Question 1

Unit-level costs vary with the number of units produced.

Accepted Answer

A) True 
 B)False

Question 2

Inside Out,Company designs custom showroom spaces in interior design marts across the country.The following data pertain to a recent reporting period.
   Required
a.Use ABC to compute overhead rates for each activity.
b.Assign costs to a 3,000 square-foot job that requires 70 contact hours,20 design hours,and 14 days to complete.

Accepted Answer

The answer of Inside Out,Company designs custom showroom spaces in...

Question 3

The ________ overhead rate is calculated by dividing total budgeted overhead cost by a chosen allocation base,such as direct labor hours.

Accepted Answer

The answer of The ________ overhead rate is calculated by...

Question 4

Two big benefits of ABC costing are a)more accurate product cost information and b)more detailed information on costs and the drivers of those costs.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) $200.00 per MH 
B) $150.00 per MH 
C) $160.00 per MH 
D) $31.11 per MH 
E) $5.14 per MH 
A) $200.00 per MH 
B) $150.00 per MH 
C) $160.00 per MH 
D) $31.11 per MH 
E) $5.14 per MH

Question 6

A method of assigning overhead costs to a product using a single overhead rate is:

Accepted Answer

A) Plantwide overhead rate method. 
B) Cost pool overhead rate method. 
C) Departmental overhead rate method. 
D) Activity-based costing. 
E) Overhead cost allocation method. 
A) Plantwide overhead rate method. 
B) Cost pool overhead rate method. 
C) Departmental overhead rate method. 
D) Activity-based costing. 
E) Overhead cost allocation method.

Question 7

ABC allocates overhead costs to products based on activities rather than direct labor or machine hours.

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 cost to heat a manufacturing facility can be directly linked to the number of units produced.

Accepted Answer

A) True 
 B)False

Question 10

A single cost pool is used when allocating overhead using the activity-based costing method.

Accepted Answer

A) True 
 B)False

Question 11

A company produces heating elements that go through two operations,casting and assembling,before they are complete.Expected costs and activities for the two departments are shown below.Given this information,the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.

Accepted Answer

A) True 
 B)False

Question 12

Compared to the departmental overhead rate method,the plantwide overhead rate method usually results in more accurate overhead allocations.

Accepted Answer

A) True 
 B)False

Question 13

Some companies allocate their overhead cost using a plantwide overhead rate largely because of its simplicity.

Accepted Answer

A) True 
 B)False

Question 14

Freeze Frame,Inc.produces cameras that require three processes,A,B,and C,to complete.Digital camera model #789 is the best-selling of all the many types of cameras produced.Information related to the 550,000 units of digital camera model #789 produced annually is shown below.
   Freeze Frame's total expected overhead costs and related overhead data are shown below:
  
-a.Compute a departmental overhead rate for department A based on machine hours.
b.How much overhead is associated with model 789 from department A?
c.Compute a departmental overhead rate for department B based on direct labor hours.
d.How much overhead is associated with model 789 from department B?
e.Compute a departmental overhead rate for department C based on machine hours.
f.How much overhead is associated with model 789 from department C?
g What is the per unit cost of the 550,000 units of model 789?

Accepted Answer

a.$540,000/67,500 MH = $8 per MH
b.($8/h

Question 15

Lemon Yellow Company produces children's clothing that requires two processes,cutting and sewing,to complete.The company is concerned about one product,a hooded jacket,which hasn't been selling as well as it had in past years.Information related to the 20,000 jackets produced annually is shown in the following table:
   Lemon Yellow'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 Cutting Department and machine hours in the Sewing Department.
   Assume this jacket currently sells for $10.How much profit does the company make per jacket?

Accepted Answer

Cutting Dept.overhead: $480,000/16,000 D

Question 16

A company has two products: A1 and B2.It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:   Annual production and sales level of Product A1 is 8,480 units,and the annual production and sales level of Product B2 is 22,310 units.
-What is the approximate overhead cost per unit of Product B2 under activity-based costing?

Accepted Answer

A) $8.00 
B) $9.00 
C) $10.00 
D) $12.00 
E) $4.00 
A) $8.00 
B) $9.00 
C) $10.00 
D) $12.00 
E) $4.00

Question 17

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 machine hours.

Accepted Answer

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

Question 18

Explain cost flows for the departmental overhead rate method.

Accepted Answer

The departmental overhead rate method us

Question 19

The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

Accepted Answer

The answer of The ________ stage of ABC is to...

Question 20

A company has two products: A and B.It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:  Annual production and sales level of Product A is 34,300 units,and the annual production and sales level of Product B is 69,550 units.
-What is the approximate overhead cost per unit of Product B under activity-based costing?

Accepted Answer

A) $3.00 
B) $2.00 
C) $10.28 
D) $15.00 
E) $2.33 
A) $3.00 
B) $2.00 
C) $10.28 
D) $15.00 
E) $2.33

Unit-level costs vary with the number of units produced.

The ________ overhead rate is calculated by dividing total budgeted overhead cost by a chosen allocation base,such as direct labor hours.

Two big benefits of ABC costing are a)more accurate product cost information and b)more detailed information on costs and the drivers of those costs.

A method of assigning overhead costs to a product using a single overhead rate is:

ABC allocates overhead costs to products based on activities rather than direct labor or machine hours.

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

The cost to heat a manufacturing facility can be directly linked to the number of units produced.

A single cost pool is used when allocating overhead using the activity-based costing method.

Compared to the departmental overhead rate method,the plantwide overhead rate method usually results in more accurate overhead allocations.

Some companies allocate their overhead cost using a plantwide overhead rate largely because of its simplicity.

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 machine hours.

Explain cost flows for the departmental overhead rate method.

The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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Exam 17: Activity-Based Costing and Analysis

Unit-level costs vary with the number of units produced.

The ________ overhead rate is calculated by dividing total budgeted overhead cost by a chosen allocation base,such as direct labor hours.

Two big benefits of ABC costing are a)more accurate product cost information and b)more detailed information on costs and the drivers of those costs.

A method of assigning overhead costs to a product using a single overhead rate is:

ABC allocates overhead costs to products based on activities rather than direct labor or machine hours.

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

The cost to heat a manufacturing facility can be directly linked to the number of units produced.

A single cost pool is used when allocating overhead using the activity-based costing method.

Compared to the departmental overhead rate method,the plantwide overhead rate method usually results in more accurate overhead allocations.

Some companies allocate their overhead cost using a plantwide overhead rate largely because of its simplicity.

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 machine hours.

Explain cost flows for the departmental overhead rate method.

The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

Filters