Question 1

An activity-based costing system traces costs to activities and then to products and other cost objects.

Accepted Answer

A) True 
 B)False

Question 2

If activity-based costing is used, insurance on the plant would be classified as a

Accepted Answer

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

Question 3

Figure 4 - 3
The records of Family Manufacturing show the following information:
  
-Refer to Figure 4-3. The company uses a predetermined overhead rate to apply overhead. Manufacturing overhead applied is

Accepted Answer

A)  $750,000. 
B)  $700,000. 
C)  $690,000. 
D)  $648,000. 
A)  $750,000. 
B)  $700,000. 
C)  $690,000. 
D)  $648,000.

Question 4

Activity-based costing assigns cost to cost objects by first tracing costs to

Accepted Answer

A)  products and then tracing costs to cost objects. 
B)  departments and then tracing costs to products. 
C)  activities and then tracing costs to cost objects. 
D)  customers and then tracing costs to products. 
A)  products and then tracing costs to cost objects. 
B)  departments and then tracing costs to products. 
C)  activities and then tracing costs to cost objects. 
D)  customers and then tracing costs to products.

Question 5

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
-Refer to Figure 4-7. If Manufacturing overhead was $12,000 overapplied and considered material, what is the journal entry?

Accepted Answer

A)  Cost of Goods Sold $12,000 Manufacturing Overhead $12,000 
B)  Manufacturing Overhead $12,000 Cost of Goods Sold $12,000 
C)  Manufacturing Overhead $12,000 Raw Materials $2,000 Work in Process $4,000 Finished Goods $1,000 Cost of Goods Sold $5,000 
D)  Raw Materials $2,000 Work in Process $4,000 Finished Goods $1,000 Cost of Goods Sold $5,000 Manufacturing Overhead $12,000 
E)  Manufacturing Overhead $12,000 Work in Process $4,800 Finished Goods $1,200 Cost of Goods Sold $6,000 
A)  Cost of Goods Sold $12,000 Manufacturing Overhead $12,000 
B)  Manufacturing Overhead $12,000 Cost of Goods Sold $12,000 
C)  Manufacturing Overhead $12,000 Raw Materials $2,000 Work in Process $4,000 Finished Goods $1,000 Cost of Goods Sold $5,000 
D)  Raw Materials $2,000 Work in Process $4,000 Finished Goods $1,000 Cost of Goods Sold $5,000 Manufacturing Overhead $12,000 
E)  Manufacturing Overhead $12,000 Work in Process $4,800 Finished Goods $1,200 Cost of Goods Sold $6,000

Question 6

The nonfinancial and financial data that describe individual activities is called:

Accepted Answer

A)  Activity dictionaries 
B)  Activity attributes 
C)  Concatenated keys 
D)  ABC inventories 
A)  Activity dictionaries 
B)  Activity attributes 
C)  Concatenated keys 
D)  ABC inventories

Question 7

Maroone, Inc., has identified the following overhead costs and activity drivers for next year:
   The following are the two product models completed during the year:
     The company's normal activity is 20,000 direct labor hours.
Required: 
a. Determine the unit cost for each job using direct labor hours to apply overhead.
b. Determine the unit cost for each job using the four activity drivers. (Round amounts to 2 decimal places.)
c. Which method produces the more accurate cost assignment? Why?

Accepted Answer

The answer of Maroone, Inc., has identified the following overhead...

Question 8

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 using activity based costing?

Accepted Answer

A)  $11.00 
B)  $ 7.26 
C)  $ 4.00 
D)  $ 3.75 
A)  $11.00 
B)  $ 7.26 
C)  $ 4.00 
D)  $ 3.75

Question 9

Figure 4-8
Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
  
-Refer to Figure 4-8. What is the allocation rate per setup using activity-based costing?

Accepted Answer

A)  $ 550 
B)  $1,100 
C)  $11,000 
D)  $2,200 
A)  $ 550 
B)  $1,100 
C)  $11,000 
D)  $2,200

Question 10

Figure 4-8
Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
  
-Refer for Figure 4-8. What is the allocation rate per packing order using activity-based costing?

Accepted Answer

A)  $18,750 
B)  $ 75 
C)  $ 1,875 
D)  $ 250 
A)  $18,750 
B)  $ 75 
C)  $ 1,875 
D)  $ 250

Question 11

Figure 4-6
The Fast & Furious Company produces two products: toy planes and toy race cars. They use departmental overhead rates for the two production departments: molding and finishing. Molding uses machine hours to assign overhead and Finishing uses direct labor hours. 50,000 planes and 250,000 race cars are produced. Please find the following data:
  
-The Sterling Company applies manufacturing overhead. At the end of the year the following data were available:   The following accounts had the unadjusted balances:
  What is the journal entry if the amount is considered material?

Accepted Answer

The answer of Figure 4-6
The Fast & Furious Company produces...

Question 12

Figure 4-20
Quasi-Tech Corporation produces specially machined parts. The parts are produced in batches in one continuous manufacturing process. Each part is custom produced and requires special engineering design activity (based on customer specifications). Once the design is completed, the equipment can be set up for batch production. Once the batch is completed, a sample is taken and inspected to see if the parts are within the tolerances allowed. Thus, the manufacturing process has four activities: engineering, setups, machining, and inspecting. Costs have been assigned to each activity using direct tracing and resource drivers:
   Owens produces two models: Model X and Model Y. The following table shows how the two products consume activity.
  
-Refer to Figure 4-20. First, determine the overhead costs assigned to model D using the two most expensive activities for cost pools. The costs of the two relatively inexpensive activities are allocated to the two most expensive activities in proportion to their costs. (Round to two decimal places.)What is the error in the overhead cost assigned to model D using ABC (4 driver model) as the benchmark?

Accepted Answer

A)  $180,030 
B)  $240,700 
C)  $313,330 
D)  $626,650 
A)  $180,030 
B)  $240,700 
C)  $313,330 
D)  $626,650

Question 13

The Roanoke plant of the Virginia Company has two production departments: Extrusion and Assembly. The plant produces two products: P and Q. Cost information for the production departments is given below:   The following table presents activity information about the departments and products:
   Required: 
a. Compute the predetermined overhead rate for each department if Extrusion uses machine hours and Assembly uses labor hours.
b. Calculate the per unit overhead rate for each product if 80,000 units of P were produced and 90,000 units of Q were produced.

Accepted Answer

The answer of The Roanoke plant of the Virginia Company...

Question 14

For a labor-intensive manufacturing operation, which of the following would be the most appropriate activity driver?

Accepted Answer

A)  machine hours 
B)  direct labor hours 
C)  number of employees 
D)  units of output 
A)  machine hours 
B)  direct labor hours 
C)  number of employees 
D)  units of output

Question 15

The Data Retrieving Corporation provided the following data about its resources and activities.
   In addition, computers are used for issuing statements (30 percent) and processing data (70 percent). Phones, supplies, and answering customer inquiries are 60 percent, with the other 40 percent divided equally among the remaining activities, including supervision. The supervisor spends 100 percent of his/her time on supervision. In addition to the 25,000 clerical hours, there are 2,000 hours of supervision used (the hours used by the supervising clerks activity which is not listed above)
Required:
Prepare a work distribution matrix for the primary activities.

Accepted Answer

The answer of The Data Retrieving Corporation provided the following...

Question 16

Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level.

Accepted Answer

A) True 
 B)False

Question 17

A(n) method first traces costs to a department and then to products.

Accepted Answer

The answer of A(n) method first traces costs to a...

Question 18

Figure 4-1
The Foremost Company predicted factory overhead for 2016 and 2017 would be $120,000 for each year. The predicted activity for 2016 and 2017 were 30,000 and 20,000 direct labor hours, respectively. Additional data are as follows:
   The company assumes that the long-run normal production level is 20,000 direct labor hours per year. The actual factory overhead cost for the end of 2016 and 2017 was $120,000. Assume that it takes one direct labor hour to make one finished unit.
-Refer to Figure 4-1. When the annual estimated factory overhead rate is used, the gross profits for 2016 and 2017, respectively, are

Accepted Answer

A)  $150,000 and $150,000. 
B)  $150,000 and $100,000. 
C)  $250,000 and $250,000. 
D)  $100,000 and $150,000. 
A)  $150,000 and $150,000. 
B)  $150,000 and $100,000. 
C)  $250,000 and $250,000. 
D)  $100,000 and $150,000.

Question 19

A secondary activity is

Accepted Answer

A)  the second activity on the activity list. 
B)  an activity driver. 
C)  one that is consumed by intermediate cost objects. 
D)  one that is consumed by the final cost object. 
A)  the second activity on the activity list. 
B)  an activity driver. 
C)  one that is consumed by intermediate cost objects. 
D)  one that is consumed by the final cost object.

Question 20

Figure 4-4
Mannitou Company made the following predictions for 2016:   Job A2 (which was started and completed in June) used 3,000 direct labor hours, 2,000 machine hours, and $57,000 of prime costs.
-The following information is provided by the Sutton Corporation for the year:   If normal costing is used, budgeted overhead used to calculate the predetermined rate would be

Accepted Answer

A)  $443,250. 
B)  $450,000. 
C)  $487,500. 
D)  $536,250. 
A)  $443,250. 
B)  $450,000. 
C)  $487,500. 
D)  $536,250.

An activity-based costing system traces costs to activities and then to products and other cost objects.

If activity-based costing is used, insurance on the plant would be classified as a

Figure 4 - 3 The records of Family Manufacturing show the following information: -Refer to Figure 4-3. The company uses a predetermined overhead rate to apply overhead. Manufacturing overhead applied is

Activity-based costing assigns cost to cost objects by first tracing costs to

The nonfinancial and financial data that describe individual activities is called:

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 using activity based costing?

Figure 4-8 Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: -Refer to Figure 4-8. What is the allocation rate per setup using activity-based costing?

Figure 4-8 Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: -Refer for Figure 4-8. What is the allocation rate per packing order using activity-based costing?

For a labor-intensive manufacturing operation, which of the following would be the most appropriate activity driver?

Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level.

A(n) method first traces costs to a department and then to products.

A secondary activity is

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters

Exam 4: Activity-Based Costing

An activity-based costing system traces costs to activities and then to products and other cost objects.

If activity-based costing is used, insurance on the plant would be classified as a

Figure 4 - 3 The records of Family Manufacturing show the following information: -Refer to Figure 4-3. The company uses a predetermined overhead rate to apply overhead. Manufacturing overhead applied is

Activity-based costing assigns cost to cost objects by first tracing costs to

The nonfinancial and financial data that describe individual activities is called:

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 using activity based costing?

Figure 4-8 Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: -Refer to Figure 4-8. What is the allocation rate per setup using activity-based costing?

Figure 4-8 Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers: -Refer for Figure 4-8. What is the allocation rate per packing order using activity-based costing?

For a labor-intensive manufacturing operation, which of the following would be the most appropriate activity driver?

Predetermined overhead rates are calculated at the end of each year using the formula: overhead rate = budgeted annual driver level/budgeted annual driver level.

A(n) method first traces costs to a department and then to products.

A secondary activity is

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Budgeting for Planning and Control

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility, Accounting, Performance Evaluation, and Transfer Pricing

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

Filters