Question 1

If the direct labor time estimates are met, Kudzu will allocate $10.50 of overhead cost to each unit of Little X.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true with regard to the departmental overhead rate method?

Accepted Answer

A) It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments. 
B) It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments. 
C) Each department has the same rate for the same activity pool. 
D) It requires one overhead cost pool and one rate. 
E) It is synonymous with activity-based costing. 
A) It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments. 
B) It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments. 
C) Each department has the same rate for the same activity pool. 
D) It requires one overhead cost pool and one rate. 
E) It is synonymous with activity-based costing.

Question 3

The ________________________ overhead rate method uses multiple volume-based measures to allocate overhead costs to products.

Accepted Answer

The answer of The ________________________ overhead rate method uses multiple...

Question 4

Assume New Belgium Brewing Company manufactures and distributes three types of beer and that estimated per unit product costs and related information for the next year are shown in the following table:
 $$\begin{array} { | l | r | r | r | } 
\hline & \begin{array} { r } 
\text { Blue } \
\text { Paddle }
\end{array} & \text { Somersault } &  { \begin{array} { c } 
\text { Cocoa } \
\text { Mole Ale }
\end{array} } \
\hline \text { Cost data per urit: } & & & \
\hline \text { Direct materials } & \$ 100,000 & \$ 500,000 & \$ 750,000 \
\hline \text { Direct labor } & \$ 3,600 & \$ 4,800 & \$ 6,000 \
\hline \text { Overhead } & \$ 12,000 & \$ 16,000 & \$ 20,000 \
\hline \text { Total product cost per urit } & \$ 115,600 & \$ 520,800 & \$ 776,000 \
\hline & & & \
\hline \text { Machine hours per unit } & 30 \mathrm { MH } & 40 \mathrm { MH } & 50 \mathrm { MH } \
\hline \text { Nurnber of urits produced per year } & 30 \text { units } & \mathbf { 2 0 ~ u ni t s } & 10 \text { units } \
\hline
\end{array}$$ a.If New Belgium Brewing Company uses a plantwide overhead rate based on machine hours, what is the total product cost per unit of Cocoa Mole Ale?
b.Blue Paddle is a traditional brew made in large quantities with long production runs.Somersault is a seasonal beer made in small batches.Cocoa Mole Ale is a specialty beer also made in small batches.Which of the overhead allocation methods studied in this chapter would you recommend that New Belgium Brewing Company use and why?

Accepted Answer

a.
Total overhead:
= ($12,000 x 30 units

Question 5

The cost object of the plantwide overhead rate method is:

Accepted Answer

A) The unit of product. 
B) The production departments of the company. 
C) The production activities of the company. 
D) Manufacturing cost pools. 
E) the time period. 
A) The unit of product. 
B) The production departments of the company. 
C) The production activities of the company. 
D) Manufacturing cost pools. 
E) the time period.

Question 6

A _____________________ is a collection of costs that are related to the same or similar activity.

Accepted Answer

The answer of A _____________________ is a collection of costs...

Question 7

Upside Down, Incorporated designs custom storage spaces to eliminate clutter in both residential and business settings.The following data pertain to a recent reporting period:   Required
a.Use ABC to compute overhead rates for each activity.
b.Assign costs to a 3,000 square foot job that requires 70 contact hours, 20 design hours, and 14 days to complete.

Accepted Answer

None

Question 8

Examples of volume-related measures include direct labor hours, direct labor cost dollars, and machine hours.

Accepted Answer

A) True 
 B)False

Question 9

A company estimates that costs for the next year will be $600,000 for indirect labor, $40,000 for factory utilities, and $1,000,000 for the CEO's salary.The company uses machine hours as its overhead allocation base.If 80,000 machine hours are planned for this next year, then the plantwide overhead rate is $8 per machine hour.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A company has two products: AA and BB.It uses a plantwide overhead allocation method based on activity 33 and has prepared the following analysis showing budgeted costs and activities.Use this information to compute the company's plantwide overhead rate.
 $\begin{array}{r}
\text { Budgeted Activity }\quad\quad\quad\
\begin{array} { | l | c | r | r | r | } 
\hline & &  {  } \
 { \text { Activity Cost Pool } } & { \begin{array} { c } 
\text { Budgeted } \
\text { Overhead Cost }
\end{array} } & \text { Product AA } & \text { Product BB } &  { \text { Total } } \
\hline \text { Activity } 11 & \$ 40,000 & 100 & 400 & 500 \
\hline \text { Activity 22 } & \$ 55,000 & 500 & 250 & 750 \
\hline \text { Activity 33 } & \$ 90,000 & 300 & 1,700 & 2,000 \
\hline & &  { } \
\hline \begin{array} { l } 
\text { Total budgeted } \
\text { overhead }
\end{array} & \$ 185,000 &  { } \
\hline
\end{array}\end{array}$

Accepted Answer

$185,000/2,000 units

Question 12

Data concerning volume-related measures are readily available in most manufacturing settings.

