3/9/24,u10:21uAM TestuBankuHorngrenuChapteru5u-
uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
CostuAccounting:uAuManagerialuEmphasis,u16e,uGlobaluEditionu(Horngren)
Chapteru5u Activity-BaseduCostiunguanduActivity-BaseduManagementu
5.1 Objectiveu5.1u
1) Whichu ofu theu followingu statementsu is u trueu ofu au peanut-
butteru costingu system? u A)uAupeanut-butterucostingusystemutypicallyuhas umore-
homogeneous uindirectucostupools.u
B) Aupeanut-
butterucostingusystembroadly uaverages uoruspreads utheucostuofuresources uuniformlyutoucostu ob
jects.u
C) Aupeanut-butterucosting usystemuassumes uthatuallucosts uare uvariable.u
D) Inua upeanut-
butterucostingusystem,ucostsuofuactivities uareuusedutouassignucosts utouotherucostuobjects usuchu a
suproducts uoruservices ubaseduonutheuactivities utheuproducts uoruservices uconsume.u
Answer:u B
u Difu fu:u
2u Objective:
u 1u
AACSB:u Analyticalu thinkingu
2) Overcostingu au particularu product umayuresult u
in:u A) u u pricingu u the u u productu u too
u u highu B) u u pricingu u theu u product
u u toou u lowu C)u operatingu efu u u f
u u u iu u u ciencies u D) uunderstatingutotal
uproduct ucostsu
Answer:u A
u Difu fu:u
2u Objective:
u 1u
AACSB:u Analyticalu thinkingu
3) Foruaucompanyuwithudiverse uproducts,uundercostinguoverheaduofua uproductuwilluleadutouproduct-crossu
-
subsidizationu u u whichu u u means u u u th
at:u A)u directulaborucosts uofu theuproductuareumi
sallocatedu B)udirectumaterialucosts uofutheuproduct
uareumisallocatedu C)uindirectucosts uofuanotherupr
oductuareumisaulocatedu
D)udirectucosts uofuanotheruproductuareumisallocate
du Answer:u Cu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
1
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
4) Aquau Companyu produces utwou products–
Alphau andu Beta.uAlphau has uau highu marketushareuandu isu produceduinubulk.uProductionuofuBeta
uisubaseduonucustomeruorders uanduisucustomudesigned.uAlso,u55%uofu Beta's ucostuisusharedubetwe
enudesignuandusetupucosts,uwhileuAlpha'sumajoruportions uofucosts uareudirectucosts.u Alphauis uusin
guausingle ucostupoolutouallocate uindirectucosts.uWhichuofu theufollowing ustatementsuis utrueuofu Aqu
a?u
A)uAquauwilluovercostuBeta's udirectucosts uas uituis uusinguausingle ucostupoolutouallocate uin
directucosts.u B)uAquauwilluundercostuAlpha's uindirectucostsubecauseualphauhas uhighudire
ctucosts.u
C) Aquau willu overcostu Alpha'suindirectucostsuasuituisu usinguausingleu costupoolutouallocateu indirectu costs.u
D) Aqua uwilluovercost uBeta's uindirect ucosts ubecause ubeta uhasuhighuindirec
tucosts.u Answer:u Cu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
5) Product-costu u u u u cross-
subsidizationu u u u u u u u u u meansu u u u u u that:u A)u whenu oneu p
roductu is u overcosted,u itu results u inu moreu thanu oneu otheru productu beingu overcostedu B)uwh
enuaucompanyuundercosts umoreuthanuoneuofuits uproducts,uituwilluovercostumoreuthanuoneuofu its
uotheru productsu u u u u u u u u u u u u u u u u u u u u u
u u u u u u u u u u u C)u whenuau companyu undercosts uoneu ofu its u products,ui
tu willu overcostu atuleastuone u ofu its uotheru products u D)uwhenuoneuproductuis uovercosteduitures
ultsuinualluotheruproducts ubeinguovercostedu
Answer:u C
u Difu fu:u
2u Objective:
u 1u
AACSB:u Analyticalu thinkingu
6) Which uofu the ufollowingu has uaccelerated uneedufor urefu iu neducost usy
stems?u A) uglobal umonopolies u
B)u u u u u risingu u u u pr
ices u C)u u u intense u u u co
mpetitionu D)uaushiftutowarduincrea
sedudirectucostsu Answer:u Cu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
7) Uniformlyuassigninguthe ucosts uofuresources utoucostuobjectsuwhenuthoseuresources uareuactually
uuseduinuau nonuniformuwayuisucalleduactivityubaseducosting.u
Answer:u u u u u u u u u u u u u u u u u u u u u u u u
u u u FALSEu Explanation:u Peanut u butter u costingu occurs uwhenucostsuareuassignedu unifor
