Deck 6: Activity-Based Costing

Question 1

The following information is provided for the year:
$\begin{array}{lr}\text { Actual direct labour hours worked } & 36,000 \\\text { Budgeted overhead } & \$ 300,000 \\\text { Budgeted direct labour hours } & 30,000 \\\text { Actual overhead costs incurred } & \$ 360,000\end{array}$

-Refer to the figure.If normal costing is used,what is the amount of overhead applied for the year?

A)$299,880
B)$300,000
C)$360,000
D)$380,000

Answer 1

$360,000

Question 2

What is the formula used to calculate a predetermined overhead rate?

A)actual annual overhead/budgeted annual driver level
B)budgeted annual overhead/budgeted annual driver level
C)budgeted annual overhead/actual annual driver level
D)actual annual overhead/actual annual driver level

Answer 2

B

Question 3

What is one characteristic of a unit-based costing system?

A)It uses traditional product costing definitions.
B)It uses batch-based activity drivers to assign overhead to products.
C)It is more expensive than an activity-based costing system.
D)It offers greater product costing accuracy than an activity-based costing system.

Answer 3

A

Question 4

A department that is capital intensive most likely would use a predetermined departmental overhead rate based on which of the following activity bases?

A)units of direct material used
B)direct labour hours
C)direct labour cost
D)machine hours

Question 5

The following information is provided:
$\begin{array}{lr}\text { Estimated manufacturing overhead } & \$ 690,000 \\\text { Estimated machine hours } & 46,000 \\\text { Actual machine hours worked } & 50,000\\\\\text { Actual costs incurred: }\\\text { Indirect materials } & \$ 170,000 \\\text { Indirect labour } & 230,000 \\\text { Utilities } & 120,000 \\\text { Insurance } & 100,000 \\\text { Rent } & 80,000\end{array}$

-Refer to the figure.What is the amount of overapplied or underapplied overhead?

A)$10,000 underapplied
B)$50,000 overapplied
C)$60,000 overapplied
D)$65,200 underapplied

Question 6

Which of the following is a unit-based activity driver?

A)number of setups
B)number of direct labour hours
C)number of inspections
D)number of material moves

Question 7

If unit-based product costing is used,which of the following would be traced directly to the product?

A)setup costs
B)direct labour
C)maintenance of machinery
D)inspection costs

Question 8

What is a component of the overhead rates of the traditional functional-based product costing?

A)non-unit-based activity drivers
B)unit-based activity drivers
C)process costing
D)job order costing

Question 9

What is the term for a costing system that uses actual costs for direct materials and labour and predetermined overhead rates to apply overhead?

A)actual costing system
B)normal costing system
C)standard costing system
D)activity-based costing system

Question 10

Adams Company predicted factory overhead for Year 2 and Year 3 would be $120,000 for each year. The predicted activity for Year 2 and Year 3 would be 30,000 and 20,000 direct labour hours, respectively. Additional data are as follows:
$\begin{array}{lcc}&\underline{\text { Year } 1} & \underline{\text { Year } 2}\\\text { Sales in units } & 25,000 & 25,000 \\\text { Selling price per unit } & \$ 20 & \$ 20 \\\text { Direct materials and direct labour per unit } & \$ 10 & \$ 10\end{array}$ The company assumes that the long-run normal production level is 20,000 direct labour hours per year.The actual factory overhead cost for the end of Year 1 and Year 2 was $120,000.Assume that it takes one direct labour hour to make one finished unit.

-Refer to the figure.When the annual estimated factory overhead rate is used,what are the gross profits for Year 2 and Year 3,respectively?

A)$120,000 and $100,000
B)$120,000 and $150,000
C)$150,000 and $100,000
D)$250,000 and $250,000

Question 11

Adams Company predicted factory overhead for Year 2 and Year 3 would be $120,000 for each year. The predicted activity for Year 2 and Year 3 would be 30,000 and 20,000 direct labour hours, respectively. Additional data are as follows:
$\begin{array}{lcc}&\underline{\text { Year } 1} & \underline{\text { Year } 2}\\\text { Sales in units } & 25,000 & 25,000 \\\text { Selling price per unit } & \$ 20 & \$ 20 \\\text { Direct materials and direct labour per unit } & \$ 10 & \$ 10\end{array}$ The company assumes that the long-run normal production level is 20,000 direct labour hours per year.The actual factory overhead cost for the end of Year 1 and Year 2 was $120,000.Assume that it takes one direct labour hour to make one finished unit.