Accepted Answer

A) True 
 B)False

Question 13

Identify each of the following activities as unit level (U), batch level (B), product level (P), or facility level (F)to indicate the way each is incurred with respect to production.
_____ (1)Providing electricity
_____ (2)Sampling product quality
_____ (3)Cutting parts
_____ (4)Receiving shipments
_____ (5)Organizing production
_____ (6)Printing checks
_____ (7)Providing personnel support
_____ (8)Calibrating machines
_____ (9)Cleaning workplace
_____ (10)Assembling components

Accepted Answer

(1)F, (2)B, (3)U, (4

Question 14

When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

Accepted Answer

A) True 
 B)False

Question 15

Kudzu has 34,000 total estimated direct labor hours for next year.

Accepted Answer

A) True 
 B)False

Question 16

Product costs consist of direct labor, direct materials, manufacturing overhead, and indirect costs.

Accepted Answer

A) True 
 B)False

Question 17

Kudzu's plantwide overhead rate will be $21 per direct labor hour next year.

Accepted Answer

A) True 
 B)False

Question 18

Product pricing, product mix decisions, and cost control are examples of _________________ activities.

Accepted Answer

The answer of Product pricing, product mix decisions, and cost...

Question 19

Superior Products Manufacturing identified the following data in its two production departments.
 $$\begin{array} { | l | c | c | } 
\hline & \text { Assembly } & \text { Finishing } \
\hline \text { Marufacturing overhead costs } & \$ 225,000 & \$ 420,000 \
\hline \text { Direct labor hours worked } & 6,600 \mathrm { DL } H & 9,000 \mathrm { DLH } \
\hline \text { Machine hours used } & 2,400 \mathrm { MH } & 5,200 \mathrm { MH } \
\hline
\end{array}$$ Make the following independent calculations (Round to two decimals).
a.Compute a plantwide overhead rate using machine hours as the allocation base.
b.Compute a plantwide overhead rate using direct labor hours as the allocation base.

Accepted Answer

a.($225,000 +$420,000)/(2,400

Question 20

Consider the following activities that take place in a medical clinic. 
(a)Cleaning exam rooms.
(b)Heating and air conditioning the clinic.
(c)Sending blood work to a lab.
(d)Dispensing medicine.
Which of the following statements is true?

Accepted Answer

A) Cleaning rooms and heating the clinic are both unit level activities. 
B) Sending blood work to the lab is a batch level activity. 
C) Sending blood work and dispensing medicine are both batch level activities. 
D) Cleaning rooms and dispensing medication are both product or service level activities. 
E) Heating the clinic and dispensing medication are both batch level activities. 
A) Cleaning rooms and heating the clinic are both unit level activities. 
B) Sending blood work to the lab is a batch level activity. 
C) Sending blood work and dispensing medicine are both batch level activities. 
D) Cleaning rooms and dispensing medication are both product or service level activities. 
E) Heating the clinic and dispensing medication are both batch level activities.

If the direct labor time estimates are met, Kudzu will allocate $10.50 of overhead cost to each unit of Little X.

Which of the following statements is true with regard to the departmental overhead rate method?

The ________________________ overhead rate method uses multiple volume-based measures to allocate overhead costs to products.

The cost object of the plantwide overhead rate method is:

A _____________________ is a collection of costs that are related to the same or similar activity.

Examples of volume-related measures include direct labor hours, direct labor cost dollars, and machine hours.

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

Data concerning volume-related measures are readily available in most manufacturing settings.

When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

Kudzu has 34,000 total estimated direct labor hours for next year.

Product costs consist of direct labor, direct materials, manufacturing overhead, and indirect costs.

Kudzu's plantwide overhead rate will be $21 per direct labor hour next year.

Product pricing, product mix decisions, and cost control are examples of _________________ activities.

Consider the following activities that take place in a medical clinic. (a)Cleaning exam rooms. (b)Heating and air conditioning the clinic. (c)Sending blood work to a lab. (d)Dispensing medicine. Which of the following statements is true?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters

Exam 4: Activity-Based Costing and Analysis

If the direct labor time estimates are met, Kudzu will allocate $10.50 of overhead cost to each unit of Little X.

Which of the following statements is true with regard to the departmental overhead rate method?

The ________________________ overhead rate method uses multiple volume-based measures to allocate overhead costs to products.

The cost object of the plantwide overhead rate method is:

A _____________________ is a collection of costs that are related to the same or similar activity.

Examples of volume-related measures include direct labor hours, direct labor cost dollars, and machine hours.

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

Data concerning volume-related measures are readily available in most manufacturing settings.

When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

Kudzu has 34,000 total estimated direct labor hours for next year.

Product costs consist of direct labor, direct materials, manufacturing overhead, and indirect costs.

Kudzu's plantwide overhead rate will be $21 per direct labor hour next year.

Product pricing, product mix decisions, and cost control are examples of _________________ activities.

Consider the following activities that take place in a medical clinic. (a)Cleaning exam rooms. (b)Heating and air conditioning the clinic. (c)Sending blood work to a lab. (d)Dispensing medicine. Which of the following statements is true?

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Accounting for Partnerships

Filters