Question 1

Which of the following is true?

Accepted Answer

A)  Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor. 
B)  The departmental overhead rate is not usually based on measures closely related to production volume. 
C)  The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume. 
D)  Allocated overhead costs will be the same no matter which allocation method is used. 
E)  When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved. 
A)  Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor. 
B)  The departmental overhead rate is not usually based on measures closely related to production volume. 
C)  The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume. 
D)  Allocated overhead costs will be the same no matter which allocation method is used. 
E)  When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.

Question 2

The premise of ABC is that it takes activities to make products and provide services and these activities drive costs.

Accepted Answer

A) True 
 B)False

Question 3

The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

Accepted Answer

The answer of The ________ stage of ABC is to...

Question 4

The following data relates to Spurrier Company's estimated amounts for next year.   What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Accepted Answer

A)  $3.31 per direct labor hour. 
B)  $3.43 per direct labor hour. 
C)  $2.04 per direct labor hour. 
D)  $0.30 per direct labor hour. 
E)  $0.50 per direct labor hour. 
A)  $3.31 per direct labor hour. 
B)  $3.43 per direct labor hour. 
C)  $2.04 per direct labor hour. 
D)  $0.30 per direct labor hour. 
E)  $0.50 per direct labor hour.

Question 5

Unit-level costs vary with the number of units produced.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true with regard to activity-based costing rates?

Accepted Answer

A)  The premise of ABC is that activities are what cause costs to be incurred. 
B)  ABC is another way to refer to a multiple departmental rate situation. 
C)  There one basic stage to ABC. 
D)  ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs. 
E)  All cost drivers used to determine the rates will be unit-level drivers. 
A)  The premise of ABC is that activities are what cause costs to be incurred. 
B)  ABC is another way to refer to a multiple departmental rate situation. 
C)  There one basic stage to ABC. 
D)  ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs. 
E)  All cost drivers used to determine the rates will be unit-level drivers.

Question 7

The usefulness of overhead allocations based on a plantwide overhead rate depends on two crucial assumptions: (1) the overhead cost is correlated with the allocation base; and (2) all products use overhead cost in dissimilar proportions.

Accepted Answer

A) True 
 B)False

Question 8

The cost to heat a manufacturing facility can be directly linked to the number of units produced.

Accepted Answer

A) True 
 B)False

Question 9

The departmental overhead rate method involves the following four steps: 1) Assign overhead costs to departmental cost pools, 2) select an allocation base for each department, 3) compute overhead allocation rates for each department, and 4) use departmental overhead rates to assign overhead costs to products.

Accepted Answer

A) True 
 B)False

Question 10

Kinetic Company estimates that overhead costs for the next year will be $1,600,000 for indirect labor and $400,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 50,000 direct labor hours are planned for this next year, then the plantwide overhead rate is $.025 per direct labor hour.

Accepted Answer

A) True 
 B)False

Question 11

Put the following ABC implementation steps in order ________. A Use the activity overhead rates to assign overhead costs to cost objects.
B Compute the allocation rates.
C Trace overhead costs to cost pools.
D Identify the activities and the overhead costs they cause.

Accepted Answer

A)  DACB 
B)  DBCA 
C)  BADC 
D)  CDAB 
E)  DCBA 
A)  DACB 
B)  DBCA 
C)  BADC 
D)  CDAB 
E)  DCBA

Question 12

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

Accepted Answer

A) True 
 B)False

Question 13

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:   How much overhead will be assigned to Product B using activity-based costing?

Accepted Answer

A)  $56,500 
B)  $78,000 
C)  $62,500 
D)  $197,000 
E)  $70,000 
A)  $56,500 
B)  $78,000 
C)  $62,500 
D)  $197,000 
E)  $70,000

Question 14

A quality-inspection cost is an example of unit-level costs.

Accepted Answer

A) True 
 B)False

Question 15

The departmental overhead rate method traces costs to each department and then determines an allocation base for each department.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is true with regard to the plantwide overhead rate method?

