Question 1

Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are different across different departments and products.

Accepted Answer

A) True 
 B)False

Question 2

Multiple production department factory overhead rates are most useful when production departments significantly differ in their manufacturing processes.

Accepted Answer

A) True 
 B)False

Question 3

The Pikes Peak Leather Company manufactures leather handbags and moccasins.The company has been using the factory overhead rate method but has decided to evaluate activity based costing to allocate factory overhead.The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices.
​
   Calculate the amount of factory overhead to be allocated to each unit using activity based costing.The factory plans to produce 60,000 handbags and 40,000 moccasins.

Accepted Answer

The answer of The Pikes Peak Leather Company manufactures leather...

Question 4

If the budgeted factory overhead cost is $460,000,the budgeted direct labor hours is 80,000,and the actual direct labor hours is 6,700 for the month,the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

Accepted Answer

A) True 
 B)False

Question 5

A plantwide factory overhead rate is computed by dividing total budgeted factory overhead costs by the plantwide allocation base.

Accepted Answer

A) True 
 B)False

Question 6

Shubelik Company is changing to an activity-based costing method.They have determined that they will use three cost pools: setups,inspections,and assembly.Which of the following would not be used as the activity base for any of these three activities?

Accepted Answer

A)  number of units to be produced 
B)  number of setups 
C)  number of inspections 
D)  number of direct labor hours 
A)  number of units to be produced 
B)  number of setups 
C)  number of inspections 
D)  number of direct labor hours

Question 7

Use of a plantwide factory overhead rate distorts product costs when there are differences in the factory overhead rates across different production departments and when products require different ratios of allocation-base usage in each production department.

Accepted Answer

A) True 
 B)False

Question 8

Multiple production department factory overhead rates are less accurate than are plantwide factory overhead rates.

Accepted Answer

A) True 
 B)False

Question 9

Calculate the overhead per unit to be charged to small lamps.

Accepted Answer

A)  $75.00 
B)  $39.17 
C)  $38.33 
D)  $17.50 
A)  $75.00 
B)  $39.17 
C)  $38.33 
D)  $17.50

Question 10

ABC is used to allocate selling and administrative expenses to each product based on the product's individual differences in consuming these activities.

Accepted Answer

A) True 
 B)False

Question 11

Using a single plantwide rate,determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B.

Accepted Answer

A)  $496.00 
B)  $144.00 
C)  $640.00 
D)  $320.00 
A)  $496.00 
B)  $144.00 
C)  $640.00 
D)  $320.00

Question 12

If selling and administrative expenses are allocated to different products,they should be reported as a

Accepted Answer

A)  cost of goods manufactured 
B)  factory overhead cost 
C)  period cost 
D)  cost of goods sold 
A)  cost of goods manufactured 
B)  factory overhead cost 
C)  period cost 
D)  cost of goods sold

Question 13

Common allocation bases are

Accepted Answer

A)  direct labor dollars,direct labor hours,direct material dollars 
B)  direct labor dollars,direct labor hours,machine hours 
C)  direct labor dollars,direct labor hours,machine dollars 
D)  machine dollars,direct labor dollars,direct labor hours 
A)  direct labor dollars,direct labor hours,direct material dollars 
B)  direct labor dollars,direct labor hours,machine hours 
C)  direct labor dollars,direct labor hours,machine dollars 
D)  machine dollars,direct labor dollars,direct labor hours

Question 14

The Camper's Edge Factory produces two products - canopies and tents.It has two separate departments - Cutting and Sewing.The budget is $350,000 for the Cutting Department and $400,000 for the Sewing Department.Each canopy requires 2 hours of cutting and 1 hour of sewing.Each tent requires 1 hour of cutting and 6 hours of sewing.The budget estimates that 20,000 canopies and 10,000 tents will be manufactured during the year.Determine (a)the total number of budgeted direct labor hours for the year in each department,(b)the departmental factory overhead rates for both departments,and (c)the factory overhead allocated per unit of each product using the department factory overhead allocation rates using direct labor hours as the base.

Accepted Answer

(a) Cutting: (20,000 canopies × 2 dlh)+

Question 15

Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.

Accepted Answer

A) True 
 B)False

Question 16

Activity-based costing for selling and administrative expenses can also be beneficial in allocating expenses to various products.Which of the following is the best allocation base for help desk costs?

Accepted Answer

A)  Number of calls 
B)  Square footage of the help desk office 
C)  Number of products sold 
D)  Number of sales employees 
A)  Number of calls 
B)  Square footage of the help desk office 
C)  Number of products sold 
D)  Number of sales employees

Question 17

If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production,what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours,if 26,000 units are produced?

Accepted Answer

A)  $540,000 
B)  $187,200 
C)  $475,000 
D)  $288,600 
A)  $540,000 
B)  $187,200 
C)  $475,000 
D)  $288,600

Question 18

Using a plantwide factory overhead rate distorts product costs when:

Accepted Answer

A)  products require different ratios of allocation-base usage in each production department 
B)  significant differences exist in the factory overhead rates used across different production departments 
C)  both A and B are true 
D)  neither A nor B are true 
A)  products require different ratios of allocation-base usage in each production department 
B)  significant differences exist in the factory overhead rates used across different production departments 
C)  both A and B are true 
D)  neither A nor B are true

Question 19

Using the single plantwide factory overhead rate with an allocation base of direct labor hours,how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?

Accepted Answer

A)  $391,500 
B)  $225,000 
C)  $261,000 
D)  $337,500 
A)  $391,500 
B)  $225,000 
C)  $261,000 
D)  $337,500

Question 20

What is the overhead cost per unit for Rings?

Accepted Answer

A)  $65.25 
B)  $23.25 
C)  $44.10 
D)  $64.50 
A)  $65.25 
B)  $23.25 
C)  $44.10 
D)  $64.50

Exam 18: Activity-Based Costing

Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are different across different departments and products.

Multiple production department factory overhead rates are most useful when production departments significantly differ in their manufacturing processes.

If the budgeted factory overhead cost is $460,000,the budgeted direct labor hours is 80,000,and the actual direct labor hours is 6,700 for the month,the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

A plantwide factory overhead rate is computed by dividing total budgeted factory overhead costs by the plantwide allocation base.

Shubelik Company is changing to an activity-based costing method.They have determined that they will use three cost pools: setups,inspections,and assembly.Which of the following would not be used as the activity base for any of these three activities?

Use of a plantwide factory overhead rate distorts product costs when there are differences in the factory overhead rates across different production departments and when products require different ratios of allocation-base usage in each production department.

Multiple production department factory overhead rates are less accurate than are plantwide factory overhead rates.

Calculate the overhead per unit to be charged to small lamps.

ABC is used to allocate selling and administrative expenses to each product based on the product's individual differences in consuming these activities.

Using a single plantwide rate,determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B.

If selling and administrative expenses are allocated to different products,they should be reported as a

Common allocation bases are

Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.

Activity-based costing for selling and administrative expenses can also be beneficial in allocating expenses to various products.Which of the following is the best allocation base for help desk costs?

Using a plantwide factory overhead rate distorts product costs when:

Using the single plantwide factory overhead rate with an allocation base of direct labor hours,how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?

What is the overhead cost per unit for Rings?

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Internal Control and Cash

Receivables

Long-Term Assets: Fixed and Intangible

Liabilities: Current,installment Notes,and Contingencies

Liabilities: Bonds Payable

Corporations: Organization, stock Transactions, and Dividends

Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Cost Systems

Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Evaluating Variances From Standard Costs

Evaluating Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Lean Manufacturing and Activity Analysis

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