Exam 8: Activity-Based Costing

Troxler Inc.produces various types of floor rugs with many different designs.They typically produce at least 200 rugs with a single machine setup.A cost incurred every time an individual rug is produced is called a(n):

Traditional overhead allocation methods as opposed to activity-based allocation methods work best when:

Which of the following would be the least likely cost driver for an activity such as the usage of factory supplies?

Which of the following statements associated with traditional overhead allocation is true?

Herndon Brothers Inc.produces a variety of 'all natural' household cleaning supplies that it manufactures and distributes to various grocery stores along the west coast.Which of the following types of costs would most likely be a facility-level cost?

Wake Construction Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes. Last year, the company incurred $200 000 in overhead costs. After implementing activity-based costing (ABC), the company’s accountant identified the following related information: Proportion Activity Allocation Base of Overhead Cost Material delivery and handling Number of deliveries 30\% Inspections Number of inspections 25\% Supervision Hours of supervisor time 20\% Purchasing Number of purchase orders 25\% The number of activities for standard and custom-made cabinets is as follows: Number of deliveries 200 100 Number of inspections 600 400 Hours of supervisor time 1800 2200 Number of purchase orders 1000 1000 During the past year, Wake accepted a customer order for a set of custom-made cabinets that would require the following: Direct labour cost ( 25 hours at \ 15 per hour) \ 75 Direct materials (wood) ( 900 at \ 3.00 per foot) \ 2700 Number of deliveries 3 Number of inspections 5 Hours of supervisor time 3 -What is the total product (manufacturing)cost for the above customer order?

Which of the following would be the least likely cost driver for an activity such as product testing?

Ken's Carpets sells carpet for both residential and business use.To better estimate costs,the company recently adopted an activity-based costing system.Last year,the company incurred $300 000 in overhead costs.Based on an intense study of their company,the following activities,allocation bases,and percentages of overhead costs were determined: Activity Allocation Base Proportion of Overhead Cost Purchasing Number of purchase orders 25\% Materials processing Number of square feet 50\% Sales Numher of sales orders 25\% The number of activities for residential and business is as follows: Number of purchase orders 700 500 Number of square feet 4000000 2000000 Numher of sales ntrlere 400 100 Required: A. Calculate the tatal cverhead that should be allocated to each af the three actrites. B. Calculate the averhead rates for each of the three activities. C. If a particular residential job reqquires 4 purchase arders and 1 sales arder far tatal af 1500 square feet of carpet how much cverhead should be allocated to the job?

Which of the following statements accurately describes the basis of activity-based costing?

Aunt Lucy’s Candies Aunt Lucy’s Candies sells standard and premium chocolate confectionary through its catalogue business. Many of the confectionary are sold in bulk to other companies. Last year, the company incurred $300 000 in overhead costs. After implementing activity-based costing (ABC), the company’s controller identified the following information: Activity Allocation Base Proportion of Overhead Cost Purchasing Number of purchase orders 30\% Processing Number of units 50\% Sales Number of sales orders 20\% The number of activities for standard and premium confectionary is as follows: Number of purchase orders 4000 2000 Number of units 200000 100000 Number of sales orders 3000 1000 -What is the overhead rate for the sales activity?

Johnson Manufacturing Johnson Manufacturing anticipates incurring $500 000 in overhead costs this year. After implementing activity-based costing (ABC), the company’s controller identified the following related information: Activity Allocation Base Proportion of Overhead Cost Purchasing Number of purchase orders 20\% Machine setups Number of setups 15\% Production Number of machine hours 65\% The number of activities expected is as follows: Total number of purchase orders 4000 Total number of setups 2000 Total number of machine hours 10000 -How much total overhead would be applied to a job that required 1 purchase order,5 setups,and 300 machine hours?

Which of the following statements comparing traditional and activity-based costing (ABC)is true?

Which of the following would most likely be a unit-level cost?

Johnson Manufacturing Johnson Manufacturing anticipates incurring $500 000 in overhead costs this year. After implementing activity-based costing (ABC), the company’s controller identified the following related information: Activity Allocation Base Proportion of Overhead Cost Purchasing Number of purchase orders 20\% Machine setups Number of setups 15\% Production Number of machine hours 65\% The number of activities expected is as follows: Total number of purchase orders 4000 Total number of setups 2000 Total number of machine hours 10000 -What will be the overhead rate for the production activity?

In activity-based costing (ABC),the wage paid to an assembly-line worker would most likely be classified as:

What are the benefits and limitations of activity-based costing (ABC)systems?

Can activity-based costing (ABC)be used by service companies? If so,is the implementation of an ABC system in a service company different than that of a manufacturing company?

Which of the following statements regarding activity-based costing (ABC)is true?

What should be done in Stage 1 in an activity-based costing (ABC)system?

Activity-based costing (ABC):