Question 1

Which of the following is a batch-level activity?

Accepted Answer

A)  Plant management 
B)  Product design 
C)  Equipment setups 
D)  Assembling 
A)  Plant management 
B)  Product design 
C)  Equipment setups 
D)  Assembling

Question 2

Which of the following is a non-value-added activity?

Accepted Answer

A)  Painting 
B)  Finishing 
C)  Packaging 
D)  Building maintenance 
A)  Painting 
B)  Finishing 
C)  Packaging 
D)  Building maintenance

Question 3

Baxter Accounting Services estimates for next year revenues of $3,000,000, direct labor of $600,000, and overhead of $1,050,000. Under traditional costing, overhead is applied to audit jobs using the rate of

Accepted Answer

A)  35% of revenues. 
B)  20% of revenues. 
C)  56% of direct labor. 
D)  175% of direct labor. 
A)  35% of revenues. 
B)  20% of revenues. 
C)  56% of direct labor. 
D)  175% of direct labor.

Question 4

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a non-value-added activity?

Accepted Answer

A)  Engineering design 
B)  Machining 
C)  Inspection 
D)  Packaging 
A)  Engineering design 
B)  Machining 
C)  Inspection 
D)  Packaging

Question 6

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

Accepted Answer

A)  Drilling 
B)  Cutting 
C)  Sanding 
D)  Inspecting 
A)  Drilling 
B)  Cutting 
C)  Sanding 
D)  Inspecting

Question 7

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

Accepted Answer

A)  banks. 
B)  hospitals. 
C)  telephone companies. 
D)  ABC has been useful in any of these industries. 
A)  banks. 
B)  hospitals. 
C)  telephone companies. 
D)  ABC has been useful in any of these industries.

Question 8

Painting is a product-level activity.

Accepted Answer

A) True 
 B)False

Question 9

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

Accepted Answer

A) True 
 B)False

Question 10

In the hierarchy of activity levels, the four levels are __________, ___________, ____________, and _____________.

Accepted Answer

unit, batc

Question 11

Activity-based costing uses

Accepted Answer

A)  one plantwide pool and a single cost driver. 
B)  departmental pools and a single cost driver. 
C)  numerous cost pools and numerous cost drivers. 
D)  one plantwide pool and numerous cost drivers 
A)  one plantwide pool and a single cost driver. 
B)  departmental pools and a single cost driver. 
C)  numerous cost pools and numerous cost drivers. 
D)  one plantwide pool and numerous cost drivers

Question 12

Which of the following is a facility-level activity?

Accepted Answer

A)  Engineering changes 
B)  Product design 
C)  Property taxes 
D)  Inspection 
A)  Engineering changes 
B)  Product design 
C)  Property taxes 
D)  Inspection

Question 13

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:   Overhead applied to Case 165 using activity-based costing is

Accepted Answer

A)  $3,840,000. 
B)  $4,608,000. 
C)  $4,992,000. 
D)  $6,000,000. 
A)  $3,840,000. 
B)  $4,608,000. 
C)  $4,992,000. 
D)  $6,000,000.

Question 14

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is:   Overhead applied to Regular using traditional costing using direct labor hours is

Accepted Answer

A)  $1,290,000. 
B)  $1,800,000. 
C)  $2,700,000. 
D)  $3,210,000. 
A)  $1,290,000. 
B)  $1,800,000. 
C)  $2,700,000. 
D)  $3,210,000.

Question 15

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:   Production information for the two products is as follows:  
The amount of overhead assigned to Oil using ABC is

Accepted Answer

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.

Question 16

Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.   If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is

Accepted Answer

A)  $9.60. 
B)  $12.00. 
C)  $15.00. 
D)  $34.17. 
A)  $9.60. 
B)  $12.00. 
C)  $15.00. 
D)  $34.17.

Question 17

Which of the following is not typical of traditional costing systems?

Accepted Answer

A)  Use of a single predetermined overhead rate. 
B)  Use of direct labor hours or direct labor cost to assign overhead. 
C)  Assumption of correlation between direct labor and incurrence of overhead cost. 
D)  Use of multiple cost drivers to allocate overhead. 
A)  Use of a single predetermined overhead rate. 
B)  Use of direct labor hours or direct labor cost to assign overhead. 
C)  Assumption of correlation between direct labor and incurrence of overhead cost. 
D)  Use of multiple cost drivers to allocate overhead.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A value-added activity in a service enterprise is

Accepted Answer

A)  performing landscaping services. 
B)  reception. 
C)  billing. 
D)  ordering supplies. 
A)  performing landscaping services. 
B)  reception. 
C)  billing. 
D)  ordering supplies.

Exam 17: Activity-Based Costing

Which of the following is a batch-level activity?

Which of the following is a non-value-added activity?

Baxter Accounting Services estimates for next year revenues of $3,000,000, direct labor of $600,000, and overhead of $1,050,000. Under traditional costing, overhead is applied to audit jobs using the rate of

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

Which of the following is a non-value-added activity?

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

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

Painting is a product-level activity.

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

In the hierarchy of activity levels, the four levels are __________, ___________, ____________, and _____________.

Activity-based costing uses

Which of the following is a facility-level activity?

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: Overhead applied to Case 165 using activity-based costing is

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: Overhead applied to Regular using traditional costing using direct labor hours is

Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year. If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is

Which of the following is not typical of traditional costing systems?

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

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

A value-added activity in a service enterprise is

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

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

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

Filters

In the hierarchy of activity levels, the four levels are ____, _, , and _____.