mlyuamount umultiple u productsu usingu average u costs u that u dou not u take uintouaccount u the u nonunifo
rumwayuthe u resources uare u consumedu tou produce uthe udifu fuerent uproducts.u
Difu f u: u1
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
2
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
8)Product-costucross-
subsidizationuis uveryucommon uwhenucosts uareuuniformlyuspreaduacross uvarious u products.u
Answer:u TRUE
u Difu fu:u2 u
Objective: u 1u
AACSB:u Analyticalu thinkingu
9)Companies uthat uovercost uproducts uriskubecominguless uefu fuective uon upricingu andulosingumark
etushareu whenucompetition uutilizes umoreuaccurateucost usystems. u
Answer:u TRU
Eu Difu fu:u1
u Objective: u 1
u
AACSB:u Analyticalu thinkingu
10) Ifucompaniesuincrease umarketushareuinuaugivenuproductulineubecause utheirureporteducostsuar
euless uthanu theiruactualucosts,utheyuwillubecomeumoreuprofu iutable uinutheulongurun.u
Answer:u u u u u u u u u u u u u u u u u u u u u u u u u u
u u FALSEu Explanation: u Theuactualucosts uwilluincreaseubecause uofu theuadditionalusalesuandut
heuotheru productulines u (whichuareusubsidizingutheuundercostinguofutheugrowinguproductuline)uwillu
sufu fuer.uTheuneturesultuwillubeutheu companyuhavinguauloweruoperatinguincome uthanuitucoulduha
veuhad.u
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
11)As uproductudiversityuanduindirectucosts uincrease,uituis uusuallyubestutouswitchuawayufro
muaubroadu averagingusystemutouanuactivity-baseducostusystem.u
Answer:u TRU
Eu Difu fu:u1
u Objective: u 1
u
AACSB:u Analyticalu thinkingu
12) Theuriskuofupeanut-
butterucostingurises uwhenubroaduaverages uareuuseduacrossumultiple uproductsu withoutumanagers
uconsideringutheutrueuamounts uofuresources uconsumeduinutheumakinguofueachuproduct.u Answe
r:u TRUEu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
13) Explainu howu au top-
sellingu productu mayu actuallyu resultu inu losses u foru theu company. u Answer:u Ifu indirectuco
stsuareu notuproperlyuallocatedu toutheu products,uauproductumayuappearu toucostulessu thanuituactu
allyudoes ucostutouproduce. uIfutheusellingupriceuis ubaseduonutheseulowerucosts,utheusellingupriceum
ayu actuallyubeuloweruthanutheucosts uneededutouproduce utheuproducturesultinguinulossesuforutheuc
ompany.uThis u
wouldumakeu undercosted uproducts uappear umore uprofu iu tableuandu therefore umakingumarketinguef
u fu orts u tou promote utheuundercosted uproduct ucounter uproductive. u
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
3
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
5.2 Objectiveu5.2u
1) Refu u u u iu u ningu u au u costu u systeminvolves u u whichu u ofu u theu
u following? u A)u u classifu yingu u asu u manyu u costs u u asu u indirectu u cos
tsu u as u u is u u feasible u B)u u creatingu asu u manyu u costu u pools u u as u u po
ssibleu u u tou u capture u u allu u costs u C)uidentifyingutheuactivitiesuinvolveduinuaupr
ocess u anduunderstandinguhowuthoseuactivities uconsume u
resourcesu u u u u u u u u u u u u u u u u
u u u u u u u D)uSeekinguanueasier uandumoreucost uefu fuecti
veuwayutoucalculate uaverage ucosts u Answer:u Cu
Difu fu :u1u
Objective: u 2
u
AACSB:u Analyticalu thinkingu
2) Whichu ofu u theu following u is u trueu ofu u refu u u iu u nementu ofu u au u costin
gu system?u A)uWhileurefu iuninguaucostingusystem,ucompanies ushoulduidentifyuas umanyuindire
ctucosts uas uis ueconomically u feasible.u
B) Au homogeneousu costu poolu willu useumultipleucostu driversutou allocateucosts.u
C) Itu reduces u the u useu ofu broadu averages u foru assigningu the u costu ofu resources u tou costu
objects.u D)uItuis ulikelyutouyieldutheumostudecision-
makingubenefu iuts uwhenudirectucosts uareuauhighupercentage uofutotalu costs.u
Answer:u C
u Difu fu:u
2u Objective:
u 2u
AACSB:u Analyticalu thinkingu
3) Which uofu theufollowinguis uaureason uthatuhas uaccelerated uthe udemand ufor urefu iunementsutouth
eucostingu system?u
A) The u decliningu demand u foru customizedu products uhas u led u managers u tou decreaseu the u varietyu of
u products u anduservices utheir ucompanies uofu fuer.u
B) The uuse uofuproduct uand uprocess utechnology uhas uledutouanuincrease uinuindirectucosts uandua
udecreaseuinu directucosts.u
C) The uincreased uofuautomated uprocesses uhasuledutouthe uincrease uinudirectumanufacturing ucostule
adingutouau decreaseuinubreakuevenupoint.u
D) The uincreasingucompetition uinuproduct umarkets uhas uledutouanuincrease uinucontribution umargin
uresultingu inuaudecreaseuofubreakuevenupoint.u
Answer:u B
u Difu fu:u3
u Objective:
u 2u
AACSB:u Analyticalu thinkingu
4)Demanduforu refu iunementsutoutheucostingusystemuhasuacceleratedudueu
tou
.uA)uincreaseuinudirectucostsu
B)u decreaseu inu productudiversit
yu C)u decreaseu inu indirect u
costs u D)ucompetitionuinuprodu
ctumarkets u Answer:u Du
Difu fu :u1u
Objective: u 2
u
AACSB:u Analyticalu thinkingu
5) JohnsonuSuperioruProducts uInc.uproduces uhospitaluequipmentuandutheusetupurequirements uvary
ufromu productutouproduct. uJohnsonuproduces uits uproductsubaseduonucustomeruorders uandu uses u
ABCucosting.uInu oneuofuits uindirectucostupools,usetupucosts uandudistribution ucosts uareupooledut
ogether.uCosts uinu this upooluareu allocateduusingunumberuofucustomeruordersuforutheueasiness uof
ucostinguoperations.uBaseduonutheu informationuprovided,uwhichuofu theufollowinguarguments uisu
valid?u
A) Johnsonuhasuclearlyufailedu tou identifyu asu manyu directu costsuasuisueconomicallyu feasible.u
4
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
CostuAccounting:uAuManagerialuEmphasis,u16e,uGlobaluEditionu(Horngren)
Chapteru5u Activity-BaseduCostiunguanduActivity-BaseduManagementu
5.1 Objectiveu5.1u
1) Whichu ofu theu followingu statementsu is u trueu ofu au peanut-
butteru costingu system? u A)uAupeanut-butterucostingusystemutypicallyuhas umore-
homogeneous uindirectucostupools.u
B) Aupeanut-
butterucostingusystembroadly uaverages uoruspreads utheucostuofuresources uuniformlyutoucostu ob
jects.u
C) Aupeanut-butterucosting usystemuassumes uthatuallucosts uare uvariable.u
D) Inua upeanut-
butterucostingusystem,ucostsuofuactivities uareuusedutouassignucosts utouotherucostuobjects usuchu a
suproducts uoruservices ubaseduonutheuactivities utheuproducts uoruservices uconsume.u
Answer:u B
u Difu fu:u
2u Objective:
u 1u
AACSB:u Analyticalu thinkingu
2) Overcostingu au particularu product umayuresult u
in:u A) u u pricingu u the u u productu u too
u u highu B) u u pricingu u theu u product
u u toou u lowu C)u operatingu efu u u f
u u u iu u u ciencies u D) uunderstatingutotal
uproduct ucostsu
Answer:u A
u Difu fu:u
2u Objective:
u 1u
AACSB:u Analyticalu thinkingu
3) Foruaucompanyuwithudiverse uproducts,uundercostinguoverheaduofua uproductuwilluleadutouproduct-crossu
-
subsidizationu u u whichu u u means u u u th
at:u A)u directulaborucosts uofu theuproductuareumi
sallocatedu B)udirectumaterialucosts uofutheuproduct
uareumisallocatedu C)uindirectucosts uofuanotherupr
oductuareumisaulocatedu
D)udirectucosts uofuanotheruproductuareumisallocate
du Answer:u Cu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
1
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
4) Aquau Companyu produces utwou products–
Alphau andu Beta.uAlphau has uau highu marketushareuandu isu produceduinubulk.uProductionuofuBeta
uisubaseduonucustomeruorders uanduisucustomudesigned.uAlso,u55%uofu Beta's ucostuisusharedubetwe
enudesignuandusetupucosts,uwhileuAlpha'sumajoruportions uofucosts uareudirectucosts.u Alphauis uusin
guausingle ucostupoolutouallocate uindirectucosts.uWhichuofu theufollowing ustatementsuis utrueuofu Aqu
a?u
A)uAquauwilluovercostuBeta's udirectucosts uas uituis uusinguausingle ucostupoolutouallocate uin
directucosts.u B)uAquauwilluundercostuAlpha's uindirectucostsubecauseualphauhas uhighudire
ctucosts.u
C) Aquau willu overcostu Alpha'suindirectucostsuasuituisu usinguausingleu costupoolutouallocateu indirectu costs.u
