Question 1

Which of the following describes how,in ABC,the activity allocation rate is computed?

Accepted Answer

A) The total estimated activity cost pool is divided by the total estimated activity allocation base. 
B) The total estimated activity allocation base is divided by the total estimated activity cost pool. 
C) The total estimated activity allocation base is multiplied by the total estimated activity cost pool. 
D) You take the total estimated activity allocation base and subtract the total estimated total activity cost pool. 
A) The total estimated activity cost pool is divided by the total estimated activity allocation base. 
B) The total estimated activity allocation base is divided by the total estimated activity cost pool. 
C) The total estimated activity allocation base is multiplied by the total estimated activity cost pool. 
D) You take the total estimated activity allocation base and subtract the total estimated total activity cost pool.

Question 2

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases:
 
Hinckley & Granger uses activity-based costing.
The above activities are used by Departments P and Q as follows:
 
How much of the account inquiry cost will be assigned to Department Q?

Accepted Answer

A) $8,000 
B) $9,000 
C) $18,000 
D) $6,000 
A) $8,000 
B) $9,000 
C) $18,000 
D) $6,000

Question 3

Vittoria Corporation manufactures two products-Carts and Wheelbarrows.The annual production and sales of Carts is 2,000 units,while 1,800 units of Wheelbarrows are produced and sold.The company has traditionally used direct labour hours to allocate its overhead to products.Carts require 1.0 direct labour hours per unit,while Wheelbarrows require 0.5 direct labour hours per unit.The total estimated overhead for the period is $117,500.The company is looking at the possibility of changing to an activity-based costing system for its products.If the company used an activity-based costing system,it would have the following three activity cost pools:
 
The overhead cost per Wheelbarrow using an activity-based costing system would be closest to

Accepted Answer

A) $27.50. 
B) $65.00. 
C) $65.28. 
D) $24.75. 
A) $27.50. 
B) $65.00. 
C) $65.28. 
D) $24.75.

Question 4

Leonard Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs.The company has two departments: Building and Inspection.The Building Department uses a departmental overhead rate of $18 per machine hour,while the Inspection Department uses a departmental overhead rate of $15 per direct labour hour.Job 611 used the following direct labour hours and machine hours in the two departments:
   
The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by Job 611 is $1,500.
What was the total cost of Job 611 if Leonard Industries used the departmental overhead rates to allocate manufacturing overhead?

Accepted Answer

@#IMG-DLM&_TB1765_00_TB1765_00

Question 5

The use of which of the following costing systems is most likely to reduce cost distortion to a minimum?

Accepted Answer

A) Plant-wide overhead rate 
B) Departmental overhead allocation rates 
C) Activity-based costing 
D) Traditional costing system 
A) Plant-wide overhead rate 
B) Departmental overhead allocation rates 
C) Activity-based costing 
D) Traditional costing system

Question 6

Menno Corporation manufactures two products-Tables and Chairs.The annual production and sales of Tables is 2,000 units,while 8,000 units of Chairs are produced and sold.The company has traditionally used direct labour hours to allocate its overhead to products.Tables require 1.0 direct labour hours per unit,while Chairs require 0.5 direct labour hours per unit.The total estimated overhead for the period is $235,000.The company is looking at the possibility of changing to an activity-based costing system for its products.If the company used an activity-based costing system,it would have the following three activity cost pools:
 
The overhead cost per Chair using an activity-based costing system would be closest to

Accepted Answer

A) $145.00. 
B) $7.25. 
C) $325.00. 
D) $16.25. 
A) $145.00. 
B) $7.25. 
C) $325.00. 
D) $16.25.

Question 7

Jason Corporation uses activity-based costing.The company produces two products: Snaps and Pops.The expected annual production of Snaps is 1,000 units,while the expected annual production of Pops is 3,000 units.There are three activity cost pools: Assembly,Testing,and Packing.The estimated costs and activities for each of these three activity pools follows:
 
The cost pool activity rate for Testing would be

Accepted Answer

A) $12.40 per activity. 
B) $20.29 per activity. 
C) $31.89 per activity. 
D) $5.58 per activity. 
A) $12.40 per activity. 
B) $20.29 per activity. 
C) $31.89 per activity. 
D) $5.58 per activity.

Question 8

The four categories of activity costs in cost hierarchy are determined by the underlying factor that drives its costs.

Accepted Answer

A) True 
 B)False

Question 9

Red Stone Manufacturing,a manufacturer of a variety of products,uses an activity-based costing system.Information from its system for the year for all products follows:
   
Red Stone Manufacturing makes 400 of its product B34 a year,which requires a total of 52 machine hours,15 inspection hours,and 20 orders.Product B34 requires $75.50 in direct materials per unit and $68.80 in direct labour per unit.Product B34 sells for $180 per unit.
Required:
A.Calculate the cost pool activity rate for each of the three activities.
B.How much manufacturing overhead would be allocated to Product B34 in total?
C.What is the product margin in total for Product B34?

Accepted Answer

@#IMG-DLM&_TB1765_00_TB1765_00_TB1765_00

Question 10

Cost distortion results in the

Accepted Answer

A) over costing of all products. 
B) under costing of all products. 
C) over costing of some products and under costing of other products. 
D) accurate costing of all products. 
A) over costing of all products. 
B) under costing of all products. 
C) over costing of some products and under costing of other products. 
D) accurate costing of all products.

Question 11

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

Accepted Answer

A) total estimated departmental overhead cost pool. 
B) total estimated amount of the departmental allocation base. 
C) total estimated amount of manufacturing overhead for the factory. 
D) actual quantity of the departmental allocation base used by the job. 
A) total estimated departmental overhead cost pool. 
B) total estimated amount of the departmental allocation base. 
C) total estimated amount of manufacturing overhead for the factory. 
D) actual quantity of the departmental allocation base used by the job.

Question 12

If a company uses departmental overhead allocation rates,then the amount of manufacturing overhead allocated to the job is equal to the plant-wide overhead rate multiplied by the actual use of the cost allocation base.

Accepted Answer

A) True 
 B)False

Question 13

General Products Company manufactures toaster ovens and uses an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of May:
 
Each toaster oven consists of 3 parts.The direct materials cost per toaster oven is $25.00.
What is the total manufacturing cost per toaster oven?

Accepted Answer

A) $42.50 
B) $17.50 
C) $15.00 
D) $40.00 
A) $42.50 
B) $17.50 
C) $15.00 
D) $40.00

Question 14

Molding and sanding each unit of product would most likely be classified as a

Accepted Answer

A) unit-level activity. 
B) batch-level activity. 
C) product-level activity. 
D) facility-level activity. 
A) unit-level activity. 
B) batch-level activity. 
C) product-level activity. 
D) facility-level activity.

Question 15

The goal of value-engineering is to eliminate all waste in the system by making the company's processes as effective and efficient as possible.

Accepted Answer

A) True 
 B)False

Question 16

The cost to research and develop,design and market new models would be considered a unit- level cost.

Accepted Answer

A) True 
 B)False

Question 17

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases:
 
Hinckley & Granger uses activity-based costing.
The above activities are used by Departments P and Q as follows:
 
How much of the account verification costs will be assigned to Department P?

Accepted Answer

A) $450 
B) $3,375 
C) $5,000 
D) $3,750 
A) $450 
B) $3,375 
C) $5,000 
D) $3,750

Question 18

Durable Engines Company uses ABC to account for it manufacturing process.
 
Durable Engines Company expects to produce 2,000 engines.Durable Engines Company also expects to use 12,000 parts and have 16 setups.
The allocation rate for materials handling will be

Accepted Answer

A) $5.28. 
B) $6.40. 
C) $3.00. 
D) $18.00. 
A) $5.28. 
B) $6.40. 
C) $3.00. 
D) $18.00.

Question 19

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases:
 
Hinckley & Granger uses activity based costing.
The above activities are used by Departments P and Q as follows:
 
What is the cost per driver unit for the correspondence activity?

Accepted Answer

A) $1.50 
B) $10.00 
C) $16.00 
D) $30.00 
A) $1.50 
B) $10.00 
C) $16.00 
D) $30.00

Question 20

All of the following are activities in an activity-based costing system that determine the cost of a manufactured product except for

Accepted Answer

A) accounting. 
B) inspecting. 
C) machining. 
D) materials handling. 
A) accounting. 
B) inspecting. 
C) machining. 
D) materials handling.

Which of the following describes how,in ABC,the activity allocation rate is computed?

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Hinckley & Granger uses activity-based costing. The above activities are used by Departments P and Q as follows: How much of the account inquiry cost will be assigned to Department Q?

The use of which of the following costing systems is most likely to reduce cost distortion to a minimum?

The four categories of activity costs in cost hierarchy are determined by the underlying factor that drives its costs.

Cost distortion results in the

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

If a company uses departmental overhead allocation rates,then the amount of manufacturing overhead allocated to the job is equal to the plant-wide overhead rate multiplied by the actual use of the cost allocation base.

Molding and sanding each unit of product would most likely be classified as a

The goal of value-engineering is to eliminate all waste in the system by making the company's processes as effective and efficient as possible.

The cost to research and develop,design and market new models would be considered a unit- level cost.

Durable Engines Company uses ABC to account for it manufacturing process. Durable Engines Company expects to produce 2,000 engines.Durable Engines Company also expects to use 12,000 parts and have 16 setups. The allocation rate for materials handling will be

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Hinckley & Granger uses activity based costing. The above activities are used by Departments P and Q as follows: What is the cost per driver unit for the correspondence activity?

All of the following are activities in an activity-based costing system that determine the cost of a manufactured product except for

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behaviour

Cost-Volume-Profit Analysis

Short-Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Capital Investment Decisions and the Time Value of Money

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Exam 4: Activity Based Costing

Which of the following describes how,in ABC,the activity allocation rate is computed?

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Hinckley & Granger uses activity-based costing. The above activities are used by Departments P and Q as follows: How much of the account inquiry cost will be assigned to Department Q?

The use of which of the following costing systems is most likely to reduce cost distortion to a minimum?

The four categories of activity costs in cost hierarchy are determined by the underlying factor that drives its costs.

Cost distortion results in the

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

If a company uses departmental overhead allocation rates,then the amount of manufacturing overhead allocated to the job is equal to the plant-wide overhead rate multiplied by the actual use of the cost allocation base.

Molding and sanding each unit of product would most likely be classified as a

The goal of value-engineering is to eliminate all waste in the system by making the company's processes as effective and efficient as possible.

The cost to research and develop,design and market new models would be considered a unit- level cost.

Durable Engines Company uses ABC to account for it manufacturing process. Durable Engines Company expects to produce 2,000 engines.Durable Engines Company also expects to use 12,000 parts and have 16 setups. The allocation rate for materials handling will be

Hinckley & Granger Company had the following activities,estimated indirect activity costs,and allocation bases: Hinckley & Granger uses activity based costing. The above activities are used by Departments P and Q as follows: What is the cost per driver unit for the correspondence activity?

All of the following are activities in an activity-based costing system that determine the cost of a manufactured product except for

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behaviour

Cost-Volume-Profit Analysis

Short-Term Business Decisions

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

Capital Investment Decisions and the Time Value of Money

Filters