-Refer to the figure.When the normal factory overhead rate is used,what are the gross profits for Year 2 and Year 3,respectively?

A)$80,000 and $80,000
B)$100,000 and $100,000
C)$120,000 and $140,000
D)$200,000 and $200,000

Question 12

What procedure does unit-based product costing use?

A)Overhead costs are traced to departments,then costs are traced to products.
B)Overhead costs are traced to activities,then costs are traced to products.
C)Overhead costs are traced directly to products.
D)All overhead costs are expensed as incurred.

Question 13

The following information is provided for the year:
$\begin{array}{lr}\text { Actual direct labour hours worked } & 36,000 \\\text { Budgeted overhead } & \$ 300,000 \\\text { Budgeted direct labour hours } & 30,000 \\\text { Actual overhead costs incurred } & \$ 360,000\end{array}$

-Refer to the figure.What is the actual overhead rate for applying manufacturing overhead?

A)$7.14
B)$7.50
C)$10.00
D)$10.50

Question 14

In a department that is drilling holes in materials,which activity base is likely to be most appropriate for assigning overhead costs?

A)units produced
B)direct labour hours
C)machine hours
D)number of batches

Question 15

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

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

Question 16

What does unit-level product costing assign?

A)It assigns direct materials and direct labour to products and assigns overhead to departmental pools,which are assigned to products using predetermined overhead rates based on unit-level drivers.
B)It assigns direct materials,direct labour,and overhead to departmental cost pools,which are assigned to products using predetermined overhead rates based on unit-level drivers.
C)It assigns direct materials and direct labour directly to products and assigns overhead to departmental pools,which are assigned to products using predetermined overhead rates based on non-unit-level drivers.
D)It assigns direct materials,direct labour,and overhead to departmental cost pools,which are assigned to products using predetermined overhead rates based on non-unit-level drivers.

Question 17

Which of the following is a non-unit-based activity driver?

A)number of machine hours
B)number of setups
C)number of units
D)number of direct labour hours

Question 18

What costing method first traces costs to a department and then to products?

A)direct costing
B)absorption costing
C)unit-based costing
D)indirect costing

Question 19

The following information is provided:
$\begin{array}{lr}\text { Estimated manufacturing overhead } & \$ 690,000 \\\text { Estimated machine hours } & 46,000 \\\text { Actual machine hours worked } & 50,000\\\\\text { Actual costs incurred: }\\\text { Indirect materials } & \$ 170,000 \\\text { Indirect labour } & 230,000 \\\text { Utilities } & 120,000 \\\text { Insurance } & 100,000 \\\text { Rent } & 80,000\end{array}$

-Refer to the figure.The company uses a predetermined overhead rate to apply overhead.What is the manufacturing overhead applied?

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

Question 20

What are common measures of production activity?

A)units produced,machine hours,and direct labour hours
B)units produced,machine hours,and indirect labour hours
C)units produced,utilities dollars,and direct labour hours
D)Indirect material dollars,machine hours,and direct labour hours

Question 21

Long Industries uses a job-order costing system.The Moulding Department applies overhead based on machine hours,while the Assembly Department applies overhead based on direct labour hours.The company made the following estimates at the beginning of the current year: $\begin{array}{lcc}& \text { Moulding } & \text { Assembly } \\\text { Manufacturing overhead cost } & \$ 600,000 & \$ 400,000 \\\text { Machine hours } & 10,000 & 4,000 \\\text { Direct labour hours } & 12,000 & 16,000\end{array}$ The following information was available for Job No.7-29,which was started and completed during July:
$\begin{array}{lrr}&\text { Job No. 7-29 }\\&\text { Moulding }&\text { Assembly }\\\text { Direct materials } & \$ 3,500 & \$ 7,500 \\\text { Direct labour } & \$ 9,000 & \$ 12,500 \\\text { Direct labour hours } & 900 & 1,250 \\\text { Marhine hours } & 500 & 400\end{array}$ What is the predetermined overhead rate for the Moulding Department?

