Question 1

Discuss how the shift from labor intensive manufacturing to automation has affected product costing.

Accepted Answer

When companies were more labor intensive

Question 2

Mountaineer Tents manufactures and sells heavy and light duty tents to various outdoor retailers. To better estimate costs, the company recently adopted an activity-based costing system. Last year, the company incurred $1,200,000 in overhead costs. Based on an intense study of their company, the following activities, allocation bases, and percentages of overhead costs were determined:
   The number of activities for heavy and light duty tents is as follows:
   Required:

Accepted Answer

The answer of Mountaineer Tents manufactures and sells heavy and...

Question 3

Which of the following statements is true regarding cross subsidies?

Accepted Answer

A)  They occur when factory workers are trained to work on many different machines. 
B)  They occur when high-volume products are assigned more than their fair share of overhead costs. 
C)  They occur when high-volume products have more direct material and direct labor costs than overhead costs. 
D)  They occur when more than one cost driver can be determined for a particular overhead cost item. 
A)  They occur when factory workers are trained to work on many different machines. 
B)  They occur when high-volume products are assigned more than their fair share of overhead costs. 
C)  They occur when high-volume products have more direct material and direct labor costs than overhead costs. 
D)  They occur when more than one cost driver can be determined for a particular overhead cost item.

Question 4

Compton Corporation The following overhead cost information is available for Compton Corporation for 2011:
  During the year, 5,000 purchase orders were issued; 20,000 shipments were received; 3,000 machine setups were performed; and 4,000 inspections were conducted.
Refer to the Compton Corporation information above. If Job #229 required 5 purchase orders, 10 shipments, 8 machine setups, and 4 inspections to fill, how much overhead should be assigned to Job #229?

Accepted Answer

A)  $ 4.06 
B)  $303.75 
C)  $580.00 
D)  $ 85.50 
A)  $ 4.06 
B)  $303.75 
C)  $580.00 
D)  $ 85.50

Question 5

Which of the following would be a likely disadvantage of activity-based costing (ABC)?

Accepted Answer

A)  A decrease in a company's ability to accurately prepare budgets for the upcoming period. 
B)  A decrease in a company's ability to find opportunities for continuous improvement. 
C)  An increase in the accuracy of product cost information. 
D)  An increase in the cost of obtaining accurate product cost information. 
A)  A decrease in a company's ability to accurately prepare budgets for the upcoming period. 
B)  A decrease in a company's ability to find opportunities for continuous improvement. 
C)  An increase in the accuracy of product cost information. 
D)  An increase in the cost of obtaining accurate product cost information.

Question 6

Which of the following statements is true regarding the identification of activities in an ABC system?

Accepted Answer

A)  All manufacturing companies have identical types of activities. 
B)  All merchandising companies have identical types of activities. 
C)  As a business becomes more complex, fewer activities need to be identified. 
D)  Two different businesses which have the same type of activities can still choose different cost drivers. 
A)  All manufacturing companies have identical types of activities. 
B)  All merchandising companies have identical types of activities. 
C)  As a business becomes more complex, fewer activities need to be identified. 
D)  Two different businesses which have the same type of activities can still choose different cost drivers.

Question 7

Which of the following statements comparing traditional and activity-based costing (ABC) is false?

Accepted Answer

A)  Traditional systems are generally less accurate than ABC systems. 
B)  ABC and traditional systems often produce different product cost information. 
C)  ABC systems focus on activity costing while traditional systems focus on volume costing. 
D)  ABC systems are generally less expensive to implement than traditional systems. 
A)  Traditional systems are generally less accurate than ABC systems. 
B)  ABC and traditional systems often produce different product cost information. 
C)  ABC systems focus on activity costing while traditional systems focus on volume costing. 
D)  ABC systems are generally less expensive to implement than traditional systems.

Question 8

Which of the following statements accurately describes the basis of activity-based costing?

Accepted Answer

A)  Activities simply sustain a facility's general manufacturing process. 
B)  Activities refer to batch-level costs incurred to support the production of each different type of product. 
C)  Activities consume facility-level costs. 
D)  Activities consume resources and products consume activities. 
A)  Activities simply sustain a facility's general manufacturing process. 
B)  Activities refer to batch-level costs incurred to support the production of each different type of product. 
C)  Activities consume facility-level costs. 
D)  Activities consume resources and products consume activities.

Question 9

Johnson Manufacturing Johnson Manufacturing anticipates incurring $850,000 in overhead costs this year. After implementing activity-based costing (ABC), the company's controller identified the following related information:
  The number of activities expected is as follows:
  Refer to the Johnson Manufacturing information above. How much total overhead will be allocated to the production activity?

Accepted Answer

A)  $170,000 
B)  $552,500 
C)  $30,000 
D)  $127,500 
A)  $170,000 
B)  $552,500 
C)  $30,000 
D)  $127,500

Question 10

Wake Construction Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes. Last year, the company incurred $200,000 in overhead costs. After implementing activity-based costing (ABC), the company's accountant identified the following related information:
  The number of activities for standard and custom-made cabinets is as follows:
  During the past year, Wake accepted a customer order for a set of custom-made cabinets that would require the following:
  Refer to the Wake Construction information above. How much overhead should be applied to the above customer order?

Accepted Answer

A)  $4,050 
B)  $285 
C)  $3,360 
D)  $975 
A)  $4,050 
B)  $285 
C)  $3,360 
D)  $975

Question 11

The following overhead cost information is available for Lowman Inc. for 2008:
   During the year, 2,000 purchase orders were issued; 500 machine setups were performed; and 1,500 inspections were conducted.
Required:

Accepted Answer

The answer of The following overhead cost information is available...

Question 12

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred each time a machine is set up is called a(n):

Accepted Answer

A)  product-level cost. 
B)  batch-level cost. 
C)  unit-level cost. 
D)  facility-level cost. 
A)  product-level cost. 
B)  batch-level cost. 
C)  unit-level cost. 
D)  facility-level cost.

Question 13

Which of the following would be the least likely cost driver for an activity such as the usage of factory supplies?

Accepted Answer

A)  Machine hours 
B)  Number of engineering hours 
C)  Direct labor hours 
D)  Number of units produced 
A)  Machine hours 
B)  Number of engineering hours 
C)  Direct labor hours 
D)  Number of units produced

Question 14

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred each time a new rug design is developed is called a(n):

Accepted Answer

A)  product-level cost. 
B)  batch-level cost. 
C)  unit-level cost. 
D)  facility-level cost. 
A)  product-level cost. 
B)  batch-level cost. 
C)  unit-level cost. 
D)  facility-level cost.

Question 15

Which of the following would most likely be a batch-levelcost?

Accepted Answer

A)  Factory rent 
B)  Quality control 
C)  Energy costs for factory machinery 
D)  Research and development costs for a new product line 
A)  Factory rent 
B)  Quality control 
C)  Energy costs for factory machinery 
D)  Research and development costs for a new product line

Question 16

Johnson Manufacturing Johnson Manufacturing anticipates incurring $850,000 in overhead costs this year. After implementing activity-based costing (ABC), the company's controller identified the following related information:
  The number of activities expected is as follows:
  Refer to the Johnson Manufacturing information above. How much total overhead would be applied to a job that required 2 purchase order, 4 setups, and 400 machine hours?

Accepted Answer

A)  $14,723.55 
B)  $10,280.00 
C)  $14,413.45 
D)  $14,005.64 
A)  $14,723.55 
B)  $10,280.00 
C)  $14,413.45 
D)  $14,005.64

Question 17

Which of the following is not a benefit of activity-based costing (ABC)?

Accepted Answer

A)  Increased product cost information 
B)  Increased accuracy in the budgeting process 
C)  Increased implementation costs 
D)  Increased understanding of activities that drive overhead costs 
A)  Increased product cost information 
B)  Increased accuracy in the budgeting process 
C)  Increased implementation costs 
D)  Increased understanding of activities that drive overhead costs

Question 18

Wake Construction Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes. Last year, the company incurred $200,000 in overhead costs. After implementing activity-based costing (ABC), the company's accountant identified the following related information:
  The number of activities for standard and custom-made cabinets is as follows:
  During the past year, Wake accepted a customer order for a set of custom-made cabinets that would require the following:
  Refer to the Wake Construction information above. What is the total product (manufacturing) cost for the above customer order?

