Question 1

Worker recreational facilities is an example of a cost that would ordinarily be considered to be:

Accepted Answer

A)  Unit-level. 
B)  Batch-level. 
C)  Product-level. 
D)  Organization-sustaining. 
A)  Unit-level. 
B)  Batch-level. 
C)  Product-level. 
D)  Organization-sustaining.

Question 2

Laib Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:  
How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool?

Accepted Answer

A)  $187,000 
B)  $133,000 
C)  $264,000 
D)  $66,000 
A)  $187,000 
B)  $133,000 
C)  $264,000 
D)  $66,000

Question 3

Andracki Housecleaning provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based costing system.   
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Lason family, requested 46 jobs during the year that required a total of 92 hours of housecleaning. For this service, the client was charged $2,230.
Required:
a. Compute the activity rates (i.e., cost per unit of activity) for the activity cost pools. Round off all calculations to the nearest whole cent.
b. Using the activity-based costing system, compute the customer margin for the Lason family. Round off all calculations to the nearest whole cent.
c. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Lason family. Round off all calculations to the nearest whole cent.

Accepted Answer

@#IMG-DLM& Computations for costs:
Cleaning: 92 ho

Question 4

In activity-based costing, a plantwide overhead rate is used to apply overhead to products.

Accepted Answer

A) True 
 B)False

Question 5

Unit-level production activities are performed each time a unit is made.

Accepted Answer

A) True 
 B)False

Question 6

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-The cost per unit of Product A is closest to:

Accepted Answer

A)  $59.23 
B)  $57.20 
C)  $47.89 
D)  $22.70 
A)  $59.23 
B)  $57.20 
C)  $47.89 
D)  $22.70

Question 7

Lakes Corporation has provided the following data from its activity-based costing accounting system:   
Required:
Compute the activity rates for each of the three cost pools. Show your work!

Accepted Answer

The answer of Lakes Corporation has provided the following data...

Question 8

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to products before they are assigned to customers.

Accepted Answer

A) True 
 B)False

Question 9

Toma Nuptial Bakery makes very elaborate wedding cakes to order. The company has an activity-based costing system with three activity cost pools. The activity rate for the Size-Related activity cost pool is $1.14 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $31.86 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $59.66 per order. (Each wedding involves one order for a cake.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.
Data concerning two recent orders appear below:  
-Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Zedian wedding cake to just break even?

Accepted Answer

A)  $247.60 
B)  $18.55 
C)  $59.66 
D)  $204.63 
A)  $247.60 
B)  $18.55 
C)  $59.66 
D)  $204.63

Question 10

Activity rates from Hample Corporation's activity-based costing system are listed below. The company uses the activity rates to assign overhead costs to products:  
Last year, Product J27W involved 30 customer orders, 152 assembly hours, and 54 batches. How much overhead cost would be assigned to Product J27W using the activity-based costing system?

Accepted Answer

A)  $24,702.12 
B)  $5,419.38 
C)  $4,634.28 
D)  $104.67 
A)  $24,702.12 
B)  $5,419.38 
C)  $4,634.28 
D)  $104.67

Question 11

Setting up equipment is an example of a:

Accepted Answer

A)  Unit-level activity. 
B)  Batch-level activity. 
C)  Product-level activity. 
D)  Organization-sustaining activity. 
A)  Unit-level activity. 
B)  Batch-level activity. 
C)  Product-level activity. 
D)  Organization-sustaining activity.

Question 12

An action analysis report reconciles activity-based costing product costs with traditional product costs based on direct labor.

Accepted Answer

A) True 
 B)False

Question 13

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the prefab barns? (Round off your answer to the nearest whole dollar.)

Accepted Answer

A)  $109,395 
B)  $48,620 
C)  $125,238 
D)  $68,640 
A)  $109,395 
B)  $48,620 
C)  $125,238 
D)  $68,640

Question 14

Accola Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 1,100 units and of Product B is 700 units. There are three activity cost pools, with estimated costs and expected activity as follows:

-If the materials handling cost is allocated on the basis of direct labor-hours, how much of the total materials handling cost would be allocated to the wall mirrors? (Round off your answer to the nearest whole dollar.)