A)$50
B)$60
C)$83
D)$100

Question 22

The Hampshire Company produces 9 volt batteries and AAA batteries. The Hampshire Company uses a plant-wide rate to apply overhead based on direct labour hours. The following data is given:
$\begin{array}{|c|c|}\hline \text { Actual overhead } & \$ 325,000 \\\hline \text { Estimated overhead } & \$ 350,000 \\\hline \text { Estimated activity: } & \\\hline \text { 9 volt battery } & 100,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \text { direct labour hours } \\\hline \text { Actual activity: } & \\\hline 9 \text { volt battery } & 125,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \quad \text { direct labour hours } \\\hline \text { Units produced: } & \\\hline 9 \text { volt battery } & 500,000 \\\hline \text { AAA battery } & 250,000 \\\hline\end{array}$

-Refer to the figure.What is the predetermined overhead rate (rounded to two decimal places)?

A)$0.62
B)$0.65
C)$0.67
D)$0.70

Question 23

The Hampshire Company produces 9 volt batteries and AAA batteries. The Hampshire Company uses a plant-wide rate to apply overhead based on direct labour hours. The following data is given:
$\begin{array}{|c|c|}\hline \text { Actual overhead } & \$ 325,000 \\\hline \text { Estimated overhead } & \$ 350,000 \\\hline \text { Estimated activity: } & \\\hline \text { 9 volt battery } & 100,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \text { direct labour hours } \\\hline \text { Actual activity: } & \\\hline 9 \text { volt battery } & 125,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \quad \text { direct labour hours } \\\hline \text { Units produced: } & \\\hline 9 \text { volt battery } & 500,000 \\\hline \text { AAA battery } & 250,000 \\\hline\end{array}$

-Refer to the figure.How much overhead is applied to 9 volt batteries and AAA batteries (rounded to two decimal places),respectively?

A)$70,000; $280,00
B)$81,250; $260,000
C)$87,500; $280,000
D)$90,000; $300,000

Question 24

The following information pertains to Black Corporation for the current year:
$\begin{array}{llr} \text { Estmated total overhead costs for the current year} &\$37,500\\ \text {Estimated direct labour costs for the current year } &25,000\\ \text { Actual direct labour costs} &22,500\\ \text { Actual overhead costs } &36,000\\ \text { Activity base} &\text { Direct labour cost } &\\\end{array}$
What is the predetermined overhead rate for Black Corporation for the current year?

A)62.5%
B)66.7%
C)150%
D)160%

Question 25

Cabrini Company produces two products: toy trucks and toy cars. The company uses departmental overhead rates for the two production departments: Moulding and Finishing. Moulding uses machine hours to assign overhead and Finishing uses direct labour hours; 50,000 trucks and 250,000 cars are produced. Please find the following data:
$\begin{array}{|l|c|c|c|}\hline & \text { Moulding } & \text { Finishing } & \text { Total } \\\hline \text { Estimated overhead } & \$ 250,000 & \$ 100,000 & \$ 350,000 \\\hline \text { Actual overhead } & \$ 240,000 & \$ 120,000 & \$ 360,000 \\\hline & & & \\\hline \text { Expected direct labour hours } & & & \\\hline \text { Trucks } & 5,000 & 5,000 & 10,000 \\\hline \text { Cars } & 5,000 & 35,000 & 40,000 \\\hline \text { Expected machine hours } & & & \\\hline \text { Trucks } & 17,000 & 3,000 & 20,000 \\\hline \text { Cars } & 3,000 & 7,000 & 10,000 \\\hline \text { Actual direct labour hours } & & & \\\hline \text { Trucks } & 4,500 & 5,300 & 10,000 \\\hline \text { Cars } & 5,500 & 34,500 & 40,000 \\\hline \text { Actual machine hours } & & & \\\hline \text { Trucks } & 16,500 & 3,500 & 20,000 \\\hline \text { Cars } & 3,200 & 6,800 & 10,000 \\\hline\end{array}$

-Refer to the figure.How much was overhead overapplied or underapplied?

