Question 1

Why may departmental overhead rates NOT correctly assign overhead costs?

Accepted Answer

A)  Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials. 
B)  Because of the high correlation between direct labour hours and the incurrence of overhead costs. 
C)  Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced,lot size,or complexity of production. 
D)  Because of the difficulties associated with identifying cost pools for the first stage of the allocation process. 
A)  Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials. 
B)  Because of the high correlation between direct labour hours and the incurrence of overhead costs. 
C)  Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced,lot size,or complexity of production. 
D)  Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.

Question 2

Fife & Jones PLC,a consulting firm,uses an activity-based costing in which there are three activity cost pools.The company has provided the following data concerning its costs and its activity-based costing system:   
Distribution of Resource Consumption:   
Required:
a)How much cost,in total,would be allocated to the Working On Engagements activity cost pool?
b)How much cost,in total,would be allocated to the Business Development activity cost pool?
c)How much cost,in total,would be allocated to the Other activity cost pool?

Accepted Answer

All three parts can be answere

Question 3

Eaker Company uses activity-based costing to compute product costs for external reports.The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool.Estimated costs and activities for the current year are presented below for the three activity centres:   
Actual costs and activities for the current year were as follows:   
Required:
a)How much total overhead was applied to products during the year?
b)By how much was overhead overapplied or underapplied? (Be sure to clearly label your answer as to whether the overhead was overapplied or underapplied for each activity centre as well as for the total. )

Accepted Answer

a)The overhead rates for each activity c

Question 4

Which of the following would be classified as a product-level activity?

Accepted Answer

A)  Machine setup for a batch of a standard product. 
B)  Cafeteria facilities available to and used by all employees. 
C)  Human resource management. 
D)  Advertising a product. 
A)  Machine setup for a batch of a standard product. 
B)  Cafeteria facilities available to and used by all employees. 
C)  Human resource management. 
D)  Advertising a product.

Question 5

Mike Kyekyeku is a sole proprietorship that provides consulting and tax preparation services to its clients.Mike charges a fee of $100 per hour for each service and can devote a maximum of 4,000 hours annually to his clients.He reported the following revenues and expenses for 2014:   
Being an accountant,Mike kept good records of the following data for 2014:
(i).   
(ii).   
Required:
a.Should Mike emphasize one service more than the other if Mike were to allocate all the overhead costs using direct-labours as the only overhead cost driver (1,300 for Tax and 2,700 for Consulting)? Support your decision with the relevant calculations and/or analysis.
b.Identify each of the three cost drivers as either unit-level,batch-level,product-level,customer-level,or organization-sustaining.
c.How might Mike's product/service emphasis decision in Part a above be altered if he were to allocate all the overhead costs using activity-based costing and the three cost drivers,that is,number of clients,number of transactions with clients,and computer hours? Show all your supporting calculations and/or analysis,including any necessary explanation.

Accepted Answer

a.
Decision:No
Analysis and/or calculati

Question 6

In the second-stage allocation in activity-based costing,activity rates are used to apply costs to products,customers,and other cost objects.

Accepted Answer

A) True 
 B)False

Question 7

What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

Accepted Answer

A)  $2.48. 
B)  $2.75. 
C)  $2.83. 
D)  $3.03. 
A)  $2.48. 
B)  $2.75. 
C)  $2.83. 
D)  $3.03.

Question 8

Unit-level production activities are performed each time a unit is made.

Accepted Answer

A) True 
 B)False

Question 9

What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

Accepted Answer

A)  $11,100. 
B)  $12,950. 
C)  $13,800. 
D)  $14,800. 
A)  $11,100. 
B)  $12,950. 
C)  $13,800. 
D)  $14,800.

Question 10

The cost per unit of Product A is closest to which of the following?

Accepted Answer

A)  $27.91. 
B)  $56.38. 
C)  $141.04. 
D)  $70.52. 
A)  $27.91. 
B)  $56.38. 
C)  $141.04. 
D)  $70.52.

Question 11

Hasty Hardwood Floors installs oak and other hardwood floors in homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity-based costing system:   
Distribution of Resource Consumption:   
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:   
A "square" is a measure of area that is roughly equivalent to 1,000 square metres.
Required:
a)Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:

Accepted Answer

@#IMG-DLM& 
b)Compute the activity rates (i.e. ,co

Question 12

What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

Accepted Answer

A)  $3.93. 
B)  $4.71. 
C)  $4.93. 
D)  $5.50. 
A)  $3.93. 
B)  $4.71. 
C)  $4.93. 
D)  $5.50.