Accepted Answer

A)  The rate is determined using volume-related measures. 
B)  It is logical to use this method when overhead costs are not closely tied to volume-related measures. 
C)  This method uses multiple overhead rates. 
D)  The rate is determined using measures that are not closely related to volume. 
E)  The method provides the most accurate means of allocating overhead costs. 
A)  The rate is determined using volume-related measures. 
B)  It is logical to use this method when overhead costs are not closely tied to volume-related measures. 
C)  This method uses multiple overhead rates. 
D)  The rate is determined using measures that are not closely related to volume. 
E)  The method provides the most accurate means of allocating overhead costs.

Question 17

Overhead costs cannot be ________ in the same way that direct materials and direct labor can.

Accepted Answer

directly t

Question 18

[The following information applies to the questions displayed below.]
Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:
  
-Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Accepted Answer

A)  $41,667 
B)  $288,900 
C)  $256,800 
D)  $146,700 
E)  $323,100 
A)  $41,667 
B)  $288,900 
C)  $256,800 
D)  $146,700 
E)  $323,100

Question 19

K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

Accepted Answer

A)  $0.02 per direct labor hour. 
B)  $46.25 per direct labor hour. 
C)  $36.25 per direct labor hour. 
D)  $10 per direct labor hour. 
E)  $0.10 per direct labor hour. 
A)  $0.02 per direct labor hour. 
B)  $46.25 per direct labor hour. 
C)  $36.25 per direct labor hour. 
D)  $10 per direct labor hour. 
E)  $0.10 per direct labor hour.

Question 20

The departmental overhead rate method allows each department to have its own overhead rate and its own ________.

Accepted Answer

The answer of The departmental overhead rate method allows each...

Which of the following is true?

The premise of ABC is that it takes activities to make products and provide services and these activities drive costs.

The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

The following data relates to Spurrier Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Unit-level costs vary with the number of units produced.

Which of the following statements is true with regard to activity-based costing rates?

The usefulness of overhead allocations based on a plantwide overhead rate depends on two crucial assumptions: (1) the overhead cost is correlated with the allocation base; and (2) all products use overhead cost in dissimilar proportions.

The cost to heat a manufacturing facility can be directly linked to the number of units produced.

Put the following ABC implementation steps in order ________. A Use the activity overhead rates to assign overhead costs to cost objects. B Compute the allocation rates. C Trace overhead costs to cost pools. D Identify the activities and the overhead costs they cause.

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: How much overhead will be assigned to Product B using activity-based costing?

A quality-inspection cost is an example of unit-level costs.

The departmental overhead rate method traces costs to each department and then determines an allocation base for each department.

Which of the following statements is true with regard to the plantwide overhead rate method?

Overhead costs cannot be ________ in the same way that direct materials and direct labor can.

The departmental overhead rate method allows each department to have its own overhead rate and its own ________.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

Exam 4: Activity-Based Costing and Analysis

Which of the following is true?

The premise of ABC is that it takes activities to make products and provide services and these activities drive costs.

The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

The following data relates to Spurrier Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Unit-level costs vary with the number of units produced.

Which of the following statements is true with regard to activity-based costing rates?

The usefulness of overhead allocations based on a plantwide overhead rate depends on two crucial assumptions: (1) the overhead cost is correlated with the allocation base; and (2) all products use overhead cost in dissimilar proportions.

The cost to heat a manufacturing facility can be directly linked to the number of units produced.

Put the following ABC implementation steps in order ________. A Use the activity overhead rates to assign overhead costs to cost objects. B Compute the allocation rates. C Trace overhead costs to cost pools. D Identify the activities and the overhead costs they cause.

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table: How much overhead will be assigned to Product B using activity-based costing?

A quality-inspection cost is an example of unit-level costs.

The departmental overhead rate method traces costs to each department and then determines an allocation base for each department.

Which of the following statements is true with regard to the plantwide overhead rate method?

Overhead costs cannot be ________ in the same way that direct materials and direct labor can.

The departmental overhead rate method allows each department to have its own overhead rate and its own ________.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters