Multiple Choice Questions
 

26. Which one of the following is not one of the basic procedures related to activity-based costing? 
A. Identify the activity.
B. Create an associated activity cost pool.
C. Compute internal failure costs.
D. Calculate the cost per unit of activity.

27. The suppliers and production component of the value chain would include all of the following costs except: 
A. Direct production labor.
B. Production set-up.
C. Salaries for sales personnel.
D. Receipt of direct materials from suppliers.

28. Examples of value-added activities include all of the following except: 
A. Product design.
B. Assembly activities.
C. Machinery set-up activities.
D. Establishing efficient distribution channels.

29. Which of the following activities performed by a manufacturer of roller blades is not a value-added activity? 
A. Inspection of direct materials upon receipt from suppliers.
B. Storage of direct materials until needed for production.
C. Transfer of direct materials to appropriate points on the assembly line.
D. Estimated lost sales due to poor quality.

30. The just-in-time manufacturing system: 
A. Contrasts with the supply push system.
B. Complements the supply push systems.
C. Neither complements nor contrasts with the supply push system.
D. Contrasts the demand pull system.

31. Just-in-time manufacturing systems are also known as: 
A. Supply push systems.
B. Supply pull systems.
C. Demand push systems.
D. Demand pull systems.

32. The primary objective of activity-based management is: 
A. To develop more accurate product costs.
B. To reduce and eliminate non-value added activities.
C. To increase product quality.
D. To identify instances of internal failure.

33. Target costing is directed toward: 
A. Increasing the activity costs associated with existing products.
B. Identifying the amount by which the costs of existing products must be reduced to achieve a target profit margin.
C. The creation and design of products that will provide adequate profits.
D. The improvement of existing production processes by eliminating non-value adding activities.

34. The identification of a target price for a newly designed product or service is focused on: 
A. The expected costs of production.
B. The required profit margin.
C. The prices charged by existing and potential competitors.
D. Customers and their functional requirements.

35. During which element of manufacturing cycle time is value added to products? 
A. Storage and waiting time.
B. Processing time.
C. Movement time.
D. Inspection time.