A Fm 102

  • View
    52

  • Download
    6

Embed Size (px)

Text of A Fm 102

AFM 102 MIDTERM 2 Tutor: Yunjun Yang

WANT TO VOLUNTEER ON A OUTREACH TRIP?SOS is currently looking for volunteers for our summer outreach program to Casa Hogar, Mexico Aug 21 Sept 4 If you interested, please contact sos.outreach2010@gmail.com

COME TO OUR MATH 136 & MATH 109 SESSION!Math 136 Friday, Mar 11th 7-10 pm in AL116

Math 109 Tuesday, Mar 15th 6-9pm in MC2065

Chapter 4 Activity-based Cost Systems

Question 1Activity-based cost systems use cost centers to accumulate & distribute costs a. True b.False

Question 1Activity-based cost systems use cost centers to accumulate & distribute costs a. True b.False

Question 1Why? Because traditional cost systems use cost centers while activity-based cost systems use activities instead!Understand the difference in cost center & activities

Question 2Machine set-up would be classified as a. Unit-level activity b.Batch-level activity c. Product-level activity d.Facility-level activity

Question 2Machine set-up would be classified as a. Unit-level activity b.Batch-level activity c. Product-level activity d.Facility-level activity

Question 2Why? Because usually only one setup is required to produce a batch of products.Typical 5 levels of activity Unit-level: e.g. electricity Batch-level: e.g. transportation to the next process Product-level (product sustaining): e.g. marketing Customer-level: e.g. customer service Organization-level: done regardless of production

Question 3List proper order of these steps A. Identify the primary activities and a estimate total cost pool for each B. Allocate the costs to cost object using the activity cost allocation rate C. Select an allocation base for each activity D. Calculate an activity cost allocation rate for each activity

a. b. c. d.

A->C->D->B A->D->C->B B->A->C->D C->A->B->D

Question 3List proper order of these steps A. Identify the primary activities and a estimate total cost pool for each B. Allocate the costs to cost object using the activity cost allocation rate C. Select an allocation base for each activity D. Calculate an activity cost allocation rate for each activity

a. b. c. d.

A->C->D->B A->D->C->B B->A->C->D C->A->B->D

Question 3Why? Because these are the 4 steps 1. Identify the primary activities and a estimate total cost pool for each (same thing as develop activity dictionary) 2. Select an allocation base for each activity (same thing as assign resource expense to each activity in the activity dictionary) 3. Calculate an activity cost allocation rate for each activity 4. Allocate the costs to cost object using the activity cost allocation rate

Question 4Which of the following is NOT advantages of a time-driven ABC system: a. Data used are more easily obtained. b. Can be easily updated as conditions change c. Less time-consuming & less expensive d.Requires many parameters to be estimated.

Question 4Which of the following is NOT advantages of a time-driven ABC system: a. Data used are more easily obtained. b. Can be easily updated as conditions change c. Less time-consuming & less expensive d.Requires many parameters to be estimated.

Question 4Why? Time-driven ABC has homogeneity assumption: all events (activities) consume same amount of resources, thus requires few parameters

Question 5Products A and B are assigned $100.00 in support costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, A requires 40% more setup time than B.

Question 5 AAccording to an ABC system, product A is a. Under-costed b. Over-costed c. Fairly costed d. Accurately costed

Question 5 AAccording to an ABC system, product A is a. Under-costed b. Over-costed c. Fairly costed d. Accurately costed

Question 5 BAccording to an ABC system, B uses a disproportionately: a. smaller amount of unit-level costs b. larger amount of unit-level costs c. smaller amount of batch-level costs d. larger amount of batch-level costs

Question 5 BAccording to an ABC system, B uses a disproportionately: a. smaller amount of unit-level costs b. larger amount of unit-level costs c. smaller amount of batch-level costs d. larger amount of batch-level costs

Question 5 CWhat is the allocation according to an ABC system based on set-up time a. $117 for A, $83 for B b. $125 for A, $75 for B c. $90 for A, $110 for B d. $140 for A, $100 for B

Question 5 CWhat is the allocation according to an ABC system based on set-up time a. $117 for A, $83 for B b. $125 for A, $75 for B c. $90 for A, $110 for B d. $140 for A, $100 for B

