A) Are directly related to production. B) Can be traced to units of product in the same way that direct materials can. C) Cannot be traced to units of product in the same way that direct labor can. D) Are period costs. E) Include only fixed costs. A) Are directly related to production. B) Can be traced to units of product in the same way that direct materials can. C) Cannot be traced to units of product in the same way that direct labor can. D) Are period costs. E) Include only fixed costs.

Exam 17: Activity-Based Costing and Analysis

Slosh,Inc.produces washing machines that require two processes,assembling and finishing,to complete.The company's bestselling machine is the commercial washer.Information related to the 500 commercial washers produced annually is shown below. Slosh's total expected overhead costs and related overhead data are shown below.The company uses departmental overhead rates based on direct labor hours in the Assembling Department and machine hours in the Finishing Department. Determine the total product cost of this product line and each individual commercial washer.

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(Essay)

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Question 1

Correct Answer:

Verified

Assembling Dept.overhead: $4,000,000/50,000 DLH = $80 per DLH
$80 per DLH x 1,000 DLH = $80,000 for commercial washer product line
Finishing Dept.overhead: $60,000/8,000 MH = $7.50 per MH
$7.50 per MH x 400 MH = $3,000 for commercial washer product line

The ________ overhead rate method uses a different overhead rate for each production department.

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(Short Answer)

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Question 2

Correct Answer:

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departmental

Machine setup costs are an example of a batch level activity.

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(True/False)

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Question 3

Correct Answer:

Verified

True

A company uses activity-based costing to determine the costs of its three products: A,B,and C.The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: -What are the activity rates for the three activities under activity-based costing?

(Multiple Choice)

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Question 4

What are the main advantages of volume-based allocation methods compared to activity-based costing?

(Multiple Choice)

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Question 5

A company produces garden benches that go through two departments,department 1A1 and department 2B2,before they are complete.Expected costs and activities for the two departments are shown below.Both departments have departmental overhead rates based on machine hours.Therefore,the overhead rates for department 1A1 and department 2B2 are the same.

(True/False)

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Question 6

Overhead costs:

(Multiple Choice)

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Question 7

Batch-level costs do not vary with the number of units produced.

(True/False)

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Question 8

Identify and explain the four control levels associated with activity-based costing.

(Essay)

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Question 9

Match each of the following terms a through j with the appropriate definitions 1 through 10.

Activities performed to sustain facility capacity as a whole.

Pool rate

An outgrowth of ABC that uses the link between activities and costs.

Activity cost driver

A cost allocation method that focuses on activities performed.

Value-added activities

Correct Answer:

Verified

Activities performed to sustain facility capacity as a whole.

An outgrowth of ABC that uses the link between activities and costs.

A cost allocation method that focuses on activities performed.

Actions which cause costs to be incurred.

The target of a cost assignment.

An allocation rate used to assign overhead costs to cost objects.

Activities performed only on groups of units.

Actions which add value to a product.

Factor that drives cost.

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

(Matching)

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Question 10

Allocated overhead costs vary depending upon the allocation methods used.

(True/False)

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Question 11

Explain cost flows for activity-based costing.

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Question 12

Assume that Angle Max Industries allocates overhead using a plantwide overhead rate based on machine hours.How much total overhead will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the Assembly Department,and 3.5 direct labor hours and 0.5 machine hours in the Finishing Department?

(Multiple Choice)

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Question 13

By definition,costs classified as overhead are consumed in basically the same manner regardless of the process involved.

(True/False)

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Question 14

Tarnish 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: -Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department.Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

(Multiple Choice)

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Question 15

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.

(Essay)

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Question 16

The final step of activity-based costing assigns overhead costs to pools rather than to products.

(True/False)

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Question 17

Superior Products Manufacturing identified the following data in its two production departments: Compute departmental overhead rates assuming the Assembly rate is based on machine hours and the Finishing rate is based on direct labor hours.

(Essay)

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Question 18

Activities are the cost objects of the second stage of ABC.

(True/False)

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Question 19

Product design costs are an example of a unit level activity.

(True/False)

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Question 20

Showing 1 - 20 of 223

Exam 17: Activity-Based Costing and Analysis

The ________ overhead rate method uses a different overhead rate for each production department.

Machine setup costs are an example of a batch level activity.

A company uses activity-based costing to determine the costs of its three products: A,B,and C.The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: -What are the activity rates for the three activities under activity-based costing?

What are the main advantages of volume-based allocation methods compared to activity-based costing?

Overhead costs:

Batch-level costs do not vary with the number of units produced.

Identify and explain the four control levels associated with activity-based costing.

Allocated overhead costs vary depending upon the allocation methods used.

Explain cost flows for activity-based costing.

By definition,costs classified as overhead are consumed in basically the same manner regardless of the process involved.

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.

The final step of activity-based costing assigns overhead costs to pools rather than to products.

Superior Products Manufacturing identified the following data in its two production departments: Compute departmental overhead rates assuming the Assembly rate is based on machine hours and the Finishing rate is based on direct labor hours.

Activities are the cost objects of the second stage of ABC.

Product design costs are an example of a unit level activity.

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