Exam 3: Activity-Based Costing

Cabat Company manufactures two products, Product C and ProductD. The company estimated it would incur $177,910 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below: Required: a. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year. b. The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor-hours. The activity-based costing system would use three activity cost pools. Data relating to these activities for the current period are given below: Determine the unit product cost of each product for the current period using the activity-based costing approach.

In the past, Hypochondriac Hospital allocated all of its overhead costs to patients based on nursing time. Hypochondriac has decided to switch to an activity based costing system using three activity cost pools. Information related to the new system is as follows: Data concerning two patients follows: Compared to the old system, which of the two patients X and Y will be charged more overhead cost under the new activity-based costing system?

Pedrozo, Inc., manufactures and sells two products: Product R9 and Product O3. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:

Facility-level costs can be traced on a cause-and-effect basis to individual products.

Diemer, Inc., manufactures and sells two products: Product N4 and Product R7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:

Jeanlouis, Inc., manufactures and sells two products: Product D0 and Product D5. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The total overhead applied to Product D5 under activity-based costing is closest to:

Assembling a product is an example of a:

Accurso, Inc., manufactures and sells two products: Product J9 and Product S5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $22.50 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:

Olide, Inc., manufactures and sells two products: Product B9 and Product C8. The annual production and sales of Product of B9 is 300 units and of Product C8 is 100 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product C8 under activity-based costing is closest to:

When a company changes from a traditional costing system to an activity-based costing system, costs will ordinarily shift from low-volume products to high-volume products when the activity-based costing system includes batch-level or product-level costs.

Activity rates in activity-based costing are computed by dividing costs from the first-stage cost assignments by the activity measure for each activity cost pool.

Garhart Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Data concerning two products appear below: Required: a. How much overhead cost would be assigned to Product R57J using the company's activity-based costing system? Show your work! b. How much overhead cost would be assigned to Product W17B using the company's activity-based costing system? Show your work!

Serva, Inc., manufactures and sells two products: Product R4 and Product N4. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $24.70 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The unit product cost of Product N4 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Setting up a machine to change from producing one product to another is an example of a:

Boutet, Inc., manufactures and sells two products: Product G5 and Product U1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $21.10 per DLH. The direct materials cost per unit is $241.40 for Product G5 and $283.80 for Product U1. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product G5 under activity-based costing is closest to:

Which of the following would be classified as a product-level activity?

Stirman, Inc., manufactures and sells two products: Product Z2 and Product F0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $28.60 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: Determine the unit product cost of each product under the activity-based costing method.

Minon, Inc., manufactures and sells two products: Product J1 and Product E7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $19.90 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product J1 under activity-based costing is closest to:

Which of the following would be classified as a product-level activity?

Bolerjack, Inc., manufactures and sells two products: Product G9 and Product B6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $16.50 per DLH. The direct materials cost per unit is $204.30 for Product G9 and $284.50 for Product B6. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The unit product cost of Product G9 under activity-based costing is closest to: