Question 1

Batch-level costs do not vary with the number of units produced.

Accepted Answer

A) True 
 B)False

Question 2

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The activity rates and activity levels for each of the company's three activity cost pools are shown below.   Compute the company's budgeted cost for each of the three activities under activity-based costing.

Accepted Answer

The answer of A company uses activity-based costing to determine...

Question 3

Because departmental overhead costs are allocated based on measures closely related to production volume, they accurately assign overhead, such as utility costs.

Accepted Answer

A) True 
 B)False

Question 4

The following data relates to Patterson Company's estimated amounts for next year.   What is the company's plantwide overhead rate if direct labor hours are the allocation base?
(Round to two decimal places.)

Accepted Answer

A)  $3.45 per DLH 
B)  $5.45 per DLH 
C)  $0.29 per DLH 
D)  $0.26 per DLH 
E)  $0.20 per DLH 
A)  $3.45 per DLH 
B)  $5.45 per DLH 
C)  $0.29 per DLH 
D)  $0.26 per DLH 
E)  $0.20 per DLH

Question 5

A company's total expected overhead costs and related overhead data are shown below.   a. Compute estimated manufacturing overhead costs for Department A.
b. Compute estimated manufacturing overhead costs for Department B.

Accepted Answer

a. $2.40 per DLH x 75,000 DLH

Question 6

Would the following activities at a manufacturer of shampoo be best classified as unit-level, batch-level, product-level, or facility level activities?

Accepted Answer

A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D 
A)  Choice A 
B)  Choice B 
C)  Choice C 
D)  Choice D

Question 7

A company produces garden benches that go through two operations, operation 1A1 and operation 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.

Accepted Answer

A) True 
 B)False

Question 8

Over recent decades, overhead costs have steadily increased while direct labor costs have decreased as a percentage of total manufacturing costs.

Accepted Answer

A) True 
 B)False

Question 9

Product costs consist of direct labor, direct materials, and ________.

Accepted Answer

manufactur

Question 10

Product design costs are an example of a unit level activity.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following are advantages of using the plantwide overhead rate method?

Accepted Answer

A)  The use of cost pools is considerably more accurate than other overhead allocations. 
B)  The necessary information is readily available. 
C)  It is more accurate than traditional overhead allocations. 
D)  Each department has its own overhead rate and its own allocation base. 
E)  It takes into account that when products differ in batch size and complexity, they usually consume different amounts of overhead resources. 
A)  The use of cost pools is considerably more accurate than other overhead allocations. 
B)  The necessary information is readily available. 
C)  It is more accurate than traditional overhead allocations. 
D)  Each department has its own overhead rate and its own allocation base. 
E)  It takes into account that when products differ in batch size and complexity, they usually consume different amounts of overhead resources.

Question 12

Which of the following is a disadvantage of the departmental overhead rate method?

Accepted Answer

A)  The departmental overhead rate method assigns overhead on the basis of volume-related measures. 
B)  The departmental overhead rate method is more refined than the plantwide overhead rate method. 
C)  The departmental overhead rate method does not assign overhead on the basis of volume-related measures. 
D)  The departmental overhead rate method is simpler and less costly to implement than the plantwide rate method. 
E)  There are no disadvantages of the departmental overhead rate method. 
A)  The departmental overhead rate method assigns overhead on the basis of volume-related measures. 
B)  The departmental overhead rate method is more refined than the plantwide overhead rate method. 
C)  The departmental overhead rate method does not assign overhead on the basis of volume-related measures. 
D)  The departmental overhead rate method is simpler and less costly to implement than the plantwide rate method. 
E)  There are no disadvantages of the departmental overhead rate method.

Question 13

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking .75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

Accepted Answer

A)  $11.57 per unit 
B)  $8.17 per unit 
C)  $5.61 per unit 
D)  $12.43 per unit 
E)  $10.89 per unit 
A)  $11.57 per unit 
B)  $8.17 per unit 
C)  $5.61 per unit 
D)  $12.43 per unit 
E)  $10.89 per unit

Question 14

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

Accepted Answer

A)  ABC ignores the allocation of marketing costs. 
B)  ABC classifies some indirect costs as direct costs. 
C)  ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. 
D)  Activities are the cost objects of the second stage of ABC. 
A)  ABC ignores the allocation of marketing costs. 
B)  ABC classifies some indirect costs as direct costs. 
C)  ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. 
D)  Activities are the cost objects of the second stage of ABC.

