Question 1

The plantwide overhead rate is determined by using volume-related measures.

Accepted Answer

A) True 
 B)False

Question 2

ABC can be used to assign costs to any cost object that is of management interest.

Accepted Answer

A) True 
 B)False

Question 3

Heritage Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year’s expected activities are shown in the following table:
$\begin{array} { | l | c | c | } 
\hline & \text { Molding } & \text { Finishing } \
\hline \text { Direct labor hours } & 65,000 \mathrm { DLH } & 162,500 \mathrm { DLH } \
\hline \text { Machine hours } & 97,500 \mathrm { MH } & 81,250 \mathrm { MH } \
\hline
\end{array}$
-Heritage Industries uses departmental overhead rates and is planning on a $3.20 per machine hour overhead rate for the finishing department.Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Accepted Answer

A) $208,000 
B) $312,000 
C) $520,000 
D) $260,000 
E) $572,000 
A) $208,000 
B) $312,000 
C) $520,000 
D) $260,000 
E) $572,000

Question 4

Product costs consist of direct labor, direct materials, and ______________.

Accepted Answer

manufactur

Question 5

What are the major advantages of using a plantwide overhead rate?

Accepted Answer

The major advantages of using a plantwid

Question 6

Assume that a pet food manufacturer is considering adding two types of pet food to its existing product line. Research had determined that good demand exists for dog food in 40-pound bags and cat food in 1/2pound cans.
The company identified the following partial list of activities, costs, and activity drivers expected for the next year:
$\begin{array} { | l | c | l | } 
\hline \text { Activity } & \text { Expected Costs } &{ \text { Cost Driver } } \
\hline \text { Handling materials } & \$ 105,000 & \text { Number of batches made } \
\hline \text { Storage costs } & \$ 820,000 & \text { Weight of finished product } \
\hline
\end{array}$
$\begin{array} { | l | c | c | } 
\hline & \text { Dog Food } & \text { Cat Food } \
\hline \text { Production volume } & 100,000 \text { units } & 200,000 \text { units } \
\hline \text { Batches made } & 200 \text { batches } & 150 \text { batches } \
\hline
\end{array}$
-Refer to the data in the preceding tables.How much overhead cost will be assigned to each product line using activity-based costing (ABC)?

Accepted Answer

A) Dog food: $462,500; cat food: $462,500. 
B) Dog food: $860,000; cat food: $65,000. 
C) Dog food: $60,000; cat food: $45,000. 
D) Dog food: $800,000; cat food: $20,000. 
E) Dog food: $320; cat food: $320. 
A) Dog food: $462,500; cat food: $462,500. 
B) Dog food: $860,000; cat food: $65,000. 
C) Dog food: $60,000; cat food: $45,000. 
D) Dog food: $800,000; cat food: $20,000. 
E) Dog food: $320; cat food: $320.

Question 7

Activities causing overhead cost in an organization are typically separated into four levels: (1)direct activities, (2)indirect activities, (3)batch level activities, and (4)facility level activities.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true with regard to activity-based costing rates?

Accepted Answer

A) The premise of ABC is that activities are what cause costs to be incurred. 
B) ABC is another way to refer to a multiple departmental rate situation. 
C) There one basic stage to ABC. 
D) ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs. 
E) All cost drivers used to determine the rates will be unit-level drivers. 
A) The premise of ABC is that activities are what cause costs to be incurred. 
B) ABC is another way to refer to a multiple departmental rate situation. 
C) There one basic stage to ABC. 
D) ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs. 
E) All cost drivers used to determine the rates will be unit-level drivers.

Question 9

The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.

Accepted Answer

A) True 
 B)False

Question 10

The departmental overhead rate method allows each department to have its own overhead rate and its own ____________________.

Accepted Answer

The answer of The departmental overhead rate method allows each...

Question 11

The following data relates to Lead Company's estimated amounts for next year. $$\begin{array} { l c c } 
\text { Estimated: } & \text { Department 1 } & \text { Department } 2 \
\text { Marufacturing overhead costs } & \$ 1,200,000 & \$ 3,400,000 \
\text { Direct labor hours } & 560,000 \mathrm { DLH } & 780,000 \mathrm { DLH } \
\text { Machine hours } & 91,000 \mathrm { MH } & 23,000 \mathrm { MH }
\end{array}$$ What is the company's plantwide overhead rate if direct labor hours are the allocation base?
(Round to two decimal places)

Accepted Answer

A) $3.43 per direct labor hour. 
B) $2.14 per direct labor hour. 
C) $4.36 per direct labor hour. 
D) $.29 per direct labor hour. 
E) $.47 per direct labor hour. 
A) $3.43 per direct labor hour. 
B) $2.14 per direct labor hour. 
C) $4.36 per direct labor hour. 
D) $.29 per direct labor hour. 
E) $.47 per direct labor hour.

Question 12

ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

Accepted Answer

A) True 
 B)False

The plantwide overhead rate is determined by using volume-related measures.

ABC can be used to assign costs to any cost object that is of management interest.

Product costs consist of direct labor, direct materials, and ______________.

What are the major advantages of using a plantwide overhead rate?

Activities causing overhead cost in an organization are typically separated into four levels: (1)direct activities, (2)indirect activities, (3)batch level activities, and (4)facility level activities.

Which of the following statements is true with regard to activity-based costing rates?

The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.

The departmental overhead rate method allows each department to have its own overhead rate and its own ____________________.

ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

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

The plantwide overhead rate is determined by using volume-related measures.

ABC can be used to assign costs to any cost object that is of management interest.

Product costs consist of direct labor, direct materials, and ______________.

What are the major advantages of using a plantwide overhead rate?

Activities causing overhead cost in an organization are typically separated into four levels: (1)direct activities, (2)indirect activities, (3)batch level activities, and (4)facility level activities.

Which of the following statements is true with regard to activity-based costing rates?

The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.

The departmental overhead rate method allows each department to have its own overhead rate and its own ____________________.

ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

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