Exam 4: Activity-Based Costing

An activity that is consumed by a final cost object, such as a product or customer, is called a(n):

If activity-based costing is used, security is an example of a

Mannitou Company made the following predictions for 2018: Factory overhead costs \ 300,000 Direct labor hours 50,000 hours Machine hours 100,000 hours Job A2 (which was started and completed in June) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs. If factory overhead is applied based on machine hours, the cost of Job A2 for the Mannitou Company is

The Manoli Company has collected the following data for use in calculating product costs: Activity Data: (expected and actual) Rug Cleaners Sweepers T otal Units Produced 50,000 250,000 300,000 Prime Costs \ 200,000 \ 750,000 \ 950,000 Direct Labor Hours 10,000 40,000 50,000 Machine Hours 20,000 10,000 30,000 Number of Setups 25 75 100 Inspection Hours 1200 2,800 4,000 Number of Moves 140 210 350 Departmental Data: (expected and actual) Molding Assembly Total Direct Labor Hours Rug Cleaners 5,000 5,000 10,000 Sweepers Total 10,000 40,000 50,000 Machine Hours Rug Cleaners 17,000 3,000 20,000 Sweepers 3,000 7,000 10,000 Total 20,000 10,000 30,000 Overhead Costs Machining \ 120,000 \ 30,000 \ 150,000 Moving Materials 40,000 30,000 70,000 Setting Up 70,000 10,000 80,000 Inspecting Products 20,000 30,000 50,000 Total \ 250,000 \ 100,000 \3 50,000 What are the consumption ratios for rug cleaners and sweepers respectively for the inspection of products activity?

The grouping of logically related information is called:

The Data Retrieving Corporation provided the following data about its resources and activities. Resources Activities clerical hours Supervision \ 140,000 processing accounts 10,000 phone and supplies 80,000 issuing statements 2,000 salaries 250,000 processing data 10,000 computer 20,000 answering customer inquiries 3,000 total \ 490,000 total 25,000 In addition, computers are used for issuing statements (30 percent) and processing data (70 percent). Phones, supplies, and answering customer inquiries are 60 percent, with the other 40 percent divided equally among the remaining activities, including supervision. The supervisor spends 100 percent of his/her time on supervision. In addition to the 25,000 clerical hours, there are 2,000 hours of supervision used (the hours used by the supervising clerks activity which is not listed above) Required: Prepare a work distribution matrix for the primary activities.

A secondary activity is

The activity that aids management in achieving objectives such as product or customer costing, continuous improvement and environmental management is called:

The formula Budgeted annual overhead/Budgeted annual driver level is used to calculate a __________ rate.

Unit-level drivers are factors that measure the demands placed on unit-level activities by products.

Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G. Information relating to the two products is as follows: Model Model Units produced 24,000 30,000 Machine hours 7,500 8,500 Direct labor hours 8,000 12,000 Material handling (number of moves) 4,000 6,000 Setups 5,000 7,000 Purchase orders 30 40 Inspections 10,000 14,000 Product line variations 8 12 The following overhead costs are reported for the following activities of the production process: Material handling \ 40,000 Labor-related overhead 120,000 Setups 60,000 Product design 100,000 Batch inspections 120,000 Central purchasing 70,000 Jones manufacturing has used activity based costing to assign costs to Models F and G as given in the table below: Activity Cost Pool Driver Pool Rate Model F Activity Model F Cost Model G Activity Model G Cost Total Material handling \ 40,000 10,000 \ 4 4,000 \ 16,000 6,000 \ 24,000 \ 40,000 Labor related \ 120,000 20,000 \ 6 8,000 \ 48,000 12,000 \ 72,000 \ 120,000 overhead Setups \ 60,000 12,000 \ 5 5,000 \ 25,000 7,000 \ 35,000 \ 60,000 Product design \ 100,000 20 \ 5,000 8 \ 40,000 12 \ 60,000 \ 100,000 Batch Inspections \ 120,000 24,000 \ 5 10,000 \ 50,000 14,000 \ 70,000 \ 120,000 Central purchasing \ 70,000 70 \ 1,000 30 \ 30,000 40 \ 40,000 \ 70,000 total \2 09,000 \3 01,000 \5 10,000 Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment. Under this new approach using consumption ratios for labor related and batch inspections, what set of equations would be used to create equally accurate reduced ABC allocation rates (where a = labor hours and b = batch inspections)? (round to 5 decimal places)

