Question 1

The plantwide approach to allocating overhead is typically the simplest and least expensive approach.

Accepted Answer

A) True 
 B)False

Question 2

One important reason that managers allocate overhead costs to products is to provide information for decision making.

Accepted Answer

A) True 
 B)False

Question 3

Flannery Inc.produces identical tables in large batches.Which of the following would most likely be a product-level cost for Flannery?

Accepted Answer

A) Quality control costs. 
B) Salaries for purchasing and receiving personnel. 
C) Research and development for a new line of tables. 
D) Electricity costs for plant machinery. 
E) None of the answer choices is correct. 
A) Quality control costs. 
B) Salaries for purchasing and receiving personnel. 
C) Research and development for a new line of tables. 
D) Electricity costs for plant machinery. 
E) None of the answer choices is correct.

Question 4

The predetermined overhead rate is calculated as:

Accepted Answer

A) Estimated Overhead Costs * Estimated Cost Driver Activity. 
B) Estimated Overhead Costs / Estimated Cost Driver Activity. 
C) Estimated Overhead Costs - Estimated Cost Driver Activity. 
D) Estimated Overhead Costs + Estimated Cost Driver Activity. 
E) None of the answer choices is correct. 
A) Estimated Overhead Costs * Estimated Cost Driver Activity. 
B) Estimated Overhead Costs / Estimated Cost Driver Activity. 
C) Estimated Overhead Costs - Estimated Cost Driver Activity. 
D) Estimated Overhead Costs + Estimated Cost Driver Activity. 
E) None of the answer choices is correct.

Question 5

Exhibit 3-3
Metro Inc.has two production departments (Lamination and Molding)and three service departments (Human Resources,Technology Support,and Purchasing).Service department costs are allocated to production departments using the direct method.The $200,000 costs of Human Resources are allocated based on the number of employees in each production department.The $400,000 costs of Technology Support are allocated based on hours of technology support used by each production department.The $120,000 of Purchasing is allocated on the pounds of raw materials purchased for each production department.Information for each production department is as follows:
 $\begin{array}{lccc}
&\text { Number of } & \text { Technology } & \text { Pounds of } \
&\text { Employees } & \text { Support Hours } & \text { Raw Materials } \
\hline\text { Lamination } & 40 & 600 & 30,000 \
\text { Molding } & \underline{120} & \underline{2,400} & \underline{70,000} \
\text { Total } & \underline{160} & \underline{3,000} & \underline{100,000}
\end{array}$

-Refer to Exhibit 3-3.Using the direct method of allocating service department costs to production departments,how much of the Technology Support service department costs should be allocated to the Lamination Department?

Accepted Answer

A) $40,000 
B) $160,000 
C) $80,000 
D) $320,000 
E) None of the answer choices is correct. 
A) $40,000 
B) $160,000 
C) $80,000 
D) $320,000 
E) None of the answer choices is correct.

Question 6

Which of the following would be the best allocation base for the direct materials used by workers to assemble products?

Accepted Answer

A) Square feet of space occupied. 
B) Number of new products. 
C) Quantity of materials used. 
D) Number of machine setups. 
E) None of the answer choices is correct. 
A) Square feet of space occupied. 
B) Number of new products. 
C) Quantity of materials used. 
D) Number of machine setups. 
E) None of the answer choices is correct.

Question 7

Which of the following would most likely be a value-added activity?

Accepted Answer

A) Waiting for raw materials to arrive. 
B) Moving raw materials to production. 
C) Storing finished goods. 
D) Producing goods. 
E) None of the answer choices is correct. 
A) Waiting for raw materials to arrive. 
B) Moving raw materials to production. 
C) Storing finished goods. 
D) Producing goods. 
E) None of the answer choices is correct.

Question 8

The choice of an allocation method for overhead depends on how managers decide to group costs into cost pools.

Accepted Answer

A) True 
 B)False

Question 9

Organizations can allocate overhead in a variety of ways,resulting in a number of different product costs for the same product.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following focuses on promoting the efficient use of resources?

