Question 1

Product costing consists of only direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 2

Use of a plantwide factory overhead rate does not distort product costs when there are differences in the factory overhead rates across different production departments.

Accepted Answer

A) True 
 B)False

Question 3

Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities?

Accepted Answer

A)  number of units to be produced 
B)  number of setups 
C)  number of inspections 
D)  number of direct labor hours 
A)  number of units to be produced 
B)  number of setups 
C)  number of inspections 
D)  number of direct labor hours

Question 4

Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.

Accepted Answer

A) True 
 B)False

Question 5

Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

Accepted Answer

A) True 
 B)False

Question 6

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.   Determine the activity rate for production per machine hour.

Accepted Answer

A)  $62.50 
B)  $150.00 
C)  $75.00 
D)  $176.47 
A)  $62.50 
B)  $150.00 
C)  $75.00 
D)  $176.47

Question 7

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments-Fabrication and Assembly. Data for the products and departments are listed below.   All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the overhead cost per unit for Dings?

Accepted Answer

A)  $65.25 
B)  $56.75 
C)  $23.25 
D)  $64.50 
A)  $65.25 
B)  $56.75 
C)  $23.25 
D)  $64.50

Question 8

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments-Fabrication and Assembly. Data for the products and departments are listed below.   All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the overhead cost per unit for Rings?

Accepted Answer

A)  $65.25 
B)  $23.25 
C)  $44.10 
D)  $64.50 
A)  $65.25 
B)  $23.25 
C)  $44.10 
D)  $64.50

Question 9

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.   All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks?

Accepted Answer

A)  $78.00 
B)  $19.50 
C)  $37.45 
D)  $56.00 
A)  $78.00 
B)  $19.50 
C)  $37.45 
D)  $56.00

Question 10

Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for the current year is:

Accepted Answer

A)  $8.13 per machine hour 
B)  $7.00 per machine hour 
C)  $6.50 per machine hour 
D)  $8.75 per machine hour 
A)  $8.13 per machine hour 
B)  $7.00 per machine hour 
C)  $6.50 per machine hour 
D)  $8.75 per machine hour

Question 11

Common allocation bases are

Accepted Answer

A)  direct labor dollars, direct labor hours, direct material dollars 
B)  direct labor dollars, direct labor hours, machine hours 
C)  direct labor dollars, direct labor hours, machine dollars 
D)  machine dollars, direct labor dollars, direct labor hours 
A)  direct labor dollars, direct labor hours, direct material dollars 
B)  direct labor dollars, direct labor hours, machine hours 
C)  direct labor dollars, direct labor hours, machine dollars 
D)  machine dollars, direct labor dollars, direct labor hours

Question 12

If selling and administrative expenses are allocated to different products, they should be reported as a

Accepted Answer

A)  cost of goods manufactured 
B)  factory overhead cost 
C)  period cost 
D)  cost of goods sold 
A)  cost of goods manufactured 
B)  factory overhead cost 
C)  period cost 
D)  cost of goods sold

Question 13

Service organizations can use activity-based costing to allocate selling and administrative costs to services provided.

Accepted Answer

A) True 
 B)False

Question 14

Service companies can effectively use multiple department overhead rate costing to compute product (service) costs.

Accepted Answer

A) True 
 B)False

Question 15

Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Bob's plantwide factory overhead rate is $12.00 per machine hour.

Accepted Answer

A) True 
 B)False

Question 16

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.   Determine the activity rate for materials handling per move.

Accepted Answer

A)  $58.82 
B)  $50.00 
C)  $20.83 
D)  $80.65 
A)  $58.82 
B)  $50.00 
C)  $20.83 
D)  $80.65

Question 17

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

Accepted Answer

A) True 
 B)False

Question 18

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Accepted Answer

Proper allocation of factory overhead av

Question 19

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.   All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?

Accepted Answer

A)  $77.00 
B)  $39.00 
C)  $19.50 
D)  $59.92 
A)  $77.00 
B)  $39.00 
C)  $19.50 
D)  $59.92

Question 20

Service companies can effectively use activity-based costing to compute product (service) costs.

Accepted Answer

A) True 
 B)False

Product costing consists of only direct materials and direct labor.

Use of a plantwide factory overhead rate does not distort product costs when there are differences in the factory overhead rates across different production departments.

Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities?

Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.

Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

Common allocation bases are

If selling and administrative expenses are allocated to different products, they should be reported as a

Service organizations can use activity-based costing to allocate selling and administrative costs to services provided.

Service companies can effectively use multiple department overhead rate costing to compute product (service) costs.

Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Bob's plantwide factory overhead rate is $12.00 per machine hour.

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Service companies can effectively use activity-based costing to compute product (service) costs.

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost Volume Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 4: Activity Based Costing

Product costing consists of only direct materials and direct labor.

Use of a plantwide factory overhead rate does not distort product costs when there are differences in the factory overhead rates across different production departments.

Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools: setups, inspections, and assembly. Which of the following would not be used as the activity base for any of these three activities?

Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.

Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

Common allocation bases are

If selling and administrative expenses are allocated to different products, they should be reported as a

Service organizations can use activity-based costing to allocate selling and administrative costs to services provided.

Service companies can effectively use multiple department overhead rate costing to compute product (service) costs.

Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Bob's plantwide factory overhead rate is $12.00 per machine hour.

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Service companies can effectively use activity-based costing to compute product (service) costs.

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost Volume Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

Statement of Cash Flows

Financial Statement Analysis

Filters