Exam 17: Activity-Based Costing and Analysis

Plantwide overhead rates typically do a better job of matching each department's overhead costs to the products using the department's resources than do departmental overhead rates.

Which of the following is a disadvantage of the departmental overhead rate method?

Which of the following is not true?

Products are the first stage cost objects when using a departmental overhead rate method.

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

Compute Tasty's departmental overhead rate for the mixing department based on machine hours.

Fischer Company identified the following activities,costs,and activity drivers: a.Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals). b.Compute separate rates for each of the four activities using the activity-based costing.

The major advantages of using a single plantwide overhead rate are ________ and ________.

Which of the following would not be considered a product cost?

In activity-based costing,an activity can involve several related tasks.

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 machine hour overhead rate for the molding department.Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

Product-level costs do not vary with the number of units or batches produced.

Which of the following statements is true of activity-based costing?

The cost object(s)of the departmental overhead rate method is:

Peterson Company estimates that overhead costs for the next year will be $6,520,000 for indirect labor and $550,000 for factory utilities.The company uses machine hours as its overhead allocation base.If 140,000 machine hours are planned for this next year,what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

Crinkle Cut Clothes Company manufactures two products CC1 and CC2.Current direct material and direct labor costs are detailed below.Next year the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base.Next year's overhead is estimated to be $338,250.The direct labor and direct materials costs are estimated to be consistent with the current year.Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year. Compute the plantwide overhead rate for next year.

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: -Which of the following statements is true regarding this company's activity rates?

The following data relates to Spurrier Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? $\bold{\text{(Round your answer to two decimal places.)}}$

A company estimates that overhead costs for the next year will be $8,320,000 for indirect labor and $155,500 for factory utilities.The company uses machine hours as its overhead allocation base.If 400,000 machine hours are planned for this next year,what is the company's plantwide overhead rate? $\bold{\text{(Round your answer to two decimal places.)}}$

Activity-based costing first assigns costs to products and then uses these product costs to assign costs to manufacturing activities.