Mission Company is preparing its annual profit plan.As part of its analysis of the profitability of individual products,the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below.(CMA based) \[\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Wall } \\ \text { Miirors } \end{array} & \begin{array} { l } \text { Specialty } \\ \text { Windows } \end{array} \\ \hline \text { Units Produced } & 40 & 20 \\ \hline \begin{array} { l } \text { Material moves per product } \\ \text { line } \end{array} & 5 & 15 \\ \begin{array} { l } \text { Direct labor hours per } \\ \text { product line } \end{array} & 200 & 300 \\ \hline { \text { Budgeted material handling costs: } \$ 50,000 } \\ \hline \end{array}\] Under a traditional costing system that allocates overhead on the basis of direct labor hours,the materials handling costs allocated to one unit of wall mirrors would be:

A) $1,000. B) $500. C) $2,000. D) $5,000. A) $1,000. B) $500. C) $2,000. D) $5,000.

Allure Company manufactures and distributes two products,M and XY.Overhead costs are currently allocated using the number of units produced as the allocation base.The controller has recommended changing to an activity-based costing (ABC)system.She has collected the following information: $\begin{array}{|l|l|r|r|r|} \hline \text { Acturity } & \text { Cost Driser } & \text { Amount } & \text { M } & \times Y \\ \text { Production } & \text { Number of } & \$ 82,000 & 8 & 12 \\ \text { setups } & \text { setups } & & & \\ \hline \text { Material } & \text { Number of } & 48,000 & 56 & 24 \\ \text { handling } & \text { parts } & & & \\ \text { Packaging } & \text { Number of } & 130,000 & 80,000 & 50,000 \\ \text { costs } & \text { units } & & & \\ \hline&&\underline{\$260,000}&&\\ \hline \end{array}$ What is the total overhead allocated to Product XY using the current system?

A) $113,600. B) $100,000. C) $146,400. D) $160,000. A) $113,600. B) $100,000. C) $146,400. D) $160,000.

Exam 9: Activity-Based Costing

Markham Company makes two products: Basic Product and Deluxe Product.Annual production and sales are 1,700 units of Basic Product and 1,100 units of Deluxe Product.The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products.Basic Product requires 0.3 direct labor hours per unit and Deluxe Product requires 0.6 direct labor hours per unit.The total estimated overhead for next period is $98,785.The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports.The new activity-based costing system would have three overhead activity cost pools-Activity 1,Activity 2,and General Factory-with estimated overhead costs and expected activity as follows: (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours. ) The overhead cost per unit of Deluxe Product under the activity-based costing system is closest to:

(Multiple Choice)

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Question 121

Mission Company is preparing its annual profit plan.As part of its analysis of the profitability of individual products,the controller estimates the amount of overhead that should be allocated to the individual product lines from the information provided below.(CMA based) Wall Miirors Specialty Windows Units Produced 40 20 Material moves per product line 5 15 Direct labor hours per product line 200 300 Budgeted material handling costs: \ 50,000 Under a traditional costing system that allocates overhead on the basis of direct labor hours,the materials handling costs allocated to one unit of wall mirrors would be:

(Multiple Choice)

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Question 122

Work Horse Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products $Work Horse Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products Data concerning two products appear below: \begin{array} { | l | r | r | } \hline & \text { Product J } & \text { Product S } \\ \hline \text { Number of batches } & 34 & 41 \\ \hline \text { Number of assembly hours } & 105 & 824 \\ \hline \text { Number of customer orders } & 17 & 38 \\ \hline \end{array} Required: a.How much overhead cost would be assigned to Product J using the company's activity-based costing system? Show your work! b.How much overhead cost would be assigned to Product S using the company's activity-based costing system? Show your work!$ Data concerning two products appear below: Product J Product S Number of batches 34 41 Number of assembly hours 105 824 Number of customer orders 17 38 Required: a.How much overhead cost would be assigned to Product J using the company's activity-based costing system? Show your work! b.How much overhead cost would be assigned to Product S using the company's activity-based costing system? Show your work!

(Essay)

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Question 123

Allure Company manufactures and distributes two products,M and XY.Overhead costs are currently allocated using the number of units produced as the allocation base.The controller has recommended changing to an activity-based costing (ABC)system.She has collected the following information: Acturity Cost Driser Amount M \timesY Production Number of \ 82,000 8 12 setups setups Material Number of 48,000 56 24 handling parts Packaging Number of 130,000 80,000 50,000 costs units What is the total overhead allocated to Product XY using the current system?

(Multiple Choice)

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Question 124

Which of the following statements is true?

(Multiple Choice)

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Question 125

The electricity used for production machinery would be classified as a:

(Multiple Choice)

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Question 126

Which of the following measures is used by traditional costing systems as an allocation base for allocating overhead costs to the units produced?