D) Aqua uwilluovercost uBeta's uindirect ucosts ubecause ubeta uhasuhighuindirec
tucosts.u Answer:u Cu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
5) Product-costu u u u u cross-
subsidizationu u u u u u u u u u meansu u u u u u that:u A)u whenu oneu p
roductu is u overcosted,u itu results u inu moreu thanu oneu otheru productu beingu overcostedu B)uwh
enuaucompanyuundercosts umoreuthanuoneuofuits uproducts,uituwilluovercostumoreuthanuoneuofu its
uotheru productsu u u u u u u u u u u u u u u u u u u u u u
u u u u u u u u u u u C)u whenuau companyu undercosts uoneu ofu its u products,ui
tu willu overcostu atuleastuone u ofu its uotheru products u D)uwhenuoneuproductuis uovercosteduitures
ultsuinualluotheruproducts ubeinguovercostedu
Answer:u C
u Difu fu:u
2u Objective:
u 1u
AACSB:u Analyticalu thinkingu
6) Which uofu the ufollowingu has uaccelerated uneedufor urefu iu neducost usy
stems?u A) uglobal umonopolies u
B)u u u u u risingu u u u pr
ices u C)u u u intense u u u co
mpetitionu D)uaushiftutowarduincrea
sedudirectucostsu Answer:u Cu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
7) Uniformlyuassigninguthe ucosts uofuresources utoucostuobjectsuwhenuthoseuresources uareuactually
uuseduinuau nonuniformuwayuisucalleduactivityubaseducosting.u
Answer:u u u u u u u u u u u u u u u u u u u u u u u u
u u u FALSEu Explanation:u Peanut u butter u costingu occurs uwhenucostsuareuassignedu unifor
mlyuamount umultiple u productsu usingu average u costs u that u dou not u take uintouaccount u the u nonunifo
rumwayuthe u resources uare u consumedu tou produce uthe udifu fuerent uproducts.u
Difu f u: u1
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
2
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
8)Product-costucross-
subsidizationuis uveryucommon uwhenucosts uareuuniformlyuspreaduacross uvarious u products.u
Answer:u TRUE
u Difu fu:u2 u
Objective: u 1u
AACSB:u Analyticalu thinkingu
9)Companies uthat uovercost uproducts uriskubecominguless uefu fuective uon upricingu andulosingumark
etushareu whenucompetition uutilizes umoreuaccurateucost usystems. u
Answer:u TRU
Eu Difu fu:u1
u Objective: u 1
u
AACSB:u Analyticalu thinkingu
10) Ifucompaniesuincrease umarketushareuinuaugivenuproductulineubecause utheirureporteducostsuar
euless uthanu theiruactualucosts,utheyuwillubecomeumoreuprofu iutable uinutheulongurun.u
Answer:u u u u u u u u u u u u u u u u u u u u u u u u u u
u u FALSEu Explanation: u Theuactualucosts uwilluincreaseubecause uofu theuadditionalusalesuandut
heuotheru productulines u (whichuareusubsidizingutheuundercostinguofutheugrowinguproductuline)uwillu
sufu fuer.uTheuneturesultuwillubeutheu companyuhavinguauloweruoperatinguincome uthanuitucoulduha
veuhad.u
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
11)As uproductudiversityuanduindirectucosts uincrease,uituis uusuallyubestutouswitchuawayufro
muaubroadu averagingusystemutouanuactivity-baseducostusystem.u
Answer:u TRU
Eu Difu fu:u1
u Objective: u 1
u
AACSB:u Analyticalu thinkingu
12) Theuriskuofupeanut-
butterucostingurises uwhenubroaduaverages uareuuseduacrossumultiple uproductsu withoutumanagers
uconsideringutheutrueuamounts uofuresources uconsumeduinutheumakinguofueachuproduct.u Answe
r:u TRUEu
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
13) Explainu howu au top-
sellingu productu mayu actuallyu resultu inu losses u foru theu company. u Answer:u Ifu indirectuco
stsuareu notuproperlyuallocatedu toutheu products,uauproductumayuappearu toucostulessu thanuituactu
allyudoes ucostutouproduce. uIfutheusellingupriceuis ubaseduonutheseulowerucosts,utheusellingupriceum
ayu actuallyubeuloweruthanutheucosts uneededutouproduce utheuproducturesultinguinulossesuforutheuc
ompany.uThis u
wouldumakeu undercosted uproducts uappear umore uprofu iu tableuandu therefore umakingumarketinguef
u fu orts u tou promote utheuundercosted uproduct ucounter uproductive. u
Difu fu :u 2
u Objective:
u 1u
AACSB:u Analyticalu thinkingu
3
Copyrightu ©u 2018u Pearsonu Education,u Ltd.
