Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: $\begin{array}{llr} \text { Activity Cost Pools }&\text { Activity Rate }\\ \text { Assembling products } & \$ 6.56 \text { per assembly hour } \\ \text { Processing customer orders } & \$ 65.38 \text { per customer order } \\ \text { Setting up batches } & \$ 82.84 \text { per batch } \end{array}$ Data for one of the company's products follow: $\begin{array} { l l l } & & \text { Product P59G } \\ \text { Number of assembly hours } & 240 & \\ \text { Number of customer orders } & 48 & \\ \text { Number of batches } & 64 \end{array}$ - The company produced 4,000 units of product during the period. Direct materials cost $7.30 per unit and direct labor cost $5.45 per unit. What is the cost per unit of Product P59G using the Activity-based costing system?

A) $167.53 B) $12.75 C) $9.80 D) $15.25 E) $2.50 A) $167.53 B) $12.75 C) $9.80 D) $15.25 E) $2.50

The following is taken from Jeffers Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of overhead allocated to Dept. 2 using activity-based costing. $\begin{array} { | l | r | r | } \hline & \text { Direct Labor } & \text { Machine Use Hours } \\ \hline \text { Operating Dept. 1 } & \$ 11,800 & 2,300 \\ \hline \text { Operating Dept. 2 } & \underline { 25,600 } & \underline { 1,500 } \\ \hline \text { Totals } & \$ 37,400 & \underline { 3,800 } \\ \hline & & \\ \hline \text { Factory overhead costs } & & \\ \hline \text { Rent and utilities } & & \$ 12,900 \\ \hline \text { Indirect labor } & & 11,220\\ \hline \text { Depreciation - Equipment } & &18,000 \\ \hline \text { Total factory overhead } & & \$ 42,120 \\ \hline \end{array}$

A) $73,600. B) $28,830. C) $16,392. D) $22,243. E) $19,877. A) $73,600. B) $28,830. C) $16,392. D) $22,243. E) $19,877.

Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: $\begin{array}{lr} \text { Overhead Costs: }\\ \text { Indirect labor } & \$ 260,000 \\ \text { Depreciation } & 220,000 \\ \text { Utilities } & 140,000 \\ \text { Total}& \$ 620,000 \end{array}$ Distribution of resource consumption: Activity Cost Pools \[\begin{array} { l r c c c } & \text { Assembly } & \text { Setting up} & \text { Other } & \text { Total } \\ \text { Indirect labor } & 50 \% & 25 \% & 25 \% & 100 \% \\ \text { Depreciation } & 20 \% & 30 \% & 50 \% & 100 \% \\ \text { Utilities } & 25 \% & 45 \% & 30 \% & 100 \% \end{array}\] How much overhead cost, in total, would be allocated to the Assembly activity cost pool?

A) $209,000 B) $310,000 C) $196,333 D) $200,000 E) $155,000 A) $209,000 B) $310,000 C) $196,333 D) $200,000 E) $155,000

The following is taken from Jeffers Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of overhead allocated to Dept. 1 using activity-based costing. $\begin{array} { | l | r | r | } \hline & \text { Direct Labor } & \text { Machine Use Hours } \\ \hline \text { Operating Dept. 1 } & \$ 11,800 & 2,300 \\ \hline \text { Operating Dept. 2 } & \underline { 25,600 } & \underline { 1,500 } \\ \hline \text { Totals } & \$ 37,400 & \underline { 3,800 } \\ \hline & & \\ \hline \text { Factory overhead costs } & & \\ \hline \text { Rent and utilities } & & \$ 12,900 \\ \hline \text { Indirect labor } & & 11,220\\ \hline \text { Depreciation - Equipment } & &18,000 \\ \hline \text { Total factory overhead } & & \$ 42,120 \\ \hline \end{array}$

A) $22,069. B) $22,243. C) $47,512. D) $19,877. E) $18,703. A) $22,069. B) $22,243. C) $47,512. D) $19,877. E) $18,703.