Question 15

Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed below. Next year the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.   Compute the plantwide overhead rate for next year.

Accepted Answer

A)  $28.00 per DLH. 
B)  $37.80 per DLH. 
C)  $1.35 per DLH. 
D)  $5.00 per DLH. 
E)  $.20 per DLH. 
A)  $28.00 per DLH. 
B)  $37.80 per DLH. 
C)  $1.35 per DLH. 
D)  $5.00 per DLH. 
E)  $.20 per DLH.

Question 16

A company identified the following partial list of activities, costs, and activity drivers expected for the next year:     How much overhead in total will be assigned to the Product A line using activity-based costing?

Accepted Answer

A)  $42,500. 
B)  $132,900. 
C)  $90,400. 
D)  $66,000. 
E)  $66,450. 
A)  $42,500. 
B)  $132,900. 
C)  $90,400. 
D)  $66,000. 
E)  $66,450.

Question 17

Bark Mode, Incorporated produces and distributes two types of security systems, Standard and Deluxe. Budgeted cost and activity for each of its three activity cost pools are shown below.
The company plans to produce and sell 120,000 standard units and 80,000 deluxe units.   a. Compute the approximate overhead cost per unit of standard under activity-based costing.
b. Compute the approximate overhead cost per unit of deluxe under activity-based costing.

Accepted Answer

The answer of Bark Mode, Incorporated produces and distributes two...

Question 18

Unit-level costs vary with the number of units produced.

Accepted Answer

A) True 
 B)False

Question 19

________ costs support the company as a whole.

Accepted Answer

A)  Batch-level 
B)  Product-level 
C)  Unit-level 
D)  Facility-level 
A)  Batch-level 
B)  Product-level 
C)  Unit-level 
D)  Facility-level

Question 20

Departments are the cost objects when the plantwide overhead rate method is used.

Accepted Answer

A) True 
 B)False

Batch-level costs do not vary with the number of units produced.

Because departmental overhead costs are allocated based on measures closely related to production volume, they accurately assign overhead, such as utility costs.

The following data relates to Patterson Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round to two decimal places.)

A company's total expected overhead costs and related overhead data are shown below. a. Compute estimated manufacturing overhead costs for Department A. b. Compute estimated manufacturing overhead costs for Department B.

Would the following activities at a manufacturer of shampoo be best classified as unit-level, batch-level, product-level, or facility level activities?

Over recent decades, overhead costs have steadily increased while direct labor costs have decreased as a percentage of total manufacturing costs.

Product costs consist of direct labor, direct materials, and ________.

Product design costs are an example of a unit level activity.

Which of the following are advantages of using the plantwide overhead rate method?

Which of the following is a disadvantage of the departmental overhead rate method?

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking .75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

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

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: How much overhead in total will be assigned to the Product A line using activity-based costing?

Unit-level costs vary with the number of units produced.

________ costs support the company as a whole.

Departments are the cost objects when the plantwide overhead rate method is used.

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

Batch-level costs do not vary with the number of units produced.

Because departmental overhead costs are allocated based on measures closely related to production volume, they accurately assign overhead, such as utility costs.

The following data relates to Patterson Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round to two decimal places.)

A company's total expected overhead costs and related overhead data are shown below. a. Compute estimated manufacturing overhead costs for Department A. b. Compute estimated manufacturing overhead costs for Department B.

Would the following activities at a manufacturer of shampoo be best classified as unit-level, batch-level, product-level, or facility level activities?

Over recent decades, overhead costs have steadily increased while direct labor costs have decreased as a percentage of total manufacturing costs.

Product costs consist of direct labor, direct materials, and ________.

Product design costs are an example of a unit level activity.

Which of the following are advantages of using the plantwide overhead rate method?

Which of the following is a disadvantage of the departmental overhead rate method?

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking .75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

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

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: How much overhead in total will be assigned to the Product A line using activity-based costing?

Unit-level costs vary with the number of units produced.

________ costs support the company as a whole.

Departments are the cost objects when the plantwide overhead rate method is used.

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