Exam 9: Activity-Based Costing

Which of the following statements is (are)true regarding the potential effects of using reported product costs for decision making? (A)Traditional product costing systems (e.g.,job and process costing)are designed primarily to accumulate cost information for financial reporting. (B)If a single cost driver is used as the allocation base,applied manufacturing overhead for product costing purposes may lead to inappropriate managerial decisions.

Which of the following should not be used as the allocation base in a company that appropriately uses a single plant wide rate?

Which of the following statements is (are)true? (1)Activity-based costs per unit are always greater than volume-based costs per unit. (2)Volume-based costing has typically resulted in lower gross margins for high volume products and higher gross margins for low volume products.

In general,variable costs are allocated using a first-stage cost allocation system and fixed costs are allocated using a second-stage cost allocation system.

If the company uses activity-based costing (ABC),how much overhead cost should be assigned to Job 101?

If Smelly changes its allocation basis to machine hours,what is the total product cost per case for Product J?

Under an activity-based costing (ABC)system,the materials handling costs allocated to one unit of specialty windows would be

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 X?

Which of the following would NOT be a batch-related activity?

Predetermined overhead rates are used in first-stage cost allocations but not in second-stage cost allocations.

In general,traditional product costing methods allocate less cost to low-volume products and more costs to high-volume products than activity-based costing (ABC).

Which of the following measures is used by activity-based costing (ABC)systems as an allocation base for allocating overhead costs to the units produced?

Cost pools are used with

The department cost allocation method provides more accurate product cost information for managerial decision-making than the plant wide cost allocation method.

Which of the following statements is (are)false regarding first-stage and second-stage cost allocation methods? (A)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. (B)Predetermined overhead rates are used in first-stage cost allocations but not in second-stage cost allocations.

What is the total overhead allocated to Product S using the current system?

Direct labor cost (DLC)and direct labor hours (DLH)are examples of volume-related cost drivers in the cost hierarchy.

Activity-based costing (ABC)can be applied to administrative activities (e.g.,purchasing)but not to marketing activities.

If the company uses traditional costing and allocates overhead using direct materials cost,how much overhead cost should be assigned to Job A-15?

Match each of the following activities with the appropriate category: