Gant Accounting performs two types of services, Audit and Tax. Gant's overhead costs consist of computer support, $300,000; and legal support, $150,000. Information on the two services is: \[\begin{array} { l r r } & \text { Audit } & \text { Tax } \\ \text { Direct labor cost } & \$ 50,000 & \$ 100,000 \\ \text { CPU minutes } & 40,000 & 10,000 \\ \text { Legal hours used } & 200 & 800 \end{array}\] Overhead applied to audit services using activity-based costing is

A) $150,000. B) $180,000. C) $270,000. D) $300,000. A) $150,000. B) $180,000. C) $270,000. D) $300,000.

A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available: $\begin{array}{lcr}\text { Department }&\text {Expected Use of Driver}&\text { Cost }\\ \text { Processing } & 800 & \$ 1,500,000 \\ \text { Packaging } & 200,000 & 1,500,000 \\ \text { Testing } & 2,000 & 600,000 \end{array}$ $\text { Production information for the two products is as follows: }$ $\begin{array}{lcc}&\text {Oil }&\text {Sludge }\\ \text { Department}&\text { Expected Use of Driver}&\text { Expected Use of Driver }\\\hline \text { Processing } & 300 & 500 \\ \text { Packaging } & 120,000 & 80,000 \\ \text { Testing } & 1,600 & 400 \end{array}$ The amount of overhead assigned to Oil using ABC is

A) $1,800,000. B) $1,942,500. C) $1,657,500. D) $1,380,000. A) $1,800,000. B) $1,942,500. C) $1,657,500. D) $1,380,000.

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: $\begin{array}{cccc}\text { Cost }&\text {Titanium }&\text {Aluminum}&\text { Total Cost }\\\hline \text { Assembly } & 500 \text { mach. hours } & 500 \text { mach. hours } & \$45,000 \\ \text { Inspections } & 350 & 150 & \$ 75,000 \\ & 2,100 \text { labor hours } & 1,900 \text { labor hours } & \end{array}$ Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much inspections cost is assigned to titanium racquets?

A) $30,000. B) $47,500. C) $50,000. D) $52,500 A) $30,000. B) $47,500. C) $50,000. D) $52,500

Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: $\begin{array}{lrr}&\text { Board } 12&\text { Case } 165\\ \text { Direct labor hours } & 15,000 & 25,000 \\ \text { Machine setups } & 600 & 400 \\ \text { Machine hours } & 24,000 & 26,000 \\ \text { Inspections } & 800 & 700 \end{array}$ Overhead applied to Case 165 using traditional costing using direct labor hours is

A) $3,840,000. B) $4,608,000. C) $5,010,000. D) $6,000,000. A) $3,840,000. B) $4,608,000. C) $5,010,000. D) $6,000,000.

Exam 4: Activity-Based Costing

Gant Accounting performs two types of services, Audit and Tax. Gant's overhead costs consist of computer support, $300,000; and legal support, $150,000. Information on the two services is: Audit Tax Direct labor cost \ 50,000 \ 100,000 CPU minutes 40,000 10,000 Legal hours used 200 800 Overhead applied to audit services using activity-based costing is

(Multiple Choice)

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Question 101

Non-value-added activities

(Multiple Choice)

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Question 102

Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

(Multiple Choice)

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Question 103

Under just-in-time processing, all of the following are received or completed "just in time" except

(Multiple Choice)

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Question 104

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

(Multiple Choice)

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Question 105

Which of the following is a unit-level activity?

(Multiple Choice)

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Question 106

A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available: Department Expected Use of Driver Cost Processing 800 \ 1,500,000 Packaging 200,000 1,500,000 Testing 2,000 600,000 $\text { Production information for the two products is as follows: }$ Oil Sludge Department Expected Use of Driver Expected Use of Driver Processing 300 500 Packaging 120,000 80,000 Testing 1,600 400 The amount of overhead assigned to Oil using ABC is

(Multiple Choice)

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Question 107

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

(Multiple Choice)

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Question 108

Painting is a product-level activity.

(True/False)

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Question 109

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

(Multiple Choice)

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Question 110

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

(True/False)

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Question 111

To use activity-based costing, it is necessary to know the

(Multiple Choice)

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Question 112

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 \4 5,000 Inspections 350 150 \ 75,000 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 inspections cost is assigned to titanium racquets?

(Multiple Choice)

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Question 113

Which of the following is a product-level activity?

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Question 114

Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: Board 12 Case 165 Direct labor hours 15,000 25,000 Machine setups 600 400 Machine hours 24,000 26,000 Inspections 800 700 Overhead applied to Case 165 using traditional costing using direct labor hours is

(Multiple Choice)

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Question 115

Identifying and classifying activities is the

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Question 116

An element of just-in-time processing is

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Question 117

As compared to a low-volume product, a high-volume product

(Multiple Choice)

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Question 118

As compared to a high-volume product, a low-volume product

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Question 119

Ordering materials, setting up machines, assembling products, and inspecting products are examples of

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Question 120

Non-value-added activities

Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

Under just-in-time processing, all of the following are received or completed "just in time" except

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

Which of the following is a unit-level activity?

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

Painting is a product-level activity.

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

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

To use activity-based costing, it is necessary to know the

Which of the following is a product-level activity?

Identifying and classifying activities is the

An element of just-in-time processing is

As compared to a low-volume product, a high-volume product

As compared to a high-volume product, a low-volume product

Ordering materials, setting up machines, assembling products, and inspecting products are examples of

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

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