A)$4,250
B)$10,000
C)$14,250
D)$20,000

Question 26

Cabrini Company produces two products: toy trucks and toy cars. The company uses departmental overhead rates for the two production departments: Moulding and Finishing. Moulding uses machine hours to assign overhead and Finishing uses direct labour hours; 50,000 trucks and 250,000 cars are produced. Please find the following data:
$\begin{array}{|l|c|c|c|}\hline & \text { Moulding } & \text { Finishing } & \text { Total } \\\hline \text { Estimated overhead } & \$ 250,000 & \$ 100,000 & \$ 350,000 \\\hline \text { Actual overhead } & \$ 240,000 & \$ 120,000 & \$ 360,000 \\\hline & & & \\\hline \text { Expected direct labour hours } & & & \\\hline \text { Trucks } & 5,000 & 5,000 & 10,000 \\\hline \text { Cars } & 5,000 & 35,000 & 40,000 \\\hline \text { Expected machine hours } & & & \\\hline \text { Trucks } & 17,000 & 3,000 & 20,000 \\\hline \text { Cars } & 3,000 & 7,000 & 10,000 \\\hline \text { Actual direct labour hours } & & & \\\hline \text { Trucks } & 4,500 & 5,300 & 10,000 \\\hline \text { Cars } & 5,500 & 34,500 & 40,000 \\\hline \text { Actual machine hours } & & & \\\hline \text { Trucks } & 16,500 & 3,500 & 20,000 \\\hline \text { Cars } & 3,200 & 6,800 & 10,000 \\\hline\end{array}$

-Refer to the figure.How much overhead is applied to the trucks?

A)$60,000
B)$219,500
C)$225,000
D)$250,000

Question 27

Erickson Company made the following predictions for the current year:
$$\begin{array} { l r } \text { Factory averhead costs } & \text {\$ 300,000 } \\\text { Direct labour hours } & 50,000 \text { hours } \\\text { Machine hours } & 100,00 \text { hours }\end{array}$$ Job A2 (which was started and completed in May)used 3,000 direct labour hours,2,000 machine hours,and $57,000 of prime costs.

-Refer to the figure.If factory overhead is applied based on direct labour hours,what is the cost of Job A2 for the Erickson Company?

A)$60,000
B)$63,000
C)$66,000
D)$75,000

Question 28

The Hampshire Company produces 9 volt batteries and AAA batteries. The Hampshire Company uses a plant-wide rate to apply overhead based on direct labour hours. The following data is given:
$\begin{array}{|c|c|}\hline \text { Actual overhead } & \$ 325,000 \\\hline \text { Estimated overhead } & \$ 350,000 \\\hline \text { Estimated activity: } & \\\hline \text { 9 volt battery } & 100,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \text { direct labour hours } \\\hline \text { Actual activity: } & \\\hline 9 \text { volt battery } & 125,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \quad \text { direct labour hours } \\\hline \text { Units produced: } & \\\hline 9 \text { volt battery } & 500,000 \\\hline \text { AAA battery } & 250,000 \\\hline\end{array}$

-Refer to the figure.How much was overhead overapplied or underapplied?

A)$17,500
B)$25,000
C)$42,500
D)$50,000

Question 29

How should material amounts of underapplied or overapplied overhead be disposed of?

A)treated as an adjustment to cost of goods sold
B)treated as an adjustment to work in process
C)allocated to direct materials,work in process,and finished goods
D)allocated to work in process,finished goods,and cost of goods sold

Question 30

Cabrini Company produces two products: toy trucks and toy cars. The company uses departmental overhead rates for the two production departments: Moulding and Finishing. Moulding uses machine hours to assign overhead and Finishing uses direct labour hours; 50,000 trucks and 250,000 cars are produced. Please find the following data:
$\begin{array}{|l|c|c|c|}\hline & \text { Moulding } & \text { Finishing } & \text { Total } \\\hline \text { Estimated overhead } & \$ 250,000 & \$ 100,000 & \$ 350,000 \\\hline \text { Actual overhead } & \$ 240,000 & \$ 120,000 & \$ 360,000 \\\hline & & & \\\hline \text { Expected direct labour hours } & & & \\\hline \text { Trucks } & 5,000 & 5,000 & 10,000 \\\hline \text { Cars } & 5,000 & 35,000 & 40,000 \\\hline \text { Expected machine hours } & & & \\\hline \text { Trucks } & 17,000 & 3,000 & 20,000 \\\hline \text { Cars } & 3,000 & 7,000 & 10,000 \\\hline \text { Actual direct labour hours } & & & \\\hline \text { Trucks } & 4,500 & 5,300 & 10,000 \\\hline \text { Cars } & 5,500 & 34,500 & 40,000 \\\hline \text { Actual machine hours } & & & \\\hline \text { Trucks } & 16,500 & 3,500 & 20,000 \\\hline \text { Cars } & 3,200 & 6,800 & 10,000 \\\hline\end{array}$

-Refer to the figure.What are the departmental overhead rates for the moulding and finishing department,respectively?