Bienvenue, Inc., has identified the following overhead costs and activity drivers for next year: Expected Expected Overhead Item Cost Activity Driver Ouantity Setup costs \ 100,000 Number of setups 500 Ordering costs 40,000 Number of orders 3,200 Maintenance 200,000 Machine hours 4,000 Power 20,000 Kilowatt hours 80,000 The following are two of the jobs completed during the year: Job CC Job DD Direct materials \ 375 \ 1,000 Direct labor \ 350 \ 1,200 Units completed 100 160 Direct labor hours 50 80 Number of setups 1 4 Number of orders 4 5 Machine hours 20 25 Kilowatt hours 30 50 The company's normal activity is 4,000 direct labor hours. If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job DD would be

Batch-level costs are assigned using

Which of the following is true of a unit-based costing system?

The overhead rates of the traditional functional-based product costing use

Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G. Information relating to the two products is as follows: Model F Model G Units produced 24,000 30,000 Machine hours 7,500 8,500 Direct labor hours 8,000 12,000 Material handling (number of moves) 4,000 6,000 Setups 5,000 7,000 Purchase orders 30 40 Inspections 10,000 14,000 Product line variations 8 12 The following overhead costs are reported for the following activities of the production process: Material handling \ 40,000 Labor-related overhead 120,000 Setups 60,000 Product design 100,000 Batch inspections 120,000 Central purchasing 70,000 Jones manufacturing has used activity based costing to assign costs to Models F and G as given in the table below: Activity Cost Pool Driver Pool Rate Model F Activity Model F Cost Model G Activity Model G Cost Total Material handling \ 40,000 10,000 \ 4 4,000 \ 16,000 6,000 \ 24,000 \ 40,000 Labor related \ 120,000 20,000 \ 6 8,000 \ 48,000 12,000 \ 72,000 \ 120,000 overhead Setups \ 60,000 12,000 \ 5 5,000 \ 25,000 7,000 \ 35,000 \ 60,000 Product design \ 100,000 20 \ 5,000 8 \ 40,000 12 \ 60,000 \ 100,000 Batch Inspections \ 120,000 24,000 \ 5 10,000 \ 50,000 14,000 \ 70,000 \ 120,000 Central purchasing \ 70,000 70 \ 1,000 30 \ 30,000 40 \ 40,000 \ 70,000 total \2 09,000 \3 01,000 \5 10,000 Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment. Under this new approach, what cost would be assigned to the labor related cost pool?

The total overhead assigned to actual production at any point in time is called:

The collected data sets that are organized and interrelated for use by an organization's ABC information system is(are):

The Gardenview Corporation has identified the following overhead costs and activity drivers for next year: Overhead Item Expected Cost Activity Driver Expected Ouantity Setup costs \ 200,000 Number of setups 250 Ordering costs 80,000 Number of orders 1,600 Maintenance 400,000 Machine hours 2,000 Power 40,000 Kilowatt hours 40,000 The following are two of the jobs completed during the year: Job 6A Job 8B Direct materials \ 3,000 \ 4,000 Direct labor \ 2,800 \ 4,800 Units completed 100 160 Direct labor hours 50 80 Number of setups 1 4 Number of orders 4 5 Machine hours 20 25 Kilowatt hours 30 50 The company's normal activity is 2,000 direct labor hours. If kilowatt hours are used to assign power costs, the amount of power costs assigned to Job 6A would be

The method that first traces costs to a department and then to products is called: