Question 1

The unit of product is the cost object when the plantwide overhead rate method is used.

Accepted Answer

A) True 
 B)False

Question 2

A company expects next year's overhead costs to be $400,000. During this time, the company also expects to produce 1,000,000 units, have 200,000 direct labor hours, and 800,000 machine hours.
Make the following independent calculations.
a. Compute a plantwide overhead rate using units of production as the allocation base.
b. Compute a plantwide overhead rate using direct labor hours as the allocation base.
c. Compute a plantwide overhead rate using machine hours as the allocation base.

Accepted Answer

a. $400,000/1,000,000 units =

Question 3

Which of the following would not be considered a product cost?

Accepted Answer

A)  Direct labor costs. 
B)  Factory supervisor's salary. 
C)  Factory line worker's salary. 
D)  Cost accountant's salary. 
E)  Manufacturing overhead costs. 
A)  Direct labor costs. 
B)  Factory supervisor's salary. 
C)  Factory line worker's salary. 
D)  Cost accountant's salary. 
E)  Manufacturing overhead costs.

Question 4

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Accepted Answer

A)  21 MH per unit of RST. 
B)  2 MH per unit of RST. 
C)  20 MH per unit of RST. 
D)  37.5 MH per unit of RST. 
E)  38 MH per unit of RST. 
A)  21 MH per unit of RST. 
B)  2 MH per unit of RST. 
C)  20 MH per unit of RST. 
D)  37.5 MH per unit of RST. 
E)  38 MH per unit of RST.

Question 5

Put the following ABC implementation steps in order ________. A Use the activity overhead rates to assign overhead costs to cost objects.
B Compute the allocation rates.
C Trace overhead costs to cost pools.
D Identify the activities and the overhead costs they cause.

Accepted Answer

A)  DACB 
B)  DBCA 
C)  BADC 
D)  CDAB 
E)  DCBA 
A)  DACB 
B)  DBCA 
C)  BADC 
D)  CDAB 
E)  DCBA

Question 6

Aurora Corporation produces outdoor security lighting products. All products go through three processes before completion. Use the expected overhead costs and related data shown below to compute departmental overhead rates based on machine hours in Department A1A; based on direct labor hours in Department B2B; and machine hours in Department C3C.

Accepted Answer

A)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH. 
B)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH. 
C)  Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
D)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
E)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH. 
A)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH. 
B)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH. 
C)  Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
D)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
E)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.

Question 7

Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours.

Accepted Answer

A)  $1.50 per DLH. 
B)  $5.00 per DLH. 
C)  $0.75 per DLH. 
D)  $0.50 per DLH. 
E)  $2.08 per DLH. 
A)  $1.50 per DLH. 
B)  $5.00 per DLH. 
C)  $0.75 per DLH. 
D)  $0.50 per DLH. 
E)  $2.08 per DLH.

Question 8

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:   Which of the following statements is true regarding this company's activity rates?

Accepted Answer

A)  The activity rate under the activity-based costing system for Activity 2 is $2.00. 
B)  The activity rate under the activity-based costing system for Activity 2 is $16.00. 
C)  The activity rate under the activity-based costing system for Activity 2 is $1.50. 
D)  The activity rate under the activity-based costing system for Activity 2 is $19.50. 
E)  The activity rate under the activity-based costing system for Activity 2 is $2.81. 
A)  The activity rate under the activity-based costing system for Activity 2 is $2.00. 
B)  The activity rate under the activity-based costing system for Activity 2 is $16.00. 
C)  The activity rate under the activity-based costing system for Activity 2 is $1.50. 
D)  The activity rate under the activity-based costing system for Activity 2 is $19.50. 
E)  The activity rate under the activity-based costing system for Activity 2 is $2.81.

Question 9

A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:   Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing?

Accepted Answer

A)  $8.00 
B)  $9.00 
C)  $10.00 
D)  $12.00 
E)  $4.00 
A)  $8.00 
B)  $9.00 
C)  $10.00 
D)  $12.00 
E)  $4.00

Question 10

Activity-based costing eliminates the need for overhead allocation rates.

Accepted Answer

A) True 
 B)False

Question 11

Kinetic Company estimates that overhead costs for the next year will be $1,600,000 for indirect labor and $400,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 50,000 direct labor hours are planned for this next year, then the plantwide overhead rate is $.025 per direct labor hour.

Accepted Answer

A) True 
 B)False

Question 12

Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?

Accepted Answer

Overhead allocation under ABC

Question 13

Explain some of the disadvantages of the departmental overhead rate method.

Accepted Answer

Even though the departmental overhead ra

Question 14

Which of the following would not be considered a product cost?

Accepted Answer

A)  Direct material costs. 
B)  Factory supervisor's salary. 
C)  Direct labor costs. 
D)  Budget accountant's salary. 
E)  Manufacturing overhead costs. 
A)  Direct material costs. 
B)  Factory supervisor's salary. 
C)  Direct labor costs. 
D)  Budget accountant's salary. 
E)  Manufacturing overhead costs.

Question 15

Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below:   Freeze Frame's total expected overhead costs and related overhead data are shown in the following table:   a. Compute a departmental overhead rate for department A based on machine hours.
b. How much overhead is associated with model 789 from department A?
c. Compute a departmental overhead rate for department B based on direct labor hours.
d. How much overhead is associated with model 789 from department B?
e. Compute a departmental overhead rate for department C based on machine hours.
f. How much overhead is associated with model 789 from department C?
g. What is the per unit cost of the 550,000 units of model 789?

Accepted Answer

a. $540,000/67,500 MH = $8 per MH
b. ($8

Question 16

Product-level costs do not vary with the number of units or batches produced.

Accepted Answer

A) True 
 B)False

Question 17

All of the following are examples of Facility-level costs except:

Accepted Answer

A)  Costs of cleaning the workplace. 
B)  Costs of custodial work. 
C)  Costs of personnel support. 
D)  Costs of receiving shipments. 
E)  Costs of providing electricity. 
A)  Costs of cleaning the workplace. 
B)  Costs of custodial work. 
C)  Costs of personnel support. 
D)  Costs of receiving shipments. 
E)  Costs of providing electricity.

Question 18

Peterson Company estimates that overhead costs for the next year will be $6,520,000 for indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 140,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

Accepted Answer

A)  $0.02 per machine hour. 
B)  $50.50 per machine hour. 
C)  $45.75 per machine hour. 
D)  $3.93 per machine hour. 
E)  $0.25 per machine hour. 
A)  $0.02 per machine hour. 
B)  $50.50 per machine hour. 
C)  $45.75 per machine hour. 
D)  $3.93 per machine hour. 
E)  $0.25 per machine hour.

Question 19

A company estimates that overhead costs for the next year will be $7,200,000 for indirect labor, $400,000 for factory utilities, and $43,000 for depreciation on factory machinery. The company uses direct labor hours as its overhead allocation base. If 955,375 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

Accepted Answer

($7,200,000 + $400,0

Question 20

West Company estimates that overhead costs for the next year will be $5,240,000 for indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 150,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

Accepted Answer

A)  $.0259 per machine hour. 
B)  $34.93 per machine hour. 
C)  $38.60 per machine hour. 
D)  $3.67 per machine hour. 
E)  $.2727 per machine hour. 
A)  $.0259 per machine hour. 
B)  $34.93 per machine hour. 
C)  $38.60 per machine hour. 
D)  $3.67 per machine hour. 
E)  $.2727 per machine hour.

The unit of product is the cost object when the plantwide overhead rate method is used.

Which of the following would not be considered a product cost?

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Put the following ABC implementation steps in order ________. A Use the activity overhead rates to assign overhead costs to cost objects. B Compute the allocation rates. C Trace overhead costs to cost pools. D Identify the activities and the overhead costs they cause.

Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours.

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: Which of the following statements is true regarding this company's activity rates?

Activity-based costing eliminates the need for overhead allocation rates.

Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?

Explain some of the disadvantages of the departmental overhead rate method.

Which of the following would not be considered a product cost?

Product-level costs do not vary with the number of units or batches produced.

All of the following are examples of Facility-level costs except:

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

Exam 4: Activity Based Costing and Analysis

The unit of product is the cost object when the plantwide overhead rate method is used.

Which of the following would not be considered a product cost?

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Put the following ABC implementation steps in order ________. A Use the activity overhead rates to assign overhead costs to cost objects. B Compute the allocation rates. C Trace overhead costs to cost pools. D Identify the activities and the overhead costs they cause.

Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours.

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: Which of the following statements is true regarding this company's activity rates?

Activity-based costing eliminates the need for overhead allocation rates.

Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?

Explain some of the disadvantages of the departmental overhead rate method.

Which of the following would not be considered a product cost?

Product-level costs do not vary with the number of units or batches produced.

All of the following are examples of Facility-level costs except:

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