Use the following terms to complete the sentences that follow; terms may be used once, more than once, or not at all:
Activity proportion
Activity rate
Activity-based management (ABM)
Batch-level
Cost driver
Cost-plus pricing
External failure costs
First Value engineering
Inspection costs Value-added
Internal failure costs Variable costs
Non-value-added Volume-based
Non-volume-based
Product-level
Second
Target costing
Third
Total costs
Total quality management (TQM)
Unit-level
1. _____ include(s) product recalls, warranty costs, and legal fees.
2. _____ involves analyzing 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 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 pools as possible: _____
9. Dividing the activity demands of each individual product by the total quantity of the cost driver results in a(n) _____ .
10. _____ cost systems tend to under-cost low-volume, customized, or complex products.