Accepted Answer

A) Reducing quality inspections to minimize allocated quality control department costs. 
B) Establishing prices for products. 
C) Preparing financial statements for the annual report. 
D) Calculating profits for each product so management can decide on which products to promote. 
E) None of the answer choices is correct. 
A) Reducing quality inspections to minimize allocated quality control department costs. 
B) Establishing prices for products. 
C) Preparing financial statements for the annual report. 
D) Calculating profits for each product so management can decide on which products to promote. 
E) None of the answer choices is correct.

Question 11

Which of the following is not an advantage of using activity-based costing (ABC)?

Accepted Answer

A) ABC cost information tends to be more accurate compared to traditional costing. 
B) Managers can use ABC costing to improve efficiency. 
C) ABC allows managers to make better product mix decisions. 
D) ABC is typically expensive to implement. 
E) None of the answer choices is correct. 
A) ABC cost information tends to be more accurate compared to traditional costing. 
B) Managers can use ABC costing to improve efficiency. 
C) ABC allows managers to make better product mix decisions. 
D) ABC is typically expensive to implement. 
E) None of the answer choices is correct.

The plantwide approach to allocating overhead is typically the simplest and least expensive approach.

One important reason that managers allocate overhead costs to products is to provide information for decision making.

Flannery Inc.produces identical tables in large batches.Which of the following would most likely be a product-level cost for Flannery?

The predetermined overhead rate is calculated as:

Which of the following would be the best allocation base for the direct materials used by workers to assemble products?

Which of the following would most likely be a value-added activity?

The choice of an allocation method for overhead depends on how managers decide to group costs into cost pools.

Organizations can allocate overhead in a variety of ways,resulting in a number of different product costs for the same product.

Which of the following focuses on promoting the efficient use of resources?

Which of the following is not an advantage of using activity-based costing (ABC)?

What Is Managerial Accounting

How Is Job Costing Used to Track Production Costs

How Is Process Costing Used to Track Production Costs

How Do Organizations Identify Cost Behavior Patterns

How Is Cost-Volume-Profit Analysis Used for Decision Making

How Are Relevant Revenues and Costs Used to Make Decisions

How Is Capital Budgeting Used to Make Decisions

How Are Operating Budgets Created

How Do Managers Evaluate Performance Using Cost Variance Analysis

How Do Managers Evaluate Performance in Decentralized Organizations

How Is the Statement of Cash Flows Prepared and Used

How Do Managers Use Financial and Nonfinancial Performance Measures

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Exam 3: How Does an Organization Use Activity-Based Costing to Allocate Overhead Costs

The plantwide approach to allocating overhead is typically the simplest and least expensive approach.

One important reason that managers allocate overhead costs to products is to provide information for decision making.

Flannery Inc.produces identical tables in large batches.Which of the following would most likely be a product-level cost for Flannery?

The predetermined overhead rate is calculated as:

Which of the following would be the best allocation base for the direct materials used by workers to assemble products?

Which of the following would most likely be a value-added activity?

The choice of an allocation method for overhead depends on how managers decide to group costs into cost pools.

Organizations can allocate overhead in a variety of ways,resulting in a number of different product costs for the same product.

Which of the following focuses on promoting the efficient use of resources?

Which of the following is not an advantage of using activity-based costing (ABC)?

What Is Managerial Accounting

How Is Job Costing Used to Track Production Costs

How Is Process Costing Used to Track Production Costs

How Do Organizations Identify Cost Behavior Patterns

How Is Cost-Volume-Profit Analysis Used for Decision Making

How Are Relevant Revenues and Costs Used to Make Decisions

How Is Capital Budgeting Used to Make Decisions

How Are Operating Budgets Created

How Do Managers Evaluate Performance Using Cost Variance Analysis

How Do Managers Evaluate Performance in Decentralized Organizations

How Is the Statement of Cash Flows Prepared and Used

How Do Managers Use Financial and Nonfinancial Performance Measures

Filters