Exam 4: Activity-Based Costing

If activity-based costing is used, materials handling would be classified as a

Lamar Corporation uses departmental manufacturing overhead rates to apply overhead. Direct labor cost is used to apply manufacturing overhead in Department A and machine hours are used for Department B. What predetermined overhead rate would be used for departments A and B respectively?

Figure 4-5 The Brookstone Company produces 9 volt batteries and AAA batteries. The Brookstone Company uses a plantwide rate to apply overhead based on direct labor hours. The following data is given: Refer to Figure 4-5. If the accounts had the following balances, how much will cost of goods sold be adjusted?

Figure 4-15 Carriage Manufacturing uses an activity-based costing system. The company produces Model 21 and Model 22. Information relating to the two products is as follows: The following costs are reported: Refer to Figure 4-15. Setup costs assigned to Model 22 are

A(n) __________ method first traces costs to a department and then to products. or

Figure 4-10 The Manoli Company has collected the following data for use in calculating product costs: Activity Data: (expected and actual) Departmental Data: (expected and actual) Refer to Figure 4-10. What is the activity rate for moving materials?

Figure 4-5 The Brookstone Company produces 9 volt batteries and AAA batteries. The Brookstone Company uses a plantwide rate to apply overhead based on direct labor hours. The following data is given: Refer to Figure 4-5. What is the predetermined overhead rate? (round to 2 decimal places)

Time driven activity-based costing (TDABC) requires the need to identify resource drivers to assign costs to activities.

Product classification attributes define and describe activities and are the basis for product classification.

Figure 4-19 Attraction 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. In addition, there is a sustaining process with two activities: providing utilities (plantwide) and providing space. Costs have been assigned to each activity using direct tracing and resource drivers: Activity drivers for each activity have been identified and their practical capacities listed: The costs of facility-level activities are assigned using machine hours. Refer to Figure 4-19. What is (are) the product-level activity(ies)?

Management information systems can be divided into a unit-based type and activity-based type.

If unit-based product costing is used, which of the following would be traced directly to the product?

The method that first traces costs to a department and then to products is called:

Product costs can be distorted if a unit-based activity driver is used and

Assume the following: Actual overhead costs equaled estimated overhead. Actual direct labor hours exceeded estimated direct labor hours used to calculate the predetermined overhead rate. If overhead is applied using the predetermined overhead rate, then overhead is

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 using consumption ratios for labor related and batch inspections, what set of equations would be used to create equally accurate reduced ABC allocation rates (where a = labor hours and b = batch inspections)? (round to 5 decimal places)

If operations run on less than full capacity, what is the result on cost driver rates?

Efforts to simplify activity-based costing systems (ABC) involve either before-the-fact simplification or after-the-fact simplification.

Figure 4-22 The Wellness Clinic is considering a time-driven activity based costing system. Given the following data: Refer to Figure 4-22. What is the activity rate for treating patients?

Account balances from the Boilermakers Company are as follows: If underapplied or overapplied overhead is material and is allocated to Work in Process, Finished Goods, and Cost of Goods Sold (based on ending account balances), Cost of Goods Sold after adjustment would have a balance of