Question 1

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

Accepted Answer

A) True 
 B)False

Question 2

Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the Assembly Department, and 3.5 direct labor hours and 0.5 machine hours in the Finishing Department?

Accepted Answer

A)  $13.00. 
B)  $10.50. 
C)  $2.50. 
D)  $11.00. 
E)  $7.50. 
A)  $13.00. 
B)  $10.50. 
C)  $2.50. 
D)  $11.00. 
E)  $7.50.

Question 3

The ________ overhead rate method uses a different overhead rate for each production department.

Accepted Answer

The answer of The ________ overhead rate method uses a...

Question 4

Consider the following activities that take place in a medical clinic. 
(a.) Cleaning exam rooms.
(b)) Heating and air conditioning the clinic.
(c)) Sending blood work to a lab.
(d)) Dispensing medicine.
Which of the following statements is true?

Accepted Answer

A)  Cleaning rooms and heating the clinic are both unit level activities. 
B)  Sending blood work to the lab is a batch level activity. 
C)  Sending blood work and dispensing medicine are both batch level activities. 
D)  Cleaning rooms and dispensing medication are both product or service level activities. 
E)  Heating the clinic and dispensing medication are both batch level activities. 
A)  Cleaning rooms and heating the clinic are both unit level activities. 
B)  Sending blood work to the lab is a batch level activity. 
C)  Sending blood work and dispensing medicine are both batch level activities. 
D)  Cleaning rooms and dispensing medication are both product or service level activities. 
E)  Heating the clinic and dispensing medication are both batch level activities.

Question 5

Facility-level costs vary with the number of units or batches produced.

Accepted Answer

A) True 
 B)False

Question 6

Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Accepted Answer

A)  $41,667 
B)  $288,900 
C)  $256,800 
D)  $146,700 
E)  $323,100 
A)  $41,667 
B)  $288,900 
C)  $256,800 
D)  $146,700 
E)  $323,100

Question 7

Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

Accepted Answer

A)  Departmental overhead allocation rates 
B)  Plantwide overhead rate 
C)  Activity-based costing 
D)  Traditional costing system 
A)  Departmental overhead allocation rates 
B)  Plantwide overhead rate 
C)  Activity-based costing 
D)  Traditional costing system

Question 9

Activities are the cost objects of the first stage of ABC.

Accepted Answer

A) True 
 B)False

Question 10

When products differ in batch size and complexity, they usually consume different amounts of overhead resources.

Accepted Answer

A) True 
 B)False

Question 11

What are the major advantages of using a plantwide overhead rate?

Accepted Answer

The major advantages of using a plantwid

Question 12

A company identified the following partial list of activities, costs, and activity drivers expected for the next year:     Calculate activity rates for each of the three activities using activity-based costing (ABC).

Accepted Answer

A)  Extrusion: $304 per batch; handling: $32 per unit; packaging: $.03 per unit. 
B)  Extrusion: $88 per batch; handling: $32 per order; packaging: $.03 per unit. 
C)  Extrusion: $88 per order; handling: $32 per unit; packaging: $.03 per batch. 
D)  Extrusion: $418 per batch; handling: $117.33 per order; packaging: $.054 per unit. 
E)  Extrusion: $118.13 per batch; handling: $44 per order; packaging: $.0675 per unit. 
A)  Extrusion: $304 per batch; handling: $32 per unit; packaging: $.03 per unit. 
B)  Extrusion: $88 per batch; handling: $32 per order; packaging: $.03 per unit. 
C)  Extrusion: $88 per order; handling: $32 per unit; packaging: $.03 per batch. 
D)  Extrusion: $418 per batch; handling: $117.33 per order; packaging: $.054 per unit. 
E)  Extrusion: $118.13 per batch; handling: $44 per order; packaging: $.0675 per unit.

Question 13

ABC systems ________.

Accepted Answer

A)  usually will undercost complicated or complex products 
B)  will limit cost drivers to units of output 
C)  highlight the different levels of activities 
D)  will allocate costs based on the overall level of activity 
A)  usually will undercost complicated or complex products 
B)  will limit cost drivers to units of output 
C)  highlight the different levels of activities 
D)  will allocate costs based on the overall level of activity

Question 14

Blast Rocket Company manufactures candy-coated popcorn treats that go through two operations, popping and baking, before they are complete. Expected costs and activities for the two departments are shown in the following table
:
   a. Compute a departmental overhead rate for the popping department based on direct labor hours.
b. Compute a departmental overhead rate for the baking department based on machine hours.

Accepted Answer

a. $357,000/238,000

Question 15

Slosh, Inc. produces washing machines that require two processes, assembling and finishing, to complete. The company's bestselling machine is the commercial washer. Information related to the 500 commercial washers produced annually is shown below.
   Slosh's total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on direct labor hours in the Assembling Department and machine hours in the Finishing Department.
   Determine the total product cost of this product line and each individual commercial washer.

Accepted Answer

Assembling Dept. overhead: $4,000,000/50

Question 16

Red Raider Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 400,000 units are expected to be produced requiring 1.2 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

Accepted Answer

A)  $19.00 per unit 
B)  $139.00 per unit 
C)  $22.68 per unit 
D)  $166.80 per unit 
E)  None of the choices 
A)  $19.00 per unit 
B)  $139.00 per unit 
C)  $22.68 per unit 
D)  $166.80 per unit 
E)  None of the choices

Question 17

A single cost pool is used when allocating overhead using the activity-based costing method.

Accepted Answer

A) True 
 B)False

Question 18

Turtle Company produces t-shirts that go through two operations, cutting and sewing, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the cutting department based on direct labor hours is $2.69 per direct labor hour (rounded to two decimals).

Accepted Answer

A) True 
 B)False

Question 19

A company allocates $7.50 overhead to products based on the number of direct labor hours worked. The company uses a plantwide overhead rate with direct labor hours as the allocation base. Given the amounts below, how many direct labor hours does the company expect in department 2?

Accepted Answer

A)  9,914 DLH 
B)  6,612 DLH 
C)  3,109 DLH 
D)  7,454 DLH 
E)  16,254 DLH 
A)  9,914 DLH 
B)  6,612 DLH 
C)  3,109 DLH 
D)  7,454 DLH 
E)  16,254 DLH

Question 20

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:   How much overhead will be assigned to Product B using activity-based costing?

Accepted Answer

A)  $56,500 
B)  $78,000 
C)  $62,500 
D)  $197,000 
E)  $70,000 
A)  $56,500 
B)  $78,000 
C)  $62,500 
D)  $197,000 
E)  $70,000

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

The ________ overhead rate method uses a different overhead rate for each production department.

Consider the following activities that take place in a medical clinic. (a.) Cleaning exam rooms. (b)) Heating and air conditioning the clinic. (c)) Sending blood work to a lab. (d)) Dispensing medicine. Which of the following statements is true?

Facility-level costs vary with the number of units or batches produced.

Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.

Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

Activities are the cost objects of the first stage of ABC.

When products differ in batch size and complexity, they usually consume different amounts of overhead resources.

What are the major advantages of using a plantwide overhead rate?

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: Calculate activity rates for each of the three activities using activity-based costing (ABC).

ABC systems ________.

Red Raider Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 400,000 units are expected to be produced requiring 1.2 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A single cost pool is used when allocating overhead using the activity-based costing method.

A company allocates $7.50 overhead to products based on the number of direct labor hours worked. The company uses a plantwide overhead rate with direct labor hours as the allocation base. Given the amounts below, how many direct labor hours does the company expect in department 2?

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: How much overhead will be assigned to Product B using activity-based costing?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

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Exam 4: Activity Based Costing and Analysis

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

The ________ overhead rate method uses a different overhead rate for each production department.

Consider the following activities that take place in a medical clinic. (a.) Cleaning exam rooms. (b)) Heating and air conditioning the clinic. (c)) Sending blood work to a lab. (d)) Dispensing medicine. Which of the following statements is true?

Facility-level costs vary with the number of units or batches produced.

Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.

Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

Activities are the cost objects of the first stage of ABC.

When products differ in batch size and complexity, they usually consume different amounts of overhead resources.

What are the major advantages of using a plantwide overhead rate?

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: Calculate activity rates for each of the three activities using activity-based costing (ABC).

ABC systems ________.

Red Raider Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 400,000 units are expected to be produced requiring 1.2 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A single cost pool is used when allocating overhead using the activity-based costing method.

A company allocates $7.50 overhead to products based on the number of direct labor hours worked. The company uses a plantwide overhead rate with direct labor hours as the allocation base. Given the amounts below, how many direct labor hours does the company expect in department 2?

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: How much overhead will be assigned to Product B using activity-based costing?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Analyzing for Business Transactions

Partnership Accounting

Filters