Exam 4: Activity-Based Costing

Companies use three common approaches to assign overhead costs to products-plantwide overhead rate, departmental overhead rates, and activity-based costing.The most accurate of these three approaches is the plantwide overhead rate.

Doles Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Data concerning two products appear below: Required: How much overhead cost would be assigned to each of the two products using the company's activity-based costing system?

Salvatori, Inc., manufactures and sells two products: Product A4 and Product Q5.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product A4 under activity-based costing is closest to:

The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:

Faiella, Inc., manufactures and sells two products: Product S9 and Product G3.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $21.90 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method. b.How much overhead would be applied to each product under the company's traditional costing method? c.Determine the unit product cost of each product under the company's traditional costing method. d.Compute the activity rates under the activity-based costing system. e.Determine how much overhead would be assigned to each product under the activity-based costing system. f.Determine the unit product cost of each product under the activity-based costing method. g.What is the difference between the overhead per unit under the traditional costing method and the activity-based costing system for each of the two products? h.What is the difference between the unit product costs under the traditional costing method and the activity-based costing system for each of the two products?

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product P9 would be closest to:

The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Activity-based management involves focusing on activities to eliminate waste, decrease processing time, and reduce defects.

The unit product cost of Product R3 under activity-based costing is closest to:

The overhead applied to each unit of Product I4 under activity-based costing is closest to:

The unit product cost of Product I9 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

The activity rate for the General Factory activity cost pool under activity-based costing is closest to:

The overhead applied to each unit of Product V8 under activity-based costing is closest to:

In activity-based costing, each major activity has its own overhead cost pool, its own activity measure, and its own overhead rate.

The activity rate for the General Factory activity cost pool under activity-based costing is closest to:

The unit product cost of Product A4 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Dunagin, Inc., manufactures and sells two products: Product U2 and Product H9.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:

The overhead cost per unit of Product B under the traditional costing system is closest to:

Daba Company manufactures two products, Product F and Product G.The company expects to produce and sell 1,400 units of Product F and 1,800 units of Product G during the current year.The company uses activity-based costing to compute unit product costs for external reports.Data relating to the company's three activity cost pools are given below for the current year: Required: Using the activity-based costing approach, determine the overhead cost per unit for each product.

The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to: