.
a. True
b. False
22. Velocity is the length of time that it takes to produce a unit of output from the time raw materials are received until the
good is delivered.
a. True
b. False
Chapter 5
23. A defective product is one that does conform to specifications.
a. True
b. False
24. Zero defects means that most products conform to specifications.
a. True
b. False
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25. Activity elimination focuses on nonvalue-added activities.
a. True
b. False
26. Sustainable development is development that meets the needs of the present without compromising the ability of
future generations to meet their own needs.
a. True
b. False
Chapter 5
27. ___________________ are performed each time a unit is produced.
28. _____________________ are factors that measure the consumption of activities by products and other cost objects
and can be classified as either unit-level or nonunit-level.
Chapter 5
29. When products consume overhead activities in systematically different proportion due to such things as product size,
product complexity, setup time and size of batches this is known as _________________.
30. The ___________________ is calculated by taking the amount of the activity driver per product and dividing it by
total driver quantity.
Chapter 5
31. _________________________ assigns costs to activities and then costs to cost objects.
32. ____________________ are financial and nonfinancial information items that describe individual activities.
33. A company will sometimes use a ____________________ which identifies the amount of labor consumed by each
activity.
Chapter 5
34. Accurate ___________________ allow managers to make better pricing decisions, customer-mix decisions, and other
customer-related decisions that improve profitability.
35. Tracing ________________ costs to suppliers can enable managers to choose the true low-cost supplier.
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36. _________________________ is a system-wide, integrated approach that focuses management’s attention on
activities with the objective of improving customer value and profit achieved by providing this value.
37. A focus on cost reduction instead of cost assignment and emphasizing the maximization of systemwide performance is
known as _______________________.
Chapter 5
38. A ____________________ is classified as value-added provided it simultaneously meets three conditions.
39. When a new product can be designed to use components already being used by other products this is known as
________________.
40. ______________ is concerned with doing the activity right the first time it is performed.
Chapter 5
41. Activities necessary to remain in business are known as _____________________.
42. Setups, material handling, and inspection are all possible examples of
a. product diversity.
b. unit level overhead activities.
c. nonunit-level overhead activities.
d. sustainable development.
e. None of these.
Chapter 5
43. ____ is present whenever products have different consumption ratios for different overhead activities.
a. Environmental costs
b. Activity sharing
c. Product diversity
d. Activity inputs
e. Control costs
44. A(n) ____ ratio measures the proportion of an activity consumed by a product.
a. production
b. consumption
c. efficiency
d. quality
e. usage