Exam 4: Activity-Based Costing

Activity attributes are nonfinancial and financial information items that describe individual activities.

A costing system that uses actual costs for direct materials and labor and predetermined overhead rates to apply overhead is called a(n)

Figure 4-12 The Gardenview Corporation has identified the following overhead costs and activity drivers for next year: The following are two of the jobs completed during the year: The company's normal activity is 2,000 direct labor hours. -Refer to Figure 4-12. If the number of setups is used to assign setup costs, the amount of setup costs assigned to Job 6A would be

Figure 4-14 Lawson Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are as follows: Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 20,000 direct labor hours are budgeted for next year. The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 15 percent. Estimates for the proposed job are as follows: In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based activity driver, direct labor hours. The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity drivers that would be used are: -Bienvenue, Inc., has identified the following overhead costs and activity drivers for next year: The following are two of the jobs completed during the year: The company's normal activity is 4,000 direct labor hours. If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job DD would be

If activity-based costing is used, modifications made by engineering to the product design of several products would be classified as a

Time driven activity-based costing (TDABC) requires the need to identify resource drivers to assign costs to activities.

Unit-level product costing assigns

Figure 4-7 The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted balances: Raw Materials $20,000 Work in Process $40,000 Finished Goods $10,000 Cost of Goods Sold $50,000 -Thaisom Company applies manufacturing overhead. At the end of the year the following data were available: What is the journal entry if the amount of under- or over-applied overhead is considered small?

Figure 4-9 Summer Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed as follows: Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 100,000 direct labor hours are budgeted for next year. The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 10 percent. Estimates for the proposed job are as follows: The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity drivers that would be used are: -Unit-level cost drivers create distortions when

The activity-based cost assignment is the most accurate method of costing because it follows a cause-and-effect pattern of overhead consumption.

In a time-driven ABC system, once the managers determine the cost of per time unit of supplying resources to activities, the next step would be

Activity helps management achieve objectives such as product or customer costing and continuous improvement.

Figure 4-21 Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G. Information relating to the two products is as follows: The following overhead costs are reported for the following activities of the production process: Jones manufacturing has used activity based costing to assign costs to Models F and G as given in the table below: Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment. -Refer to Figure 4-21. Under this new approach, what cost would be assigned to the labor related cost pool?

An costing database is the collected data sets that are organized and interrelated for use in a company's ABC information system.

The following information pertains to Whitestone Industries for 2016: What is the predetermined overhead rate for Whitestone Industries for 2016?

Figure 4-10 The Manoli Company has collected the following data for use in calculating product costs: Activity Data: (expected and actual) Departmental Data: (expected and actual) -Refer to Figure 4-10. What is the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours?

A(n) costing system first traces costs to activities and then to products.

Figure 4-21 Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G. Information relating to the two products is as follows: The following overhead costs are reported for the following activities of the production process: Jones manufacturing has used activity based costing to assign costs to Models F and G as given in the table below: Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment. -Refer to Figure 4-21. Under this new approach, what is the new pool rate for labor related costs?