(Multiple Choice)

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Question 127

Russell Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs).The company has two products,Slow and Fast,about which it has provided the following data: Slow Fas Direct materials \ 14.10 \ 43.40 per unit Direct labor per \ 3.20 \ 25.60 unit Direct labor-hours 0.20 1.60 per unit Annual production 30,000 15,000 The company's estimated total manufacturing overhead for the year is $1,526,700 and the company's estimated total direct labor-hours for the year is 30,000.The company is considering using a variation of activity-based costing to determine its unit product costs for external reports.Data for this proposed activity-based costing system appear below: Activities and Actirity Measures Estimeted Overhead Assembling products (DLHs) \ 720,000 Preparing batches (batches) 362,700 Product support (product variations) 444,000 Total \ 1,526,700 $Russell Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs).The company has two products,Slow and Fast,about which it has provided the following data: \begin{array}{|l|r|r|} \hline& \text { Slow } & \text { Fas } \\ \text { Direct materials } & \$ 14.10 & \$ 43.40 \\ \text { per unit } & \\ \hline \text { Direct labor per } &\$ 3.20 & \$ 25.60 \\ \text { unit } \\ \text { Direct labor-hours } & 0.20 & 1.60 \\ \text { per unit } & &\\ \hline \text { Annual production } & 30,000 & 15,000\\ \hline \end{array} The company's estimated total manufacturing overhead for the year is $1,526,700 and the company's estimated total direct labor-hours for the year is 30,000.The company is considering using a variation of activity-based costing to determine its unit product costs for external reports.Data for this proposed activity-based costing system appear below: \begin{array}{|lr|} \hline \text { Activities and Actirity Measures } & \text { Estimeted Overhead } \\ \begin{array}{lr} \text { Assembling products (DLHs) } \end{array} & \$ 720,000 \\ \hline \text { Preparing batches (batches) } & 362,700 \\ \hline \text { Product support (product } \\ \text { variations) } & 444,000 \\ \hline \text { Total } & \$ 1,526,700 \\ \hline \end{array} The manufacturing overhead that would be applied to a unit of product Slow under the company's traditional costing system is closest to:$ The manufacturing overhead that would be applied to a unit of product Slow under the company's traditional costing system is closest to:

(Multiple Choice)

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Question 128

Activity-based costs are a function of both volume and complexity.

(True/False)

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Question 129

Markham Company makes two products: Basic Product and Deluxe Product.Annual production and sales are 1,700 units of Basic Product and 1,100 units of Deluxe Product.The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products.Basic Product requires 0.3 direct labor hours per unit and Deluxe Product requires 0.6 direct labor hours per unit.The total estimated overhead for next period is $98,785.The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports.The new activity-based costing system would have three overhead activity cost pools-Activity 1,Activity 2,and General Factory-with estimated overhead costs and expected activity as follows: (Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor hours. ) The predetermined overhead rate (i.e. ,activity rate)for Activity 2 under the activity-based costing system is closest to:

(Multiple Choice)

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Question 130

A two-stage system first allocates costs to:

(Multiple Choice)

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Question 131

Which of the following statements is(are)true?

(Multiple Choice)

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Question 132

Market Corporation has an activity-based costing system with three activity cost pools-Processing,Batch Setup,and Other.The company's overhead costs,which consist of factory utilities and indirect labor,are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.Data concerning the company's costs and activity-based costing system appear below: Factory utilities (total) \ 39,000 Indirect labor (total) \ 3,000 $\quad$ $\text {Distribution of Resource Consumption Across Activity}$ $\quad$ $\text {Cost Poos}$ Factory utilities Indirect labor Processing 0.10 .30 Batch Setup 0.60 0.10 Other 0.30 0.60 Required: Assign overhead costs to activity cost pools using activity-based costing.

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Question 133

First stage cost objects do not include:

(Multiple Choice)

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Question 134

Banc Corp.Trust is considering either a bankwide overhead rate or department overhead rates to allocate $396,000 of indirect costs.The bankwide rate could be based on either direct labor hours (DLH)or the number of loans processed.The departmental rates would be based on direct labor hours for Consumer Loans and a dual rate based on direct labor hours and the number of loans processed for Commercial Loans.The following information was gathered for the upcoming period: Department DLH Loans Processed Drect Costs Consumer 14,000 700 \ 280,000 Commercial 8,000 300 \ 180,000 If Banc Corp.Trust uses a bankwide rate based on direct labor hours,what would be the indirect costs allocated to the Consumer Department?

(Multiple Choice)

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Question 135

Vargus Corporation has an activity-based costing system with three activity cost pools-Processing,Batch Setup,and Other.The company's overhead costs consist of equipment depreciation and indirect labor and are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.Equipment depreciation totals $72,000 and indirect labor totals $8,000.Data concerning the distribution of resource consumption across activity cost pools appear below: Processing Batch Setup Other Equipment depreciation 0.20 0.40 0.40 Indirect labor 0.20 0.30 0.50 Required: Assign overhead costs to activity cost pools using activity-based costing.

(Essay)

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Question 136

How can activity-based systems help managers in a global marketplace?

(Essay)

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Question 137

Installing activity-based costing requires teamwork among employees and departments within an organization.

(True/False)

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Question 138

The basic difference between a first-stage cost allocation and a second-stage cost allocation is that:

(Multiple Choice)

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Question 139

Activity-based costing provides:

(Multiple Choice)

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Question 140

Showing 121 - 140 of 149

Which of the following statements is true?

The electricity used for production machinery would be classified as a:

Which of the following measures is used by traditional costing systems as an allocation base for allocating overhead costs to the units produced?

Activity-based costs are a function of both volume and complexity.

A two-stage system first allocates costs to:

Which of the following statements is(are)true?

First stage cost objects do not include:

How can activity-based systems help managers in a global marketplace?

Installing activity-based costing requires teamwork among employees and departments within an organization.

The basic difference between a first-stage cost allocation and a second-stage cost allocation is that:

Activity-based costing provides:

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

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