Question 1

When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.

Accepted Answer

A) True 
 B)False

Question 2

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Accepted Answer

Proper allocation of factory overhead av

Question 3

Tulip Company produces two products, T and U. The indirect labor costs include the following two items:

Accepted Answer

The following activity-base us

Question 4

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 5

The Dawson Company manufactures small lamps and desk lamps. The following shows the activities per product and the total overhead information:     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 6

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below.   All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?

Accepted Answer

A)  $77.00 
B)  $39.00 
C)  $19.50 
D)  $59.92 
A)  $77.00 
B)  $39.00 
C)  $19.50 
D)  $59.92

Question 7

Determine the activity-based cost for each tape drive unit.

Accepted Answer

A)  $97.73 
B)  $232.69 
C)  $394.12 
D)  $103.84 
A)  $97.73 
B)  $232.69 
C)  $394.12 
D)  $103.84

Question 8

Which of the following is a cost pool used with the activity-based costing method?

Accepted Answer

A)  total selling and administrative overheads 
B)  direct material dollars 
C)  total factory overheads 
D)  production setups 
A)  total selling and administrative overheads 
B)  direct material dollars 
C)  total factory overheads 
D)  production setups

Question 9

Pinacle Corp. budgeted $350,000 of overhead cost for 2012. Actual overhead costs for the year were $325,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 50,000 hours. Actual machine hours were 40,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for 2012 is:

Accepted Answer

A)  $8.13 per machine hour 
B)  $7.00 per machine hour 
C)  $6.50 per machine hour 
D)  $8.75 per machine hour 
A)  $8.13 per machine hour 
B)  $7.00 per machine hour 
C)  $6.50 per machine hour 
D)  $8.75 per machine hour

Question 10

When production departments differ significantly in their manufacturing process, it is recommended that the single plantwide factory overhead rate be used for allocating factory overhead.

Accepted Answer

A) True 
 B)False

Question 11

The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information:     Calculate the total factory overhead to be charged to Nooks.

Accepted Answer

A)  $300,000 
B)  $400,000 
C)  $488,000 
D)  $600,000 
A)  $300,000 
B)  $400,000 
C)  $488,000 
D)  $600,000

Question 12

The Pikes Peak Leather Company manufactures leather handbags (H) and moccasins (M). The company has been using the factory overhead rate method but has decided to evaluate the 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.

Accepted Answer

Calculate the amount of factor

Question 13

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 14

The total factory overhead for Big Light Company is budgeted for the year at $403,750. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 30,000 units. Each night light requires 1/2 hour of direct labor. Desk lamps is budgeted for 40,000 units. Each desk lamp requires 2 hours of direct labor. Determine (a) the total number of budgeted direct labor hours for year, (b) the single plantwide factory overhead rate using direct labor hours as the allocation base, and (c) the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b).

Accepted Answer

(a) (30,000 ´ 1/2) + (40,000 ´ 2) = 95,0

Question 15

The Sawtooth Leather Company manufactures leather handbags and moccasins. For simplicity reasons, they have decided to use the single plantwide factory overhead rate method to allocate factory overhead. Calculate the amount of factory overhead to be allocated to each unit using direct labor hours.
Handbags = 60,000 units, 2 hours of direct labor
Moccasins= 40,000 units, 3 hours of direct labor
Total Budgeted factory overhead cost = $360,000

Accepted Answer

Handbags: 60,000 units ´ 2 direct labor

Question 16

Which of the following is not a factory overhead allocation method?

Accepted Answer

A)  single plantwide rate 
B)  multiple departmental rates 
C)  factory costing 
D)  activity-based costing 
A)  single plantwide rate 
B)  multiple departmental rates 
C)  factory costing 
D)  activity-based costing

Question 17

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.   Determine the activity-based cost for each disk drive unit.

Accepted Answer

A)  $92.25 
B)  $130.69 
C)  $394.12 
D)  $279.57 
A)  $92.25 
B)  $130.69 
C)  $394.12 
D)  $279.57

Question 18

Product costing consists of only direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 19

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours.   Using a single plantwide rate, determine the overhead rate per unit for 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 20

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

Accepted Answer

A) True 
 B)False

When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Tulip Company produces two products, T and U. The indirect labor costs include the following two items:

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

The Dawson Company manufactures small lamps and desk lamps. The following shows the activities per product and the total overhead information: Calculate the overhead per unit to be charged to small lamps.

Determine the activity-based cost for each tape drive unit.

Which of the following is a cost pool used with the activity-based costing method?

When production departments differ significantly in their manufacturing process, it is recommended that the single plantwide factory overhead rate be used for allocating factory overhead.

The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: Calculate the total factory overhead to be charged to Nooks.

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

Which of the following is not a factory overhead allocation method?

Product costing consists of only direct materials and direct labor.

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

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Management for Just-In-Time Environments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Filters

Exam 11: Cost Allocation and Activity-Based Costing

When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Tulip Company produces two products, T and U. The indirect labor costs include the following two items:

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

The Dawson Company manufactures small lamps and desk lamps. The following shows the activities per product and the total overhead information: Calculate the overhead per unit to be charged to small lamps.

Determine the activity-based cost for each tape drive unit.

Which of the following is a cost pool used with the activity-based costing method?

When production departments differ significantly in their manufacturing process, it is recommended that the single plantwide factory overhead rate be used for allocating factory overhead.

The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: Calculate the total factory overhead to be charged to Nooks.

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

Which of the following is not a factory overhead allocation method?

Product costing consists of only direct materials and direct labor.

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

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Management for Just-In-Time Environments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Filters