Accepted Answer

A)  $6,086 
B)  $9,129 
C)  $11,618 
D)  $3,961 
A)  $6,086 
B)  $9,129 
C)  $11,618 
D)  $3,961

Question 15

Jasmine Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 10,000 units and of Product B is 4,000 units. There are three activity cost pools, with estimated total cost and expected activity as follows:
 
The activity-based costing cost per unit of Product A is closest to:

Accepted Answer

A)  $6.00 
B)  $9.70 
C)  $1.50 
D)  $3.00 
A)  $6.00 
B)  $9.70 
C)  $1.50 
D)  $3.00

Question 16

Marton Corporation has provided the following data from its activity-based costing accounting system:  
The activity rate for the "designing products" activity cost pool is closest to:

Accepted Answer

A)  $124 per product design hour 
B)  $181 per product design hour 
C)  $55 per product design hour 
D)  $1,526,916 per product design hour 
A)  $124 per product design hour 
B)  $181 per product design hour 
C)  $55 per product design hour 
D)  $1,526,916 per product design hour

Question 17

Anola Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows:
 
The activity rate under the activity-based costing system for Activity 3 is closest to:

Accepted Answer

A)  $30.00 
B)  $30.50 
C)  $90.00 
D)  $67.78 
A)  $30.00 
B)  $30.50 
C)  $90.00 
D)  $67.78

Question 18

Vodopich Corporation has provided the following data from its activity-based costing system:  
According to the activity-based costing system, the average cost of product P58Z is closest to:

Accepted Answer

A)  $113.33 per unit 
B)  $58.30 per unit 
C)  $123.40 per unit 
D)  $118.30 per unit 
A)  $113.33 per unit 
B)  $58.30 per unit 
C)  $123.40 per unit 
D)  $118.30 per unit

Question 19

Ternasky Corporation has provided the following data from its activity-based costing accounting system:   
Distribution of Resource Consumption across Activity Cost Pools:   
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.
Required:
a. Determine the total amount of indirect factory wages and factory equipment depreciation costs that would be allocated to the Product Processing activity cost pool. Show your work!
b. Determine the total amount of indirect factory wages and factory equipment depreciation costs that would NOT be assigned to products. Show your work!

Accepted Answer

The answer of Ternasky Corporation has provided the following data...

Question 20

If a company switches from a traditional costing system to an activity-based costing system in which some activities are batch-level and product-level, costs ordinarily shift from high-volume to low-volume products.

Accepted Answer

A) True 
 B)False

Exam 8: Activity Based Costing: a Tool to Aid Decision-Making

Worker recreational facilities is an example of a cost that would ordinarily be considered to be:

Laib Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool?

In activity-based costing, a plantwide overhead rate is used to apply overhead to products.

Unit-level production activities are performed each time a unit is made.

Lakes Corporation has provided the following data from its activity-based costing accounting system: Required: Compute the activity rates for each of the three cost pools. Show your work!

The first-stage allocation in activity-based costing is the process by which overhead costs are assigned to products before they are assigned to customers.

Setting up equipment is an example of a:

An action analysis report reconciles activity-based costing product costs with traditional product costs based on direct labor.

Marton Corporation has provided the following data from its activity-based costing accounting system: The activity rate for the "designing products" activity cost pool is closest to:

Anola Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to:

Vodopich Corporation has provided the following data from its activity-based costing system: According to the activity-based costing system, the average cost of product P58Z is closest to:

If a company switches from a traditional costing system to an activity-based costing system in which some activities are batch-level and product-level, costs ordinarily shift from high-volume to low-volume products.

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost Behavior Analysis and Use

Cost-Volume-Profit Relationship

Variable Costing: a Tool for Management

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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