A)$8.33; $2
B)$12.50; $2.50
C)$25; $10
D)$25; $2.50

Question 31

Erickson Company made the following predictions for the current year:
$$\begin{array} { l r } \text { Factory averhead costs } & \text {\$ 300,000 } \\\text { Direct labour hours } & 50,000 \text { hours } \\\text { Machine hours } & 100,00 \text { hours }\end{array}$$ Job A2 (which was started and completed in May)used 3,000 direct labour hours,2,000 machine hours,and $57,000 of prime costs.

-Refer to the figure.If factory overhead is applied based on machine hours,what is the cost of Job A2 for the Erickson Company?

A)$63,000
B)$66,000
C)$69,000
D)$75,000

Question 32

The following information is provided for the year:
$\begin{array}{llr} \text { Actual direct labour hours worked } &27,500\\ \text {Budgeted overhead } &\$525,000\\ \text {Budgeted direct labour hours } &30,000\\ \text {Actual overhead costs incurred } &\$481,250\end{array}$
If normal costing is used,what is the amount of overhead applied for the year?

A)$441,031.25
B)$481,250.00
C)$525,000.00
D)$568,750.00

Question 33

Carlson Company uses a predetermined rate to apply overhead.At the beginning of the year,Carlson estimated its overhead costs at $240,000,direct labour hours at 40,000,and machine hours at 10,000.Actual overhead costs incurred were $249,280,actual direct labour hours were 41,000,and actual machine hours were 11,000. What is the predetermined overhead rate per machine hour for Carlson?

A)$5.85
B)$6.08
C)$22.66
D)$24.00

Question 34

The Holland Company uses a predetermined overhead rate of $12 per direct labour hour to apply overhead.During the year,30,000 direct labour hours were worked.Actual overhead costs for the year were $320,000.What is the overhead variance?

A)$36,000 underapplied
B)$36,000 overapplied
C)$40,000 underapplied
D)$40,000 overapplied

Question 35

The Hampshire Company produces 9 volt batteries and AAA batteries. The Hampshire Company uses a plant-wide rate to apply overhead based on direct labour hours. The following data is given:
$\begin{array}{|c|c|}\hline \text { Actual overhead } & \$ 325,000 \\\hline \text { Estimated overhead } & \$ 350,000 \\\hline \text { Estimated activity: } & \\\hline \text { 9 volt battery } & 100,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \text { direct labour hours } \\\hline \text { Actual activity: } & \\\hline 9 \text { volt battery } & 125,000 \quad \text { direct labour hours } \\\hline \text { AAA battery } & 400,000 \quad \text { direct labour hours } \\\hline \text { Units produced: } & \\\hline 9 \text { volt battery } & 500,000 \\\hline \text { AAA battery } & 250,000 \\\hline\end{array}$

-Refer to the figure.If the accounts had the following balances,by how much would cost of goods sold be adjusted? $\begin{array}{|l|l|}\hline \text { Raw materials inventory } & \$ 200,000 \\\hline \text { Work in process inventory } & \$ 100,000 \\\hline \text { Finished goods inventory } & \$ 200,000 \\\hline \text { Cost of goods sold } & \$ 500,000 \\\hline\end{array}$

A)debit $12,500.50
B)debit $21,250
C)credit $26,562.50
D)credit $28,500

Question 36

The following information is provided for the year:
$\begin{array}{llr} \text { Actual overhead } &\$450,000\\ \text {Actual machine hours worked } &25,000\\\text { Budgeted machine hours} &27,500\\ \text {Applied overhead } &\$487,500\end{array}$
If normal costing is used,what would be the budgeted overhead used to calculate the predetermined rate?

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

Question 37

Account balances are as follows: $\begin{array}{lc}\text { Manufacturing overhead } & \$ 240,000 \text { underapplied } \\\text { Work in process } & 100,000 \\\text { Finished goods } & 300,000 \\\text { Cost of goods sold } & 800,000\end{array}$
If underapplied or overapplied overhead is material and is allocated to work in process,finished goods,and cost of goods sold (based on ending account balances),what would be the balance of cost of goods sold after adjustment?

