Exam 9: Activity-Based Costing

Management estimates that it costs $500 to analyze and close a commercial loan.This amount has been included in the $250,000 of indirect costs.How much of the $250,000 indirect costs should be allocated to the Consumer Department?

Which of the following costs is not related to a batch-related activity?

If Smelly changes its overhead allocation to departmental rates,what is the product cost per case for Product X assuming Departments C and D use direct labor hours and machine hours as their respective allocation bases?

If the company uses traditional costing and allocates overhead using direct labor cost,how much overhead cost should be assigned to Job 101?

If the company uses traditional costing and allocates overhead using direct materials cost,what is the cost of each unit of Job A-28?

If the company uses activity-based costing (ABC),how much overhead cost should be assigned to Job B-32?

Companies using activity-based costing (ABC)have learned that costs are a function of

When overhead is applied based on the volume of output,high-volume products tend to "subsidize" low-volume products.

If the company uses activity-based costing (ABC),how much overhead cost should be assigned to Job 103?

If Muskego uses a bankwide rate based on direct labor hours,what would be the indirect costs allocated to the Commercial Department?

Traditional product costing systems (e.g.,job and process costing)are designed primarily to accumulate cost information for financial reporting.

Using direct labor costs to allocate overhead costs in an activity-based costing (ABC)system will encourage management to reduce labor costs.

Department D has recently purchased and installed new computerized equipment for Product X.This equipment will increase the overhead costs by $2,700 and decrease labor costs (due to time savings)in Department D by $3.00 per case.Machine hours will not change.If Smelly uses a plantwide rate based on machine hours,what is the revised product cost per case for Product J?

"Activity-based costing is just a more precise form of product costing and is only usable in a production setting." Do you agree or disagree.Explain why.

How much overhead costs were applied to the Work-in-Process Inventory during April using traditional costing?

Martin cannot change the hourly fee for the bookkeeping services because of the number of competing firms in the area.If Martin wants to earn $60,000 pre-tax in the upcoming year,how much will she charge per hour for tax services?

If Muskego uses a bankwide rate based on the number of loans processed,what would be the total costs for the Consumer Department?

If the company uses activity-based costing (ABC),how much overhead cost should be assigned to Job A-15?

The basic difference between a first-stage cost allocation and a second-stage cost allocation is that cost pools are not used in first-stage cost allocations.

Activity-based costing (ABC)provides more detailed measures of costs than do plant wide or department allocation methods.