Accepted Answer

A)  $4,050 
B)  $285 
C)  $3,360 
D)  $975 
A)  $4,050 
B)  $285 
C)  $3,360 
D)  $975

Question 19

Herndon Brothers Inc. produces a variety of "all natural" household cleaning supplies that it manufactures and distributes to various grocery stores along the west coast. Which of the following types of costs would most likely be a batch-level cost?

Accepted Answer

A)  A package product design cost for a new product line 
B)  A machine setup cost 
C)  Depreciation on the factory building 
D)  Energy costs for factory machinery 
A)  A package product design cost for a new product line 
B)  A machine setup cost 
C)  Depreciation on the factory building 
D)  Energy costs for factory machinery

Question 20

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred to sustain the overall manufacturing process is called a(n):

Accepted Answer

A)  product-level cost. 
B)  batch-level cost. 
C)  unit-level cost. 
D)  facility-level cost. 
A)  product-level cost. 
B)  batch-level cost. 
C)  unit-level cost. 
D)  facility-level cost.

Discuss how the shift from labor intensive manufacturing to automation has affected product costing.

Which of the following statements is true regarding cross subsidies?

Which of the following would be a likely disadvantage of activity-based costing (ABC)?

Which of the following statements is true regarding the identification of activities in an ABC system?

Which of the following statements comparing traditional and activity-based costing (ABC) is false?

Which of the following statements accurately describes the basis of activity-based costing?

The following overhead cost information is available for Lowman Inc. for 2008: During the year, 2,000 purchase orders were issued; 500 machine setups were performed; and 1,500 inspections were conducted. Required:

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred each time a machine is set up is called a(n):

Which of the following would be the least likely cost driver for an activity such as the usage of factory supplies?

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred each time a new rug design is developed is called a(n):

Which of the following would most likely be a batch-levelcost?

Which of the following is not a benefit of activity-based costing (ABC)?

Herndon Brothers Inc. produces a variety of "all natural" household cleaning supplies that it manufactures and distributes to various grocery stores along the west coast. Which of the following types of costs would most likely be a batch-level cost?

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred to sustain the overall manufacturing process is called a(n):

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters

Exam 4: Activity-Based Costing

Discuss how the shift from labor intensive manufacturing to automation has affected product costing.

Which of the following statements is true regarding cross subsidies?

Which of the following would be a likely disadvantage of activity-based costing (ABC)?

Which of the following statements is true regarding the identification of activities in an ABC system?

Which of the following statements comparing traditional and activity-based costing (ABC) is false?

Which of the following statements accurately describes the basis of activity-based costing?

The following overhead cost information is available for Lowman Inc. for 2008: During the year, 2,000 purchase orders were issued; 500 machine setups were performed; and 1,500 inspections were conducted. Required:

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred each time a machine is set up is called a(n):

Which of the following would be the least likely cost driver for an activity such as the usage of factory supplies?

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred each time a new rug design is developed is called a(n):

Which of the following would most likely be a batch-levelcost?

Which of the following is not a benefit of activity-based costing (ABC)?

Herndon Brothers Inc. produces a variety of "all natural" household cleaning supplies that it manufactures and distributes to various grocery stores along the west coast. Which of the following types of costs would most likely be a batch-level cost?

Troxler Inc. produces various types of floor rugs with many different designs. They typically produce at least 200 rugs with a single machine setup. A cost incurred to sustain the overall manufacturing process is called a(n):

Introduction to Managerial Accounting

Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows

Job Costing, Process Costing, and Operations Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs and Product Planning Decisions

Long-Term Capital Investment Decisions

The Use of Budgets in Planning and Decision Making

Variance Analysis A Tool for Cost Control and Performance Evaluation

Decentralization, Performance Evaluation, and the Balanced Scorecard

Financial Statement Analysis

The Statement of Cash Flows

Filters