Quantum Corporation has provided the following data from its activity-based costing system: $\begin{array}{lcrl} \text { Activity Cost Pool }&&\text { Overhead Cost }&\text { Total Activity }\\ \text { Assembly } & \$ & 1,114,920 & 57,000 \text { machine hours } \\ \text { Processing orders } & \$ & 47,016 & 1,800 \text { orders } \\ \text { Inspection } & \$ & 107,328 & 1,560 \text { inspection hours } \end{array}$ The company makes 430 units of product R32E a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. -According to the Activity-based costing system, the total overhead cost allocated to product R32E is:

A) $5,161.30 B) $1,044.80 C) $2,064.00 D) $25,016.00 E) $21,907.20 A) $5,161.30 B) $1,044.80 C) $2,064.00 D) $25,016.00 E) $21,907.20

Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows: \[\begin{array} { l l l } \text { Activity Cost Pool } & \text { Activity Measure } & \text { Estimated Cost } \\ \text { Adminstrative service } & \% \text { of time devoted to branch } & \$ 700,000 \\ \text { Development service } & \text { Computer time } & \$ 140,000 \end{array}\] Estimated branch data for next year is as follows: \[\begin{array} { l c r } & \text { Time to branch } & \text { Computer time } \\ \text { Nashville } & 60 \% & 150,000 \text { minutes } \\ \text { Atlanta } & 30 \% & 200,000 \text { minutes } \\ \text { Louisville } & 10 \% & 50,000 \text { minutes } \\ \text { Total } & 100 \% & 400,000 \text { minutes } \end{array}\] - How much of the headquarters cost allocation should Nashville expect to receive next year?

A) $280,000 B) $472,500 C) $560,000 D) $504,000 E) $409,500 A) $280,000 B) $472,500 C) $560,000 D) $504,000 E) $409,500

Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: $\begin{array}{llr} \text { Activity Cost Pools }&\text { Activity Rate }\\ \text { Assembling products } & \$ 6.56 \text { per assembly hour } \\ \text { Processing customer orders } & \$ 65.38 \text { per customer order } \\ \text { Setting up batches } & \$ 82.84 \text { per batch } \end{array}$ Data for one of the company's products follow: $\begin{array} { l l l } & & \text { Product P59G } \\ \text { Number of assembly hours } & 240 & \\ \text { Number of customer orders } & 48 & \\ \text { Number of batches } & 64 \end{array}$ -How much overhead cost would be assigned to Product P59G using the activity-based costing system?

A) $54,482.56 B) $5,301.76 C) $10,014.40 D) $3,138.24 E) $154.78 A) $54,482.56 B) $5,301.76 C) $10,014.40 D) $3,138.24 E) $154.78

Exam 27: Activity-Based Costing

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:

(Multiple Choice)

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Question 41

Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pools Activity Rate Assembling products \ 6.56 per assembly hour Processing customer orders \ 65.38 per customer order Setting up batches \ 82.84 per batch Data for one of the company's products follow: Product P59G Number of assembly hours 240 Number of customer orders 48 Number of batches 64 - The company produced 4,000 units of product during the period. Direct materials cost $7.30 per unit and direct labor cost $5.45 per unit. What is the cost per unit of Product P59G using the Activity-based costing system?

(Multiple Choice)

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Question 42

The following is taken from Jeffers Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of overhead allocated to Dept. 2 using activity-based costing. Direct Labor Machine Use Hours Operating Dept. 1 \ 11,800 2,300 Operating Dept. 2 Totals \ 37,400 Factory overhead costs Rent and utilities \ 12,900 Indirect labor 11,220 Depreciation - Equipment 18,000 Total factory overhead \ 42,120

(Multiple Choice)

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Question 43

Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Overhead Costs: Indirect labor \ 260,000 Depreciation 220,000 Utilities 140,000 Total \ 620,000 Distribution of resource consumption: Activity Cost Pools Assembly Setting up Other Total Indirect labor 50\% 25\% 25\% 100\% Depreciation 20\% 30\% 50\% 100\% Utilities 25\% 45\% 30\% 100\% How much overhead cost, in total, would be allocated to the Assembly activity cost pool?

(Multiple Choice)

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Question 44

Melbourne Resources provides the following data to enable you to calculate overhead rates: Machining Department Overhead is $15,000, which is to be allocated on estimated machine hours of 25,000. The rate per Machine Hour would be . If Machining cost is to be allocated to three jobs which consumed A = 3,000 hours, B = 4,000 hours, and C = 1,000 hours respectively; then Job A should be charged $ Job B should be charged $ ; and Job C $ .

(Essay)

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Question 45

A ________ is a factor that causes the cost of an activity to go up and down.

(Short Answer)

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Question 46

The following is taken from Jeffers Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of overhead allocated to Dept. 1 using activity-based costing. Direct Labor Machine Use Hours Operating Dept. 1 \ 11,800 2,300 Operating Dept. 2 Totals \ 37,400 Factory overhead costs Rent and utilities \ 12,900 Indirect labor 11,220 Depreciation - Equipment 18,000 Total factory overhead \ 42,120

(Multiple Choice)

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Question 47

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product A is:

(Multiple Choice)

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Question 48

An activity-based costing system usually involves a fewer number of allocation bases compared with a traditional cost allocation system.

(True/False)

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Question 49

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product B is:

(Multiple Choice)

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Question 50

In activity-based costing, costs are traced to individual activities and then allocated to cost objects.

(True/False)

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Question 51

Activity-based costing can improve costing activity for:

(Multiple Choice)

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Question 52

Arial Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to:

(Multiple Choice)

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Question 53

A factor that causes the cost of an activity to go up or down is a(n):

(Multiple Choice)

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Question 54

Quantum Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Overhead Cost Total Activity Assembly \ 1,114,920 57,000 machine hours Processing orders \ 47,016 1,800 orders Inspection \ 107,328 1,560 inspection hours The company makes 430 units of product R32E a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. - According to the activity-based costing system, the total overhead cost for producing the 340 units of the J71B product is:

(Multiple Choice)

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Question 55

With activity-based costing, complex products are assigned a larger portion of overhead.

(True/False)

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Question 56

Quantum Corporation has provided the following data from its activity-based costing system: Activity Cost Pool Overhead Cost Total Activity Assembly \ 1,114,920 57,000 machine hours Processing orders \ 47,016 1,800 orders Inspection \ 107,328 1,560 inspection hours The company makes 430 units of product R32E a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. -According to the Activity-based costing system, the total overhead cost allocated to product R32E is:

(Multiple Choice)

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Question 57

Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows: Activity Cost Pool Activity Measure Estimated Cost Adminstrative service \% of time devoted to branch \ 700,000 Development service Computer time \ 140,000 Estimated branch data for next year is as follows: Time to branch Computer time Nashville 60\% 150,000 minutes Atlanta 30\% 200,000 minutes Louisville 10\% 50,000 minutes Total 100\% 400,000 minutes - How much of the headquarters cost allocation should Nashville expect to receive next year?

(Multiple Choice)

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Question 58

Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Activity Cost Pools Activity Rate Assembling products \ 6.56 per assembly hour Processing customer orders \ 65.38 per customer order Setting up batches \ 82.84 per batch Data for one of the company's products follow: Product P59G Number of assembly hours 240 Number of customer orders 48 Number of batches 64 -How much overhead cost would be assigned to Product P59G using the activity-based costing system?

(Multiple Choice)

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Question 59

A plantwide overhead rate method is adequate when a company produces only one product or has multiple products that use about the same amount of indirect resources.

(True/False)

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Question 60

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:

A ________ is a factor that causes the cost of an activity to go up and down.

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product A is:

An activity-based costing system usually involves a fewer number of allocation bases compared with a traditional cost allocation system.

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product B is:

In activity-based costing, costs are traced to individual activities and then allocated to cost objects.

Activity-based costing can improve costing activity for:

Arial Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to:

A factor that causes the cost of an activity to go up or down is a(n):

With activity-based costing, complex products are assigned a larger portion of overhead.

A plantwide overhead rate method is adequate when a company produces only one product or has multiple products that use about the same amount of indirect resources.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

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