Question

1., Which of the following statements is(are) true about non value added activities?

1. Non value added activities are often unnecessary and dispensable
2. Non value added activities maybe necessary but are being performed in an inefficient and improvable manner
3. Non value added activities can be eliminated without deterioration of product quality, performance or perceived value
4. A, b, and c
5. A and b

2. Which of the following is least likely to be classified as a facility level activity in an activity-based costing system?

1. Plant management salaries
2. Property taxes
3. Machine processing cost
4. Pant maintenance
5. Plant depreciation

3.

Flager corp takes 8 hours to complete the set-up process for a certain electrical component with the set-up cost averaging $150 per hour. If the company’s competitor can accomplish the same process in 6 hours Flagler non value added cost would be:

1. 900
2. 0
3. 120
4. 150
5. 300

4.

Overton enterprises is converting to an activity-based costing system, it wishes to depict the various activities in its manufacturing process along with the activities relationships. Which of the following is a toll that the company cane use to accomplish this task?

1. Decisions trees
2. Activity relationship charts
3. Process organizers
4. Story boards
5. Simulation games

5.

Which of the following can have a negative impact on a particular sales profitability?

1. Special shipping instructions
2. Accounts receivable collection time
3. Purchase order changes
4. Number of required sales contact (phones calls, visit, et)
5. All of the answers are correct

Answer 1

1. D

All are correct.

2. C

Facility level activities are necessary for development and production to take place. These costs are administrative in nature and include building depreciation, property taxes, plant security, insurance, accounting, outside landscape and maintenance, and plant management's and support staff's salaries.

3. E

2 hrs (8-6) extra taken by flager corp at the rate of $150 per hour considered as non value added cost i.e $300

4. B

An activity relationship chart is a tabular means of displaying the closeness rating among all pairs of activities or departments.

5. E

All of the answers are correct.