Exam 4: Activity-Based Costing

Activity __________ helps management achieve objectives such as product or customer costing and continuous improvement.

Tarot Company has a predetermined overhead rate of $6 per direct labor hour. Last year the company incurred $156,600 of actual manufacturing overhead cost and the account was $12,600 underapplied. How many direct labor hours were worked during the year?

Figure 4-6 The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data: Refer to Figure 4-6. How much was overhead over or underapplied?

Figure 4-12 The Gardenview Corporation has identified the following overhead costs and activity drivers for next year: The following are two of the jobs completed during the year: The company's normal activity is 2,000 direct labor hours. Refer to Figure 4-12. If the four activity drivers are used to allocate overhead costs, total overhead allocated to Job 6A would be

A costing system that uses actual costs for direct materials and labor and predetermined overhead rates to apply overhead is called a(n)

A predetermined overhead rate is calculated using which of the following formulas?

The Roanoke plant of the Virginia Company has two production departments: Extrusion and Assembly. The plant produces two products: P and Q. Cost information for the production departments is given below: The following table presents activity information about the departments and products: Required:

The nonfinancial and financial data that describe individual activities is called:

Figure 4-20 Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers: Owens produces two models: Model X and Model Y. The following table shows how the two products consume activity. Refer to Figure 4-20. What are the global consumption ratios of Model C and D respectively? (round to two decimal places)

Using the before-the-fact simplification method TDABC eliminates the need for detailed interviewing and surveying to determine resource drivers.

All of the following are non-unit-based activity drivers EXCEPT

Figure 4-13 The Molotov plant of Kaboom Industries has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours. The following data have been assembled for use in developing a bid for a proposed job: Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500. Refer to Figure 4-13. Using direct labor hours to assign overhead, the total cost of the potential job would be

All of the following are unit-based activity drivers EXCEPT

Figure 4-6 The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data: Refer to Figure 4-6. How much overhead is applied to the planes?

The Data Retrieving Corporation provided the following data about its resources and activities. In addition, computers are used for issuing statements (30 percent) and processing data (70 percent). Phones, supplies, and answering customer inquiries are 60 percent, with the other 40 percent divided equally among the remaining activities, including supervision. The supervisor spends 100 percent of his/her time on supervision. In addition to the 25,000 clerical hours, there are 2,000 hours of supervision used (the hours used by the supervising clerks activity which is not listed above) Required: Prepare a work distribution matrix for the primary activities.

Figure 4-21 Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G. Information relating to the two products is as follows: The following overhead costs are reported for the following activities of the production process: Jones manufacturing has used activity based costing to assign costs to Models F and G as given in the table below: Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment. Refer to Figure 4-21. Under this new approach, what cost would be assigned to materials handling?

Figure 4-18 Marion Manufacturing uses an activity-based costing system. The company produces Model X and Model Y. Information relating to the two products is as follows: The following costs are reported: Refer to Figure 4-18. Machine-related overhead would be classified as a

If applied overhead is greater than actual overhead it is called overapplied overhead.

The Anchorage plant of the Tundra Company produces two calculators and has two production departments: assembly and packaging. Information for the products is given below: The following table presents activity information about the departments and products: Required:

Figure 4-16 Samson Company recently installed an activity-based relational database. Using the information contained in the activity relational table, the following pool rates were computed: $400 per purchase order $24 per machine hour, Process 1 $30 per machine hour, Process 2 $80 per engineering hour Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process 1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes through Process 1 while Product M goes through Process 2. The product relational table for Special Products is as follows: Refer to Figure 4-16. How much machine overhead cost will be assigned to Product L using Process 1?