Question 1

If a costing system uses a single base to allocate overhead costs that are results of several production activities:

Accepted Answer

A) Products that use relatively more of this base tend to be undercosted. 
B) Products that use relatively less of this base tend to be overcosted. 
C) Products that use relatively more of this base tend to be overcosted. 
D) Products may be over- or under-costed, depending on the activity level. 
E) Products may be over- or under-costed, depending on the overhead rate. 
A) Products that use relatively more of this base tend to be undercosted. 
B) Products that use relatively less of this base tend to be overcosted. 
C) Products that use relatively more of this base tend to be overcosted. 
D) Products may be over- or under-costed, depending on the activity level. 
E) Products may be over- or under-costed, depending on the overhead rate.

Question 2

Altima Company uses an overhead costing system based on direct labor hours for its two products X and Y. The company is considering adopting an activity-based costing system, and collects the following information for the month of October.   Required:
(1) Compute the unit manufacturing cost of each product under a volume-based costing system based on direct labor hours.
(2) Compute the unit manufacturing cost of each product under the activity-based costing system.

Accepted Answer

Answer may vary
Feedback: @#IMG-DLM& 2.

Question 3

Using activity-based costing, applied materials handling factory overhead for the 1,000 laser printers order is:

Accepted Answer

A) $7,800. 
B) $10,000. 
C) $10,500. 
D) $150. 
E) $21,600. 
A) $7,800. 
B) $10,000. 
C) $10,500. 
D) $150. 
E) $21,600.

Question 4

Which of the following would not be considered a facility-level activity?

Accepted Answer

A) Providing security for the plant. 
B) Factory property taxes and insurance. 
C) Closing the books each month. 
D) Placing purchase orders. 
A) Providing security for the plant. 
B) Factory property taxes and insurance. 
C) Closing the books each month. 
D) Placing purchase orders.

Question 5

Cost to process monthly statements is an example of a:

Accepted Answer

A) Customer unit-level cost. 
B) Customer batch-level cost. 
C) Customer-sustaining cost. 
D) Distribution-channel cost. 
E) Sales-level cost. 
A) Customer unit-level cost. 
B) Customer batch-level cost. 
C) Customer-sustaining cost. 
D) Distribution-channel cost. 
E) Sales-level cost.

Question 6

Using ABC, the materials handling overhead cost assigned to Job #971 is:

Accepted Answer

A) $2,300. 
B) $990. 
C) $6,500. 
D) $690. 
E) $1,020. 
A) $2,300. 
B) $990. 
C) $6,500. 
D) $690. 
E) $1,020.

Question 7

Pairing Company has the following cost drivers identified as A through F for determining product manufacturing overhead costs.
(A) Number of pieces of equipment
(B) Number of direct material purchase orders
(C) Number of production runs
(D) Square feet of warehouse space
(E) Number of machine hours
(F) Square feet of factory space
For each of the following activity cost pools, choose the letter of the most appropriate cost driver for each cost pool.

Accepted Answer

Answer may

Question 8

Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent):

Accepted Answer

A) $4.60. 
B) $9.45. 
C) $13.44. 
D) $15.12. 
E) $42.61. 
A) $4.60. 
B) $9.45. 
C) $13.44. 
D) $15.12. 
E) $42.61.

Question 9

Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent):

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) Option E 
A) Option A 
B) Option B 
C) Option C 
D) Option D 
E) Option E

Question 10

A company using a volume-based overhead assignment (allocation) method will tend to:

Accepted Answer

A) Overstate the cost of low volume products. 
B) Understate the cost of low volume products. 
C) Understate the cost of high volume products. 
D) Understate the cost of all products. 
E) Either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved. 
A) Overstate the cost of low volume products. 
B) Understate the cost of low volume products. 
C) Understate the cost of high volume products. 
D) Understate the cost of all products. 
E) Either understate or overstate the cost of high volume products depending on the specific manufacturing factors involved.

Question 11

Johnson Associates is a catering firm in Tucson, Arizona, with revenue of $4 million. The business began ten years ago as a one-owner bakery, but has dramatically changed in size and function during the past five years. The four partners foresee the business doubling in sales revenue within two years, and expect the firm to expand into other services including flowers, furnishings, decorations, and music. Johnson Associates employs six full-time and ten part-time employees. The four partners also work full-time, each partner managing a separate business function. The firm currently uses a volume-based costing system installed seven years ago and modified three years later.
Required:
(1) With just the above information, comment on Johnson Associates changing and future costing system needs.
(2) Is Johnson Associates a probable candidate for an activity-based costing system (ABC)? Why or why not?

Accepted Answer

Answer may vary
Feedback: (1) Johnson As

Question 12

An activity that is performed to support the production of a new custom-order product is a(n):

Accepted Answer

A) Product-level activity. 
B) Facility-level activity. 
C) Unit-level activity. 
D) Customer-support activity. 
E) Batch-level activity. 
A) Product-level activity. 
B) Facility-level activity. 
C) Unit-level activity. 
D) Customer-support activity. 
E) Batch-level activity.

Question 13

Using ABC, how much product-level overhead is assigned to the current order for Men's Razors?

Accepted Answer

A) $218.00. 
B) $250.70. 
C) $331.20. 
D) $284.00. 
E) $288.00. 
A) $218.00. 
B) $250.70. 
C) $331.20. 
D) $284.00. 
E) $288.00.

Question 14

What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

Accepted Answer

A) $0. 
B) $920. 
C) $4,120. 
D) $6,300. 
E) $6,420. 
A) $0. 
B) $920. 
C) $4,120. 
D) $6,300. 
E) $6,420.

Question 15

The total overhead of Job #971 under the ABC costing is:

Accepted Answer

A) $95. 
B) $380. 
C) $1,520. 
D) $2,300. 
E) $9,200. 
A) $95. 
B) $380. 
C) $1,520. 
D) $2,300. 
E) $9,200.

Question 16

Using ABC, how much other overhead is assigned to the order?

Accepted Answer

A) $8,000. 
B) $9,960. 
C) $11,108. 
D) $19,200. 
E) $45,992. 
A) $8,000. 
B) $9,960. 
C) $11,108. 
D) $19,200. 
E) $45,992.

Question 17

Volume-Based Costing Versus ABC: Gorden Company produces a variety of electronic products. One of its plants produces two laser printers, Speedy and Deluxe. At the beginning of 2013, the following data were prepared for this plant:   The unit overhead cost is calculated using the predetermined overhead application rate based on direct labor-hours.
Upon examining the data, the marketing manager was particularly impressed with the per-unit profitability of the Deluxe printer and suggested that more emphasis be placed on producing and selling this product. The plant supervisor objected to this strategy, arguing that the Deluxe model required a very delicate manufacturing process. The supervisor believed that the cost of the Deluxe printer was likely to be much higher than reported.
The controller suggests an activity-based costing system and provides the following budget data pertaining to the period:   * Cost per unit of cost driver
Required:
1. Using the projected data based on the firm's current costing system, calculate gross profit per unit and gross profit percentage for each product. Round calculations to 2 decimal places.
2. Using the suggested multiple cost drivers' overhead rates, calculate the overhead cost per unit for each product and determine gross profit per unit and gross profit percentage for each product.
3. Based on your results, evaluate the suggestion of the marketing manager to emphasize the Deluxe model.
4. How does ABC contribute to Gorden's competitive advantage?

Accepted Answer

Answer may vary
Feedback: 1. Current cos

Question 18

A firm has many products, some produced in an automated production process and some produced in a manual production process. Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

Accepted Answer

A) Overstate overhead of the product. 
B) Understate overhead of the product. 
C) Overapply overhead to the period. 
D) Underapply overhead to the period. 
E) Have no effect on overhead of the product. 
A) Overstate overhead of the product. 
B) Understate overhead of the product. 
C) Overapply overhead to the period. 
D) Underapply overhead to the period. 
E) Have no effect on overhead of the product.

Question 19

Scott Cameras produces digital cameras and have decided to switch from a volume-based system to an activity-based system. Scott produced 100,000 digital cameras in the most recent quarter and have determined that their total activity costs were: $3,000,000 of materials cost, $500,000 of labor costs, $1,000,000 of inspection costs, and $500,000 of packaging costs. It takes 30 minutes of labor to produce each camera, inspections are done for 20% of all cameras produced, and cameras are packaged individually.
Required: What are the driver rates for each activity?

Accepted Answer

Answer may

Question 20

Effective implementation of activity-based costing (ABC) requires:

Accepted Answer

A) Normally the assistance of a consultant. 
B) A sophisticated and expensive computer system. 
C) Support of top management and key employees. 
D) Capturing properly the complexity of the data. 
E) ABC has no significant implementation issues. 
A) Normally the assistance of a consultant. 
B) A sophisticated and expensive computer system. 
C) Support of top management and key employees. 
D) Capturing properly the complexity of the data. 
E) ABC has no significant implementation issues.

If a costing system uses a single base to allocate overhead costs that are results of several production activities:

Using activity-based costing, applied materials handling factory overhead for the 1,000 laser printers order is:

Which of the following would not be considered a facility-level activity?

Cost to process monthly statements is an example of a:

Using ABC, the materials handling overhead cost assigned to Job #971 is:

Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent):

Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent):

A company using a volume-based overhead assignment (allocation) method will tend to:

An activity that is performed to support the production of a new custom-order product is a(n):

Using ABC, how much product-level overhead is assigned to the current order for Men's Razors?

What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

The total overhead of Job #971 under the ABC costing is:

Using ABC, how much other overhead is assigned to the order?

A firm has many products, some produced in an automated production process and some produced in a manual production process. Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

Effective implementation of activity-based costing (ABC) requires:

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 5: Activity-Based Costing and Customer Profitability Analysis

If a costing system uses a single base to allocate overhead costs that are results of several production activities:

Using activity-based costing, applied materials handling factory overhead for the 1,000 laser printers order is:

Which of the following would not be considered a facility-level activity?

Cost to process monthly statements is an example of a:

Using ABC, the materials handling overhead cost assigned to Job #971 is:

Using activity-based costing, applied machinery overhead for the Great P model per unit is (rounded to the nearest cent):

Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent):

A company using a volume-based overhead assignment (allocation) method will tend to:

An activity that is performed to support the production of a new custom-order product is a(n):

Using ABC, how much product-level overhead is assigned to the current order for Men's Razors?

What is Nerrod's total sales-sustaining cost applicable to XBT as a customer?

The total overhead of Job #971 under the ABC costing is:

Using ABC, how much other overhead is assigned to the order?

A firm has many products, some produced in an automated production process and some produced in a manual production process. Using direct labor hours to assign manufacturing overhead to a product manufactured with a highly automated process is likely to:

Effective implementation of activity-based costing (ABC) requires:

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit Cvp Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters