Exam 4: Activity-Based Costing

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

Figure 4-17 Moss Corporation has the following activities: creating bills of materials (BOM), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tooling.The general ledger accounts reveal the following expenditures for manufacturing engineering: The equipment is used for two activities: improving processes and designing tooling.Thirty-five percent of the equipment's time is used for improving processes and 65 percent is used for designing tools.The salaries are for two engineers.One is paid $50,000, while the other earns $25,000.The $50,000 engineer spends 40 percent of his time training employees in new processes and 60 percent of his time on improving processes.The remaining engineer spends equal time on all activities.Supplies are consumed in the following proportions: -Refer to Figure 4-17.What is the cost assigned to the creating BOMs activity?

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

Figure 4-12 Vaughn, Inc., 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 kilowatt hours are used to assign power costs, the amount of power costs assigned to Job 10A would be

Figure 4-5 The Hampshire Company produces 9 volt batteries and AAA batteries.The Hampshire Company uses a plantwide rate to apply overhead based on direct labor hours.The following data is given: - Refer to Figure 4-5.How much was overhead over/underapplied?

Figure 4-20 Owens 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.First, determine the overhead costs assigned to model Y using the two most expensive activities for cost pools.The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs.(Round to two decimal places.)What is the error in the overhead cost assigned to model Y using ABC (4 driver model) as the benchmark?

A(n) _______________ system first traces costs to activities and then to products.

Figure 4-13 The Xiang plant 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 activity-based costing and the appropriate activity drivers, the total cost of the potential job would be

Figure 4-21 Jones 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 overhead costs are reported for the following activities of the production process: Jones manufacturing has used activity based costing to assign costs to Models X and Y as given in the table below: Jones 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 are the global consumption ratios for Model X and Model Y respectively? (round to 2 decimal places)

Figure 4-21 Jones 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 overhead costs are reported for the following activities of the production process: Jones manufacturing has used activity based costing to assign costs to Models X and Y as given in the table below: Jones 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 the new rates, what are the overhead costs is assigned to Model Y in this approximately relevant ABC system?

Figure 4-8 Zipp Company manufactures two products (X and Y).The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: - Refer to Figure 4-8.If the number of machine hours is used to assign machine hour cost, determine the amount of machine hour cost to be assigned to Product X.

Figure 4-22 Isidora's 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?

Funk Manufacturing Company 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 batch-level activities are assigned using number of setups. The costs of facility-level activities are assigned using machine hours. Required:

_______________ is (are) the collected data sets that are organized and interrelated for use by an organization's ABC information system.

Figure 4-14 Spear Manufacturing has four categories of overhead.The four categories and expected overhead costs for each category for next year are as follows: Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours.20,000 direct labor hours are budgeted for next year. The company has been asked to submit a bid for a proposed job.The plant manager feels that obtaining this job would result in new business in future years.Usually bids are based upon full manufacturing cost plus 15 percent.Estimates for the proposed job are as follows: In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based activity driver, direct labor hours.The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers.Expected activity for the four activity drivers that would be used are: -Refer to Figure 4-14.If the number of inspections is used to assign inspection costs, the amount of inspection costs allocated to the proposed job would be

Maintenance of the production equipment would be classified as a

Figure 4-20 Owens 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.Using the activity ratios for engineering and machining, what is the overhead cost assigned to the engineering pool? (round to two decimal places)

Elbert Manufacturing has recently installed an activity-based relational data base.Using the information contained in the activity relational table, the following pool rates were computed: Two products are produced by Elbert: Regular and Super.Each product has an area in the plant that is dedicated to its production.The plant has two manufacturing processes, the regular process (Process R) and the super process (Process S).Other processes include engineering, product handling, and procurement.The product relational table for Elbert is as follows: Required:

Figure 4-16 Newman 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: X and Y.The plant has two manufacturing processes, Process 1 and Process 2.Other processes include engineering, product handling, and procurement.Product X goes through Process 1 while Product Y 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 Y using Process 2?

Figure 4-10 The Emmanuele 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 unit product cost for mops if a plantwide rate is used?