Question 6Company XYZ has two products: Sales units Sales price per unit Direct costs Support costs per unit

A #5,000 $6,500.00 $1,800.00 $1000.00

B #40,000 $4,750.00 $1,300.00 $1,000.00

Use ABC analysis to help evaluate a product mix with the following ABC information for support costs: Activity Setups Machine Packing Cost Driver Cost # setups $10M # of machine hours $30M # shipments $5M Total 500 600,000 250,000 A 400 300,000 50,000 B 100 300,000 200,000

Question 6A. Find cost/profit for product A & B using traditional approach on a per-unit basis. Which one is more profitable? B. Find cost/profit for product A & B using ABC approach on a per-unit basis

Question 6C. What conclusion can you draw? Product A is not as profitable as originally thought. Firm should consider raising the price for product A to make profit or cut the product line entirely to make room for the more profitable business of product B

Question 7 Summary of XYZ operation June July # of calls for information 1,000 4,000 Avg call length for information 5 minutes 6 minutes # of calls for support 300 1,200 Avg call length for support 8 minutes 6 minutes Sales revenue $8M $12M XYZ currently allocates $200k to call center support costs by using a rate of 1% of sales revenue. An estimate of costs associated with call center is also $200K

Question 7A. Compute current cost allocation B. Compute ABC allocation to June/July based on call length C. Compute ABC allocation based on # of calls

Question 7D. Which one would you use? Why? Due to a change in average call time, allocation based on call length will be able to reflect that change However # of calls are also high correlated with costs, and the two difference allocations yield very similar costs. Both could be used, but in reality, must understand the true cost driver

Chapter 5 Management Accounting Information for activity and process decisions

Question 1Relevant costs for investing in a new system include: a. original cost of the old system b. accumulated depreciation c. the current salvage value of the existing system d. the salvage value in 5 years e. Both c & d

Question 1Relevant costs for investing in a new system include: a. original cost of the old system b. accumulated depreciation c. the current salvage value of the existing system d. the salvage value in 5 years e. Both c & d

Question 1Why? Relevant costs expected future costs and revenues that differ across the decision alternativesNote: depreciation cost is relevant, while accumulated depreciation is not

Question 2Sunk costs for investing in a new system include: a. the original cost of the old system b. the original cost of the new system c. The salvage value of the existing system d. The operating cost of the new system

Question 2Sunk costs for investing in a new system include: a. the original cost of the old system b. the original cost of the new system c. The salvage value of the existing system d. The operating cost of the new system

Question 2 Sunk costs Costs of resources that already have been committed and no current action or decision can change Not relevant to the evaluation of alternatives because they cannot be influenced by any alternative the manager chooses

Question 3Cellular manufacturing is: a. a layout that looks like a cell b. increasing the employees needed to produce a product c. Individual work area for employees so they can work independently d. a flexible layout that can be easily adjusted to make a different product

Question 3Cellular manufacturing is: a. a layout that looks like a cell b. increasing the employees needed to produce a product c. Individual work area for employees so they can work independently d. a flexible layout that can be easily adjusted to make a different product

Question 3Process layouts: similar equipment and functions are grouped together, typically for production is done in small batches of products. Might have long production path, high work-in-process inventories. Product layouts: equipment is organized to accommodate the production of a specific product, for companies producing highvolume products. The placement of equipment is is made to reduce the distance.

Cellular manufacturing involves the organization of a plant into a number of cells. Within each cell, machines that are needed to manufacture a group of similar products are arranged close to one another

Question 4Company has 2 products with the following financials Total A B Revenue 450k 300k 150k Variable expenses 350k 230k 120k Contribution margin 100k 70k 30k Fixed expenses 80k 40k 40k Operating Income 20k 30k -10k If 20k of fixed costs will be eliminated by dropping product B, how will operating income change? a. Increase by 10k b. Decrease by 10k c. Decrease by 20k d. unchanged

Question 4Company has 2 products with the following financials Total A B Revenue 450k 300k 150k Variable expenses 350k 230k 120k Contribution margin 100k 70k 30k Fixed expenses 80k 40k 40k Operating Income 20k 30k -10k I