Question 1

Facility-level costs vary with the number of units or batches produced.

Accepted Answer

A) True 
 B)False

Question 2

Malone's plantwide overhead rate will be $20.99 per direct labor hour next year.

Accepted Answer

A) True 
 B)False

Question 3

The cost object(s)of the activity-based costing method is(are):

Accepted Answer

A) The time period. 
B) The production departments of the company. 
C) The production activities of the company. 
D) The production activities in the first stage and the unit of product in the second stage. 
E) The unit of product in the first stage and the production activities in the second stage. 
A) The time period. 
B) The production departments of the company. 
C) The production activities of the company. 
D) The production activities in the first stage and the unit of product in the second stage. 
E) The unit of product in the first stage and the production activities in the second stage.

Question 4

When calculating the departmental overhead rate,the numerator should be?

Accepted Answer

A) The total estimated departmental overhead cost. 
B) The total amount of departmental allocation base. 
C) The total plantwide budgeted overhead cost. 
D) The actual quantity of the departmental allocation base used by the job. 
E) The actual department direct labor hours. 
A) The total estimated departmental overhead cost. 
B) The total amount of departmental allocation base. 
C) The total plantwide budgeted overhead cost. 
D) The actual quantity of the departmental allocation base used by the job. 
E) The actual department direct labor hours.

Question 5

What is the reason for pooling costs?

Accepted Answer

A) To shift costs from low-volume to high-volume products. 
B) It is a budgeting technique designed to accurately track fixed costs. 
C) Determining a pool rate for all costs incurred by the same activity reduces the number of cost assignments required. 
D) This procedure helps to determine which costs are directly related to production volume. 
E) It simplifies departmental overhead costing procedures. 
A) To shift costs from low-volume to high-volume products. 
B) It is a budgeting technique designed to accurately track fixed costs. 
C) Determining a pool rate for all costs incurred by the same activity reduces the number of cost assignments required. 
D) This procedure helps to determine which costs are directly related to production volume. 
E) It simplifies departmental overhead costing procedures.

Question 6

Allocated overhead ________ vary depending upon the allocation method used.

Accepted Answer

The answer of Allocated overhead ________ vary depending upon the...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Sparks Company produces and distributes two types of garden sculptures,Plain and Fancy.Budgeted cost and activity for each of its three activity cost pools are shown below.The company plans to produce and sell 64,000 plain units and 49,150 fancy units.
   a.Compute the approximate overhead cost per unit of Plain under activity-based costing.
b.Compute the approximate overhead cost per unit of Fancy under activity-based costing.

Accepted Answer

The answer of Sparks Company produces and distributes two types...

Question 9

Activity-based costing often shifts overhead costs from large volume,standardized products to low-volume,specialty products that consume disproportionate resources.

Accepted Answer

A) True 
 B)False

Question 10

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below.
 
-Compute Aztec's departmental overhead rate for the baking department based on direct labor hours.

Accepted Answer

A) $1.50 per DLH 
B) $5.00 per DLH 
C) $0.75 per DLH 
D) $0.50 per DLH 
E) $2.08 per DLH 
A) $1.50 per DLH 
B) $5.00 per DLH 
C) $0.75 per DLH 
D) $0.50 per DLH 
E) $2.08 per DLH

Question 11

Cleveland Choppers manufactures two types of motorcycles,a Base and a Loaded model.The following activity and costs have been gathered:  The number of components and number of setups are chosen as activity-cost drivers for overhead.Assuming an ABC costing system is being used.
-What is the total overhead cost assigned to the Base model?

Accepted Answer

A) $15,450. 
B) $21,375. 
C) $13,500. 
D) $17,625. 
E) $15,625. 
A) $15,450. 
B) $21,375. 
C) $13,500. 
D) $17,625. 
E) $15,625.

Question 12

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base.Next year,600,000 units are expected to be produced taking 0.75 machine hours each.How much overhead will be assigned to each unit produced given the following estimated amounts?