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uABC
3/24/22,u5:06uPM Chapteru5utestubankuwithuanswersuHorngren'suCostuAccounting:uAuManageri…
5.2 Objectiveu5.2u
1) Refu u u u iu u ningu u au u costu u systeminvolves u u whichu u ofu u theu
u following? u A)u u classifu yingu u asu u manyu u costs u u asu u indirectu u cos
tsu u as u u is u u feasible u B)u u creatingu asu u manyu u costu u pools u u as u u po
ssibleu u u tou u capture u u allu u costs u C)uidentifyingutheuactivitiesuinvolveduinuaupr
ocess u anduunderstandinguhowuthoseuactivities uconsume u
resourcesu u u u u u u u u u u u u u u u u
u u u u u u u D)uSeekinguanueasier uandumoreucost uefu fuecti
veuwayutoucalculate uaverage ucosts u Answer:u Cu
Difu fu :u1u
Objective: u 2
u
AACSB:u Analyticalu thinkingu
2) Whichu ofu u theu following u is u trueu ofu u refu u u iu u nementu ofu u au u costin
gu system?u A)uWhileurefu iuninguaucostingusystem,ucompanies ushoulduidentifyuas umanyuindire
ctucosts uas uis ueconomically u feasible.u
B) Au homogeneousu costu poolu willu useumultipleucostu driversutou allocateucosts.u
C) Itu reduces u the u useu ofu broadu averages u foru assigningu the u costu ofu resources u tou costu
objects.u D)uItuis ulikelyutouyieldutheumostudecision-
makingubenefu iuts uwhenudirectucosts uareuauhighupercentage uofutotalu costs.u
Answer:u C
u Difu fu:u
2u Objective:
u 2u
AACSB:u Analyticalu thinkingu
3) Which uofu theufollowinguis uaureason uthatuhas uaccelerated uthe udemand ufor urefu iunementsutouth
eucostingu system?u
A) The u decliningu demand u foru customizedu products uhas u led u managers u tou decreaseu the u varietyu of
u products u anduservices utheir ucompanies uofu fuer.u
B) The uuse uofuproduct uand uprocess utechnology uhas uledutouanuincrease uinuindirectucosts uandua
udecreaseuinu directucosts.u
C) The uincreased uofuautomated uprocesses uhasuledutouthe uincrease uinudirectumanufacturing ucostule
adingutouau decreaseuinubreakuevenupoint.u
D) The uincreasingucompetition uinuproduct umarkets uhas uledutouanuincrease uinucontribution umargin
uresultingu inuaudecreaseuofubreakuevenupoint.u
Answer:u B
u Difu fu:u3
u Objective:
u 2u
AACSB:u Analyticalu thinkingu
4)Demanduforu refu iunementsutoutheucostingusystemuhasuacceleratedudueu
tou
.uA)uincreaseuinudirectucostsu
B)u decreaseu inu productudiversit
yu C)u decreaseu inu indirect u
costs u D)ucompetitionuinuprodu
ctumarkets u Answer:u Du
Difu fu :u1u
Objective: u 2
u
AACSB:u Analyticalu thinkingu
5) JohnsonuSuperioruProducts uInc.uproduces uhospitaluequipmentuandutheusetupurequirements uvary
ufromu productutouproduct. uJohnsonuproduces uits uproductsubaseduonucustomeruorders uandu uses u
ABCucosting.uInu oneuofuits uindirectucostupools,usetupucosts uandudistribution ucosts uareupooledut
ogether.uCosts uinu this upooluareu allocateduusingunumberuofucustomeruordersuforutheueasiness uof
ucostinguoperations.uBaseduonutheu informationuprovided,uwhichuofu theufollowinguarguments uisu
valid?u
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