Chapter 4, Problem 4ME

Identifying terms in ABC and ABM

Use the following terms to complete the sentences that follows; terms may be used once, more than once, or not at all.

Activity proportion
Activity rate
Activity-based management (ABM)
Batch-level
Cost-plus pricing
External failure costs
First
Inspection costs
Internal failure costs
Non-value-added
Non-volume-based
Product level
Second
Target costing
Third
Total costs
Total quality management (TQM)
Unit-level
Value engineering
Value-added
Variable costs
Volume-based

1. ___ include(s) product recalls, warranty costs, and legal fees.
2. ___ involves the functionality of a product to determine which functions add value to the customer and then finding ways to deliver those functions while meeting the target cost.
3. Activities such as expediting an order or scheduling a production run are considered ___.
4. ___ When managers use activity-based costing data to improve operations or reduce costs it is called____.
5. ___In a volume-based cost system, the ___varies in direct relation to volume.
6. ___ activities include research and testing development and product testing.
7. ____allocation measures include the number of quality inspections and the number of design changes.
8. ___ This stage of ABC is assigning indirect costs to activity cost pools with the goal to create as few poos as possible.
9. Dividing the activity demands of each product by the total quantity of the cost driver results in a(n)___.
10. ___ cost systems tend to undercost low-volume, customized, or complex products.