Accepted Answer

A) $11.57 per unit 
B) $8.17 per unit 
C) $5.61 per unit 
D) $12.43 per unit 
E) $10.89 per unit 
A) $11.57 per unit 
B) $8.17 per unit 
C) $5.61 per unit 
D) $12.43 per unit 
E) $10.89 per unit

Question 13

A company has two products: A and B.It uses activity-based costing and has prepared the following analysis showing budgeted costs and activities.Use this information to compute (a)the company's overhead rates for each of the three activities and (b)the amount of overhead allocated to Product A.

Accepted Answer

(a)(1)rate = $160,000/2,000 =

Question 14

A company estimates that costs for the next year will be $500,000 for indirect labor,$50,000 for factory utilities,and $1,000,000 for the CEO's salary.The company uses machine hours as its overhead allocation base.If 25,000 machine hours are planned for this next year,then a product requiring 10 machine hours will be assigned $220 in overhead.

Accepted Answer

A) True 
 B)False

Question 15

A company estimates total overhead costs for the next year to be $1,200,000 and wishes to use direct labor hours as its overhead allocation base.This company makes two products: (1)Fancy X,which requires three direct labor hours per unit,and (2)Plain X,which requires one direct labor hour per unit.If the company plans to make 10,000 units of Fancy X and 10,000 units of Plain X,then each unit produced will be allocated the same amount of overhead.

Accepted Answer

A) True 
 B)False

Question 16

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 $2 per direct labor hour overhead rate for the molding department.Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

Accepted Answer

A) $225,000 
B) $196,000 
C) $150,000 
D) $321,000 
E) $471,000 
A) $225,000 
B) $196,000 
C) $150,000 
D) $321,000 
E) $471,000

Question 17

A company has two products: A and B.It uses a plantwide overhead allocation method based on activity 2 and has prepared the following analysis showing budgeted costs and activities.Use this information to compute (a)the company's plantwide overhead rate and (b)the amount of overhead allocated to Product A.

Accepted Answer

(a)$450,000/3,000 units of act

Question 18

The unit of product is the cost object when the plantwide overhead rate method is used.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are examples of facility-level costs except:

Accepted Answer

A) Costs of cleaning the workplace. 
B) Costs of custodial work. 
C) Costs of personnel support. 
D) Costs of receiving shipments. 
E) Costs of providing electricity. 
A) Costs of cleaning the workplace. 
B) Costs of custodial work. 
C) Costs of personnel support. 
D) Costs of receiving shipments. 
E) Costs of providing electricity.

Question 20

The first step in using the departmental overhead rate method requires that overhead be traced to each of the company's departments.

Accepted Answer

A) True 
 B)False

Exam 17: Activity-Based Costing and Analysis

Facility-level costs vary with the number of units or batches produced.

Malone's plantwide overhead rate will be $20.99 per direct labor hour next year.

The cost object(s)of the activity-based costing method is(are):

When calculating the departmental overhead rate,the numerator should be?

What is the reason for pooling costs?

Allocated overhead ________ vary depending upon the allocation method used.

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

Activity-based costing often shifts overhead costs from large volume,standardized products to low-volume,specialty products that consume disproportionate resources.

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below. -Compute Aztec's departmental overhead rate for the baking department based on direct labor hours.

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base.Next year,600,000 units are expected to be produced taking 0.75 machine hours each.How much overhead will be assigned to each unit produced given the following estimated amounts?

A company has two products: A and B.It uses activity-based costing and has prepared the following analysis showing budgeted costs and activities.Use this information to compute (a)the company's overhead rates for each of the three activities and (b)the amount of overhead allocated to Product A.

The unit of product is the cost object when the plantwide overhead rate method is used.

All of the following are examples of facility-level costs except:

The first step in using the departmental overhead rate method requires that overhead be traced to each of the company's departments.

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Adjusting Accounts for Financial Statements

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Inventories and Cost of Sales

Cash,fraud,and Internal Controls

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Analysis of Financial Statements

Managerial Accounting Concepts and Principles

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