Exam 17: Activity-Based Costing and Analysis

Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

Red Raider Company uses a plantwide overhead rate with direct labor hours as the allocation base.Next year,400,000 units are expected to be produced requiring 0.9 direct-labor hours each.How much overhead will be assigned to each unit produced given the following estimated amounts?

Base Runner,Inc.manufactures baseball bats that go through two operations,cutting and sanding,before they are complete.Expected costs and activities for the two departments are shown in the following table: a.Compute a departmental overhead rate for the cutting department based on machine hours. b.Compute a departmental overhead rate for the sanding department based on machine hours.

Overhead costs cannot be ________ in the same way that direct materials and direct labor can.

Overhead costs are indirect costs so assigning these costs to products requires an allocation method.

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.

Turtle Company produces t-shirts that go through two operations,cutting and sewing,before they are complete.Expected costs and activities for the two departments are shown below.Given this information,the departmental overhead rate for the cutting department based on direct labor hours is $2.69 per direct labor hour (rounded to two decimals).

________ focuses on activities and the cost of carrying out activities.

Multiple cost pools are used when allocating overhead using the plantwide overhead rate method.

The ________ overhead rate method uses a single rate for allocating overhead costs to products.

The departmental overhead rate method involves the following four steps: 1)Assign overhead costs to departmental cost pools,2)select an allocation base for each department,3)compute overhead allocation rates for each department,and 4)use departmental overhead rates to assign overhead costs to products.

Distorted product cost information can result in poor decisions.

A company identified the following partial list of activities,costs,and activity drivers expected for the next year: -How much overhead in total will be assigned to the Product A line using activity-based costing?

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

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

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

Because departmental overhead costs are allocated based on measures closely related to production volume,they accurately assign overhead,such as utility costs.

Malone has 33,000 total estimated direct labor hours 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 below. Compute the company's activity rates under activity-based costing for each of the three activities.

Which of the following is true?