Question 13

The predetermined overhead rate under the traditional costing system is closest to which of the following?

Accepted Answer

A)  $13.17. 
B)  $21.60. 
C)  $37.46. 
D)  $270.66. 
A)  $13.17. 
B)  $21.60. 
C)  $37.46. 
D)  $270.66.

Question 14

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to products before they are assigned to customers.

Accepted Answer

A) True 
 B)False

Question 15

What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

Accepted Answer

A)  $1.35. 
B)  $1.73. 
C)  $1.79. 
D)  $2.10. 
A)  $1.35. 
B)  $1.73. 
C)  $1.79. 
D)  $2.10.

Question 16

The cost per unit of Product A under activity-based costing is closest to which of the following?

Accepted Answer

A)  $6.00. 
B)  $8.63. 
C)  $9.60. 
D)  $13.80. 
A)  $6.00. 
B)  $8.63. 
C)  $9.60. 
D)  $13.80.

Question 17

The predetermined overhead rate (i.e. ,activity rate)for Activity 1 under the activity-based costing system is closest to which of the following?

Accepted Answer

A)  $13.17. 
B)  $24.15. 
C)  $28.97. 
D)  $83.66. 
A)  $13.17. 
B)  $24.15. 
C)  $28.97. 
D)  $83.66.

Question 18

Which of the following types of costs present the greatest difficulty in efforts to trace them to products and services?

Accepted Answer

A)  Unit-level costs 
B)  Batch-level costs 
C)  Product/service-level costs 
D)  Organization-sustaining costs 
A)  Unit-level costs 
B)  Batch-level costs 
C)  Product/service-level costs 
D)  Organization-sustaining costs

Question 19

(Appendix 7A)The unit product cost of product U86Y under the company's traditional costing system is closest to:

Accepted Answer

A)  $71.15 
B)  $55.50 
C)  $75.86 
D)  $38.00 
A)  $71.15 
B)  $55.50 
C)  $75.86 
D)  $38.00

Question 20

What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

Accepted Answer

A)  $24.00. 
B)  $26.50. 
C)  $27.00. 
D)  $30.00. 
A)  $24.00. 
B)  $26.50. 
C)  $27.00. 
D)  $30.00.

Why may departmental overhead rates NOT correctly assign overhead costs?

Which of the following would be classified as a product-level activity?

In the second-stage allocation in activity-based costing,activity rates are used to apply costs to products,customers,and other cost objects.

What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

Unit-level production activities are performed each time a unit is made.

What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

The cost per unit of Product A is closest to which of the following?

What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

The predetermined overhead rate under the traditional costing system is closest to which of the following?

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to products before they are assigned to customers.

What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

The cost per unit of Product A under activity-based costing is closest to which of the following?

The predetermined overhead rate (i.e. ,activity rate)for Activity 1 under the activity-based costing system is closest to which of the following?

Which of the following types of costs present the greatest difficulty in efforts to trace them to products and services?

(Appendix 7A)The unit product cost of product U86Y under the company's traditional costing system is closest to:

What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

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Exam 7: Activity-Based Costing: a Tool to Aid Decision Making

Why may departmental overhead rates NOT correctly assign overhead costs?

Which of the following would be classified as a product-level activity?

In the second-stage allocation in activity-based costing,activity rates are used to apply costs to products,customers,and other cost objects.

What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

Unit-level production activities are performed each time a unit is made.

What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

The cost per unit of Product A is closest to which of the following?

What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

The predetermined overhead rate under the traditional costing system is closest to which of the following?

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to products before they are assigned to customers.

What would be the total overhead cost per bouquet according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Making Bouquets activity cost pool?

The cost per unit of Product A under activity-based costing is closest to which of the following?

The predetermined overhead rate (i.e. ,activity rate)for Activity 1 under the activity-based costing system is closest to which of the following?

Which of the following types of costs present the greatest difficulty in efforts to trace them to products and services?

(Appendix 7A)The unit product cost of product U86Y under the company's traditional costing system is closest to:

What would be the total overhead cost per delivery according to the activity-based costing system,rounded to the nearest whole cent? In other words,what would be the overall activity rate for the Deliveries activity cost pool?

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Variable Costing: a Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis Online

Filters