Reference 05-15 Speed Demon Inc. manufactures two products: speedometers and odometers. During the month, it produced 2,000 speedometers and 3,000 odometers and incurred estimated overhead costs of $45,300. The company currently allocated overhead on the basis of direct labor hours. This month, the company incurred the following: $\begin{array}{|l|l|l|} \hline & \text { Speedometers } & \text { Odometers } \\ \hline \text { Machine Hours } & 750 & 1,000 \\ \hline \text { Labour Hours } & 1,200 & 800 \\ \hline \text { Labor cost } & \$ 12,000 & 18,000 \\ \hline \end{array}$ Management is considering implementing activity based costing. An analysis of estimated overhead costs revealed the following activities: $\begin{array}{|l|l|l|l|l|} \hline \text { Activity } & \text { Total Cost } & \begin{array}{l} \text { Activity } \\ \text { Measure } \end{array} & \begin{array}{l} \text { Use of Activity } \\ \text { Measure by Product } \\ \text { Line } \end{array} \\ \hline & & & \text { Speedometers} & \text { Odometers } \\\hline \begin{array}{l} \text { Materials } \\ \text { Handling } \end{array} & \$ 18,000 & \begin{array}{l} \text { of } \\ \text { requisitions } \end{array} & 400 & 600 \\ \hline \begin{array}{l} \text { Machine } \\ \text { Set-ups } \end{array} & 12,600 & \# \text { of set-ups } & 150 & 300 \\ \hline \begin{array}{l} \text { Quality } \\ \text { Inspections } \end{array} & 14,700 & \begin{array}{l} \text { \# of } \\ \text { inspections } \end{array} & 200 & 400 \\ \hline \hline \end{array}$ -Assuming a current predetermined overhead rate of $10.00, what is the total overhead allocated to speedometers using the current costing system?

A) $45,000 B) $8,000 C) $12,000 D) $20,000 A) $45,000 B) $8,000 C) $12,000 D) $20,000

Reference: 05-14 Brooke Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: \[\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\ \text { Overhead Cost } \end{array} & { \text { Expected Activity } } \\ \hline \text { Machine related (machine-hours) } & \$ 777,400 & 26,000 & \text { MHs } \\ \hline \text { Batch setup (setups) } & \$ 1,814,400 & 28,000 & \text { setups } \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & \$ 478,800 & 18,000 & \text { DLHs } \\ \hline \begin{array} { l } \text { The actual activity for the year } \\ \text { was: } \end{array} & & & \\ \hline & & \text { Actual Activity for the Year } \\ \hline \text { Activity Cost Pools } & \text { Total } & \text { Product X } & \text { Product } Y \\ \hline \text { Machine related (machine-hours) } & 28,000 & 17,000 & 11,000 \\ \hline \text { Batch setup (setups) } & 28,000 & 7,000 & 21,000 \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & 18,000 & 9,000 & 9,000 \\ \hline \end{array}\] The actual total manufacturing overhead cost incurred for the year was $3,064,400. -The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

A) $86.40. B) $64.80. C) $109.70. D) $259.20. A) $86.40. B) $64.80. C) $109.70. D) $259.20.

Reference: 05-11 Andruschack Corporation uses activity-based costing to determine product costs for external financial reports. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. The company has provided the following data concerning its activity-based costing system: \[\begin{array}{l} \begin{array} { | l | l | } \hline \begin{array} { l } \text { Activity Cost Pools (and Activity } \\ \text { Measures) } \end{array} & \text { Estimated Overhead Cost } \\ \hline \text { Machine related (machine-hours) } & \$ 213,000 \\ \hline \text { Batch setup (setups) } & \$ 339,000 \\ \hline \text { General factory (direct labour-hours) } & \$ 193,200 \\ \hline \end{array}\\\\ \begin{array} { | l | l | l | l | } \hline & & { \text { Expected Activity } } \\ \hline \text { Activity Cost Pools } & \text { Total } & \text { Product } X & \text { Product } Y \\ \hline \text { Machine related } & 10,000 & 3,000 & 7,000 \\ \hline \text { Batch setup } & 10,000 & 4,000 & 6,000 \\ \hline \text { General factory } & 14,000 & 7,000 & 7,000 \\ \hline \end{array} \end{array}\] -Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

A) $339,000. B) $372,600. C) $296,100. D) $298,000. A) $339,000. B) $372,600. C) $296,100. D) $298,000.

