Exam 4: Activity-Based Costing

Which of the following is not a batch-level activity?

A cost driver does not generally have a direct cause-effect relationship with the resources consumed.

Which would be an appropriate cost driver for the machining activity cost pool?

Activities required to support or sustain an entire production process are called

Which of the following is a batch-level activity?

Foxx Company incurs $480,000 overhead costs each year in its three main departments, setup ($30,000), machining ($330,000), and packing ($120,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Foxx's two products is as follows: Product A1 Product B1 Number of setups 20 20 Machining hours 1,000 4,000 Orders packed 150 350 Number of products manufactured 600 400 Using ABC, how much overhead is assigned to Product A1 each year?

Which of the following is a facility-level activity?

Which of the following is not a product-level activity?

An example of a cost which would not be assigned to an overhead cost pool is

Which of the following is not an example of an activity cost pool?

The general approach to identifying activities, activity cost pools, and cost drivers is used by a service company in the same manner as a manufacturing company.

Which of the following is true of activity-based costing?

Which of the following is not a facility-level activity?

Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach. hours 500 mach. hours \ 60,000 Inspections 350 150 \ 100,000 2,100 labor hours 1,900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Total overhead costs assigned to titanium racquets, using a single overhead rate, are

An activity-based overhead rate is computed as follows:

Which of the following is a limitation of activity-based costing?

Windsor Co. incurs $1,050,000 of overhead costs each year in its three main departments, machining ($600,000), inspections ($300,000) and packing ($150,000). The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year. Information about Windsor's two products is as follows: Broduct X Broduct Y Machining hours 1,000 3,000 Inspections 100 500 Orders packed 350 650 Direct labor hours 1,700 1,800 Using ABC, how much overhead is assigned to Product X this year?

Activity-based costing has been found to be useful in each of the following service industries except

Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach. hours 500 mach. hours \ 60,000 Inspections 350 150 \ 100,000 2,100 labor hours 1,900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much assembly cost is assigned to titanium racquets?

When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products.