Question 1

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, machine 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, machine hours

Question 2

Estimated activity-base usage quantities are the total activity-base quantities related to each product.

Accepted Answer

A) True 
 B)False

Question 3

Direct labor hours is not a cost pool that is regularly used in the activity-based costing method.

Accepted Answer

A) True 
 B)False

Question 4

The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows:     Calculate the cost of services for a hair cut.

Accepted Answer

A)  $3.00 
B)  $6.50 
C)  $3.50 
D)  $16.50 
A)  $3.00 
B)  $6.50 
C)  $3.50 
D)  $16.50

Question 5

Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

Accepted Answer

A) True 
 B)False

Question 6

The Bonnington Company manufactures small lamps and desk lamps. The following shows the activities per product:   Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps.

Accepted Answer

A)  $314,000 
B)  $209,333 
C)  $202,000 
D)  $104,000 
A)  $314,000 
B)  $209,333 
C)  $202,000 
D)  $104,000

Question 7

Using multiple department factory overhead rates instead of a single plantwide factory overhead rate:

Accepted Answer

A)  results in more accurate product costs 
B)  results in distorted product costs 
C)  is simpler and less expensive than a plantwide rate 
D)  applies overhead costs to all departments equally 
A)  results in more accurate product costs 
B)  results in distorted product costs 
C)  is simpler and less expensive than a plantwide rate 
D)  applies overhead costs to all departments equally

Question 8

Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the deluxe widget production if the 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 9

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 each unit of Hooks.

Accepted Answer

A)  $33 
B)  $50 
C)  $11 
D)  $61 
A)  $33 
B)  $50 
C)  $11 
D)  $61

Question 10

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

Common allocation bases are

Estimated activity-base usage quantities are the total activity-base quantities related to each product.

Direct labor hours is not a cost pool that is regularly used in the activity-based costing method.

The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Calculate the cost of services for a hair cut.

Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

The Bonnington Company manufactures small lamps and desk lamps. The following shows the activities per product: Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps.

Using multiple department factory overhead rates instead of a single plantwide factory overhead rate:

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 each unit of Hooks.

Using a plantwide factory overhead rate distorts product costs when:

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

Common allocation bases are

Estimated activity-base usage quantities are the total activity-base quantities related to each product.

Direct labor hours is not a cost pool that is regularly used in the activity-based costing method.

The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Calculate the cost of services for a hair cut.

Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

The Bonnington Company manufactures small lamps and desk lamps. The following shows the activities per product: Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps.

Using multiple department factory overhead rates instead of a single plantwide factory overhead rate:

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 each unit of Hooks.

Using a plantwide factory overhead rate distorts product costs when:

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