Matt Company uses activity-based costing. The annual production and sales of Product A are 8,000 units and of Product B are 6,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows: \[\begin{array} { | c | l | l | l | l | } \hline \text { Activity } & \text { Estimated } & \text { Expected Activity } \\ \hline \text { Cost Pool } & \text { Cost } & \text { Product A } & \text { Product B } & \text { Total } \\ \hline \text { Activity } 1 & \$ 20,000 & 100 & 400 & 500 \\ \hline \text { Activity 2 } & \$ 37,000 & 800 & 200 & 1,000 \\ \hline \text { Activity 3 } & \$ 91,200 & 800 & 3,000 & 3,800 \\ \hline \end{array}\] The cost per unit of Product A under activity-based costing is closest to:

A) $2.40. B) $6.60. C) $3.90. D) $10.59. A) $2.40. B) $6.60. C) $3.90. D) $10.59.

Reference: 05-12 Brenot Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: \[\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\ \text { Overhead Cost } \end{array} & { \text { Expected Activity } } \\ \hline \text { Machine related (machine-hours) } & \$ 379,600 & 13,000 & \text { MHs } \\ \hline \text { Batch setup (setups) } & \$ 1,144,800 & 27,000 & \text { setups } \\ \hline \text { General factory (direct labour-hours) } & \$ 420,500 & 29,000 & \text { DLHs } \\ \hline \text { The actual activity for the year was: } & & & \\ \hline & & \text { Actual Activity for the Year } \\ \hline \text { Activity Cost Pools } & \text { Total } & \text { Product X } & \text { Product } Y \\ \hline \text { Machine related (machine-hours) } & 13,000 & 11,000 & 2,000 \\ \hline \text { Batch setup (setups) } & 26,000 & 3,000 & 23,000 \\ \hline \text { General factory (direct labour-hours) } & 30,000 & 24,000 & 6,000 \\ \hline \end{array}\] The actual total manufacturing overhead cost incurred for the year was $1,942,300. -The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance)would have totalled:

A) $1,932,200. B) $1,917,000. C) $1,942,300. D) $1,929,650. A) $1,932,200. B) $1,917,000. C) $1,942,300. D) $1,929,650.

Reference: 05-13 Bressler Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: \[\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\ \text { Overhead Cost } \end{array} & { \text { Expected Activity } } \\ \hline \text { Machine related (machine-hours) } & \$ 332,800 & 16,000 & \mathrm { MHs } \\ \hline \text { Batch setup (setups) } & \$ 1,580,500 & 29,000 & \text { setups } \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & \$ 305,600 & 16,000 & \mathrm { DLHs } \\ \hline \begin{array} { l } \text { The actual activity for the year } \\ \text { was: } \end{array} & & & \\ \hline & & \text { Actual Activity for the Year } \\ \hline \text { Activity Cost Pools } & \text { Total } & \text { Product X } & \text { Product } Y \\ \hline \text { Machine related (machine-hours) } & 15,000 & 7,000 & 8,000 \\ \hline \text { Batch setup (setups) } & 30,000 & 22,000 & 8,000 \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & 15,000 & 12,000 & 3,000 \\ \hline \end{array}\] The actual total manufacturing overhead cost incurred for the year was $2,202,600. -The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

A) $54.50. B) $197.60. C) $74.00. D) $71.80. A) $54.50. B) $197.60. C) $74.00. D) $71.80.

Reference: 05-07 Alam Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. Estimated costs and activities for the current year are presented below for the three activity cost pools: \[\begin{array}{l} \begin{array} { | l | l | l | } \hline & \text { Estimated Overhead Cost } & \text { Expected Activity } \\ \hline \text { Activity 1 } & \$ 29,328 & 1,200 \\ \hline \text { Activity 2 } & \$ 30,024 & 2,400 \\ \hline \text { Activity 3 } & \$ 65,142 & 2,200 \\ \hline \end{array}\\ \text { Actual costs and activities for the current year were as follows: }\\ \begin{array} { | l | l | l | } \hline & \text { Actual Overhead Cost } & \text { Actual Activity } \\ \hline \text { Activity 1 } & \$ 29,238 & 1,185 \\ \hline \text { Activity 2 } & \$ 29,899 & 2,415 \\ \hline \text { Activity 3 } & \$ 65,117 & 2,225 \\ \hline \end{array} \end{array}\] -The total credits to the Manufacturing Overhead account during the year were closest to:

A) $125,055. B) $124,494. C) $125,667. D) $124,254. A) $125,055. B) $124,494. C) $125,667. D) $124,254.

Reference: 05-14 Brooke Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Estima \[\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\ \text { Overheod Cost } \end{array} & { \text { Expected Activity } } \\ \hline \text { Machane related (machine-hours) } & \$ 777,400 & 26,000 & \text { MHs } \\ \hline \text { Batch setup (setups) } & \$ 1,814,400 & 28,000 & \text { setups } \\ \hline \begin{array} { l } \text { Gentral factory (direct } \\ \text { labour-hours) } \end{array} & \$ 478,800 & 18,000 & \text { DLHs } \\ \hline \begin{array} { l } \text { The actual activity for the year } \\ \text { was: } \end{array} & & & \\ \hline & & \text { Protual Activity for the Year } \\ \hline \text { Actrvity Cost Pools } & \text { Total } & 17,000 & 11,000 \\ \hline \text { Machane related (machine-hours) } & 28,000 & 7,000 & 21,000 \\ \hline \text { Batch setup (setups) } & 28,000 & 9,000 & 9,000 \\ \hline \begin{array} { l } \text { Gentral factory (direct } \\ \text { labour-hours) } \end{array} & 18,000 & & \\ \hline \end{array}\] The actual total manufacturing overhead cost incurred for the year was $3,064,400. -The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance)would have totalled:

A) $3,130,400. B) $3,097,400. C) $3,064,400. D) $3,076,500. A) $3,130,400. B) $3,097,400. C) $3,064,400. D) $3,076,500.

Reference: 05-13 Bressler Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: \[\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\ \text { Overhead Cost } \end{array} & { \text { Expected Activity } } \\ \hline \text { Machine related (machine-hours) } & \$ 332,800 & 16,000 & \mathrm { MHs } \\ \hline \text { Batch setup (setups) } & \$ 1,580,500 & 29,000 & \text { setups } \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & \$ 305,600 & 16,000 & \text { DLHs } \\ \hline \begin{array} { l } \text { The actual activity for the year } \\ \text { was: } \end{array} & & & \\ \hline & & \text { Actual Activity for the Year } \\ \hline \text { Activity Cost Pools } & \text { Total } & \text { Product X } & \text { Product } Y \\ \hline \text { Machine related (machine-hours) } & 15,000 & 7,000 &8,000 \\ \hline \text { Batch setup (setups) } & 30,000 & 22,000 & 8,000 \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & 15,000 & 12,000 &3,000 \\ \hline \end{array}\] The actual total manufacturing overhead cost incurred for the year was $2,202,600. -The manufacturing overhead for the year is underapplied or overapplied by:

A) ($30,900). B) ($15,450). C) $15,450. D) $30,900. A) ($30,900). B) ($15,450). C) $15,450. D) $30,900.

Reference: 05-06 Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A are 1,100 units and of Product B are 700 units. There are three activity cost pools, with estimated costs and expected activity as follows: \[\begin{array} { | l | l | l | l | l | } \hline \text { Activity } & & \text { Expected Activity } \\ \hline \text { Cost Pool } & \text { Estimated Cost } & \text { Product A } & \text { Product B } & \text { Total } \\ \hline \text { Activity 1 } & \$ 18,271 & 600 & 500 & 1,100 \\ \hline \text { Activity 2 } & \$ 35,891 & 1,600 & 300 & 1,900 \\ \hline \text { Activity } 3 & \$ 48,796 & 440 & 420 & 860 \\ \hline \end{array}\] -The activity rate for Activity 3 is closest to?

A) $26.67. B) $119.72. C) $116.18. D) $56.74. A) $26.67. B) $119.72. C) $116.18. D) $56.74.

Reference: 05-13 Bressler Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: \[\begin{array} { | l | l | l | l | } \hline \text { Activity Cost Pools } & \begin{array} { l } \text { Estimated } \\ \text { Overhead Cost } \end{array} & { \text { Expected Activity } } \\ \hline \text { Machine related (machine-hours) } & \$ 332,800 & 16,000 & \text { MHs } \\ \hline \text { Batch setup (setups) } & \$ 1,580,500 & 29,000 & \text { setups } \\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & \$ 305,600 & 16,000 & \text { DLHs } \\ \hline \begin{array} { l } \text { The actual activity for the year } \\ \text { was: } \end{array} & & & \\ \hline & & \text { Actual Activity for the Year } \\ \hline \text { Activity Cost Pools } & \text { Total } & \text { Product X } &\text { Product } Y \\ \hline \text { Machine related (machine-hours) } & 15,000 & 7,000 & 8,000 \\ \hline \text { Batch setup (setups) } & 30,000 & 22,000 &8,000\\ \hline \begin{array} { l } \text { General factory (direct } \\ \text { labour-hours) } \end{array} & 15,000 & 12,000 & 3,000 \\ \hline \end{array}\] The actual total manufacturing overhead cost incurred for the year was $2,202,600. -The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance)would have totalled:

A) $2,249,700. B) $2,223,500. C) $2,218,050. D) $2,202,600. A) $2,249,700. B) $2,223,500. C) $2,218,050. D) $2,202,600.

Exam 5: Activity-Based Costing

Reference 05-15 Speed Demon Inc. manufactures two products: speedometers and odometers. During the month, it produced 2,000 speedometers and 3,000 odometers and incurred estimated overhead costs of $45,300. The company currently allocated overhead on the basis of direct labor hours. This month, the company incurred the following: Speedometers Odometers Machine Hours 750 1,000 Labour Hours 1,200 800 Labor cost \ 12,000 18,000 Management is considering implementing activity based costing. An analysis of estimated overhead costs revealed the following activities: Activity Total Cost Activity Measure Use of Activity Measure by Product Line Speedometers Odometers Materials Handling \ 18,000 of requisitions 400 600 Machine Set-ups 12,600 \# of set-ups 150 300 Quality Inspections 14,700 \# of inspections 200 400 -Assuming a current predetermined overhead rate of $10.00, what is the total overhead allocated to speedometers using the current costing system?

(Multiple Choice)

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Question 61

Reference: 05-14 Brooke Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Activity Cost Pools Estimated Overhead Cost Expected Activity Machine related (machine-hours) \ 777,400 26,000 MHs Batch setup (setups) \ 1,814,400 28,000 setups General factory (direct labour-hours) \ 478,800 18,000 DLHs The actual activity for the year was: Actual Activity for the Year Activity Cost Pools Total Product X Product Y Machine related (machine-hours) 28,000 17,000 11,000 Batch setup (setups) 28,000 7,000 21,000 General factory (direct labour-hours) 18,000 9,000 9,000 The actual total manufacturing overhead cost incurred for the year was $3,064,400. -The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

(Multiple Choice)

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Question 62

Reference: 05-11 Andruschack Corporation uses activity-based costing to determine product costs for external financial reports. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. The company has provided the following data concerning its activity-based costing system: Activity Cost Pools (and Activity Measures) Estimated Overhead Cost Machine related (machine-hours) \ 213,000 Batch setup (setups) \ 339,000 General factory (direct labour-hours) \ 193,200 Expected Activity Activity Cost Pools Total Product X Product Y Machine related 10,000 3,000 7,000 Batch setup 10,000 4,000 6,000 General factory 14,000 7,000 7,000 -Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

(Multiple Choice)

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Question 63

Matt Company uses activity-based costing. The annual production and sales of Product A are 8,000 units and of Product B are 6,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows: Activity Estimated Expected Activity Cost Pool Cost Product A Product B Total Activity 1 \ 20,000 100 400 500 Activity 2 \ 37,000 800 200 1,000 Activity 3 \ 91,200 800 3,000 3,800 The cost per unit of Product A under activity-based costing is closest to:

(Multiple Choice)

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Question 64

Parts administration is an example of a:

(Multiple Choice)

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Question 65

Reference: 05-12 Brenot Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Activity Cost Pools Estimated Overhead Cost Expected Activity Machine related (machine-hours) \ 379,600 13,000 MHs Batch setup (setups) \ 1,144,800 27,000 setups General factory (direct labour-hours) \ 420,500 29,000 DLHs The actual activity for the year was: Actual Activity for the Year Activity Cost Pools Total Product X Product Y Machine related (machine-hours) 13,000 11,000 2,000 Batch setup (setups) 26,000 3,000 23,000 General factory (direct labour-hours) 30,000 24,000 6,000 The actual total manufacturing overhead cost incurred for the year was $1,942,300. -The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance)would have totalled:

(Multiple Choice)

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Question 66

Which of the following would be classified as a product-level activity

(Multiple Choice)

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Question 67

Reference: 05-13 Bressler Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Activity Cost Pools Estimated Overhead Cost Expected Activity Machine related (machine-hours) \ 332,800 16,000 Batch setup (setups) \ 1,580,500 29,000 setups General factory (direct labour-hours) \ 305,600 16,000 The actual activity for the year was: Actual Activity for the Year Activity Cost Pools Total Product X Product Y Machine related (machine-hours) 15,000 7,000 8,000 Batch setup (setups) 30,000 22,000 8,000 General factory (direct labour-hours) 15,000 12,000 3,000 The actual total manufacturing overhead cost incurred for the year was $2,202,600. -The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

(Multiple Choice)

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Question 68

Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

(Multiple Choice)

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Question 69

Reference: 05-07 Alam Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. Estimated costs and activities for the current year are presented below for the three activity cost pools: Estimated Overhead Cost Expected Activity Activity 1 \ 29,328 1,200 Activity 2 \ 30,024 2,400 Activity 3 \ 65,142 2,200 Actual costs and activities for the current year were as follows: Actual Overhead Cost Actual Activity Activity 1 \ 29,238 1,185 Activity 2 \ 29,899 2,415 Activity 3 \ 65,117 2,225 -The total credits to the Manufacturing Overhead account during the year were closest to:

(Multiple Choice)

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Question 70

Reference: 05-14 Brooke Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Estima Activity Cost Pools Estimated Overheod Cost Expected Activity Machane related (machine-hours) \ 777,400 26,000 MHs Batch setup (setups) \ 1,814,400 28,000 setups Gentral factory (direct labour-hours) \ 478,800 18,000 DLHs The actual activity for the year was: Protual Activity for the Year Actrvity Cost Pools Total 17,000 11,000 Machane related (machine-hours) 28,000 7,000 21,000 Batch setup (setups) 28,000 9,000 9,000 Gentral factory (direct labour-hours) 18,000 The actual total manufacturing overhead cost incurred for the year was $3,064,400. -The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance)would have totalled:

(Multiple Choice)

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Question 71

Which of the following would be classified as a product-level activity

(Multiple Choice)

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Question 72

IBM is conducting a prototype testing of its newest product. This is an example of an activity at which level?

(Multiple Choice)

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Question 73

Departmental overhead rates may not correctly assign overhead costs due to:

(Multiple Choice)

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Question 74

Reference: 05-13 Bressler Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Activity Cost Pools Estimated Overhead Cost Expected Activity Machine related (machine-hours) \ 332,800 16,000 Batch setup (setups) \ 1,580,500 29,000 setups General factory (direct labour-hours) \ 305,600 16,000 DLHs The actual activity for the year was: Actual Activity for the Year Activity Cost Pools Total Product X Product Y Machine related (machine-hours) 15,000 7,000 8,000 Batch setup (setups) 30,000 22,000 8,000 General factory (direct labour-hours) 15,000 12,000 3,000 The actual total manufacturing overhead cost incurred for the year was $2,202,600. -The manufacturing overhead for the year is underapplied or overapplied by:

(Multiple Choice)

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Question 75

When activity-based costing is used, the flow of costs through the accounts is similar to a system using one plantwide overhead application rate other than the overhead costs are applied using multiple predetermined overhead rates.

(True/False)

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Question 76

Reference: 05-06 Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A are 1,100 units and of Product B are 700 units. There are three activity cost pools, with estimated costs and expected activity as follows: Activity Expected Activity Cost Pool Estimated Cost Product A Product B Total Activity 1 \ 18,271 600 500 1,100 Activity 2 \ 35,891 1,600 300 1,900 Activity 3 \ 48,796 440 420 860 -The activity rate for Activity 3 is closest to?

(Multiple Choice)

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Question 77

Using activity-based costing is not useful in determining costs of quality.

(True/False)

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Question 78

What is the allocation rate for Machine Set-ups using Activity Based Costing

(Multiple Choice)

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Question 79

Reference: 05-13 Bressler Corporation uses activity-based costing to determine product costs for external financial reports. Activity rates computed at the beginning of the year are used to apply manufacturing overhead costs to products. The company has provided the following data concerning its activity-based costing system. The data used to develop activity rates were: Activity Cost Pools Estimated Overhead Cost Expected Activity Machine related (machine-hours) \ 332,800 16,000 MHs Batch setup (setups) \ 1,580,500 29,000 setups General factory (direct labour-hours) \ 305,600 16,000 DLHs The actual activity for the year was: Actual Activity for the Year Activity Cost Pools Total Product X Product Y Machine related (machine-hours) 15,000 7,000 8,000 Batch setup (setups) 30,000 22,000 8,000 General factory (direct labour-hours) 15,000 12,000 3,000 The actual total manufacturing overhead cost incurred for the year was $2,202,600. -The debits to the Manufacturing Overhead control account during the year (prior to closing out the balance)would have totalled:

(Multiple Choice)

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Question 80

Parts administration is an example of a:

Which of the following would be classified as a product-level activity

Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

Which of the following would be classified as a product-level activity

IBM is conducting a prototype testing of its newest product. This is an example of an activity at which level?

Departmental overhead rates may not correctly assign overhead costs due to:

When activity-based costing is used, the flow of costs through the accounts is similar to a system using one plantwide overhead application rate other than the overhead costs are applied using multiple predetermined overhead rates.

Using activity-based costing is not useful in determining costs of quality.

What is the allocation rate for Machine Set-ups using Activity Based Costing

An Introduction to Managerial Accounting

Cost Concepts

Systems Design: Job-Order Costing

Process Costing

Cost Behaviour: Analysis and Use

Budgeting

Cost-Volume-Profit Relationships

Relevant Costs: the Key to Decision Making

Capital Budgeting Decisions

Standard Costs and Variance Analysis

Organizational Structure and Performance Measurement

How Well Am I Doing Financial Statement Analysis Online

How Well Am I Doing Cash Flow Statement Online

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