A)$640,000
B)$960,000
C)$1,040,000
D)$1,440,000

Question 38

Assume the following: Actual overhead costs equalled estimated overhead.Actual direct labour hours exceeded estimated direct labour hours used to calculate the predetermined overhead rate.If overhead is applied using the predetermined overhead rate,what will be the impact on the overhead?

A)overapplied
B)underapplied
C)$0
D)applied

Question 39

Cabrini Company produces two products: toy trucks and toy cars. The company uses departmental overhead rates for the two production departments: Moulding and Finishing. Moulding uses machine hours to assign overhead and Finishing uses direct labour hours; 50,000 trucks and 250,000 cars are produced. Please find the following data:
$\begin{array}{|l|c|c|c|}\hline & \text { Moulding } & \text { Finishing } & \text { Total } \\\hline \text { Estimated overhead } & \$ 250,000 & \$ 100,000 & \$ 350,000 \\\hline \text { Actual overhead } & \$ 240,000 & \$ 120,000 & \$ 360,000 \\\hline & & & \\\hline \text { Expected direct labour hours } & & & \\\hline \text { Trucks } & 5,000 & 5,000 & 10,000 \\\hline \text { Cars } & 5,000 & 35,000 & 40,000 \\\hline \text { Expected machine hours } & & & \\\hline \text { Trucks } & 17,000 & 3,000 & 20,000 \\\hline \text { Cars } & 3,000 & 7,000 & 10,000 \\\hline \text { Actual direct labour hours } & & & \\\hline \text { Trucks } & 4,500 & 5,300 & 10,000 \\\hline \text { Cars } & 5,500 & 34,500 & 40,000 \\\hline \text { Actual machine hours } & & & \\\hline \text { Trucks } & 16,500 & 3,500 & 20,000 \\\hline \text { Cars } & 3,200 & 6,800 & 10,000 \\\hline\end{array}$

-Refer to the figure.What is the overhead per unit for cars (rounded to two decimal places)?

A)$0.32
B)$0.50
C)$0.51
D)$1.40

Question 40

Walter Company uses a job-order costing system to account for product costs.The following information pertains to the current year: $\begin{array}{lr}\text { Materials placed into production } & \$ 140,000 \\\text { Indirect labour } & 40,000 \\\text { Direct labour (10,000 hours) } & 160,000 \\\text { Depreciation of factory building } & 60,000 \\\text { Other factory overhead } & 100,000 \\\text { Increase in work-in-process inventory } & 30,000\end{array}$ Factory overhead rate is $18 per direct labour hour.
What is the amount of underapplied or overapplied overhead for Walter Company in the current year?

A)$20,000 underapplied
B)$20,000 overapplied
C)$40,000 underapplied
D)$40,000 overapplied

Question 41

The Ogunquit Company uses a predetermined overhead rate. The following accounts have these unadjusted balances:
$\begin{array}{ll}\text { Raw Materials } & \$ 20,000 \\\text { Work in Process } & \$ 40,000 \\\text { Finished Goods } & \$ 10,000 \\\text { Cost of Goods Sold } & \$ 50,000\end{array}$

-Refer to the figure.If Manufacturing Overhead was $12,000 overapplied and considered material,what is the journal entry?

A)Cost of Goods Sold $\quad\quad \$ 12,000$
Manufacturing Overhead $\quad\quad\quad\quad\quad \$ 12,000$
B)Manufacturing Overhead $\quad\$ 12,000$
Cost of Goods Sold $\quad\quad\quad\quad\quad\quad\quad\$ 12,000$
C) $\begin{array}{cc}\text { Manufacturing Overhead } & \$ 12,000 \\& \\\text { Raw Materials } & \$ 2,000 \\\text { Work in Process } & \$ 4,000 \\\text { Finished Goods } & \$ 1,000 \\\text { Cost of Goods Sold } & \$ 5,000\end{array}$
D) $\begin{array}{ccc}\text { Manufacturing Overhead } & \$ 12,000 & \\\text { Work in Process } && \$ 4,800 \\\text { Finished Goods } && \$ 1,200 \\\text { Cost of Goods Sold } && \$ 6,000\end{array}$

Question 42

Igor Inc.had a predetermined overhead rate of $2 per direct labour hour.The direct labour hours were estimated to be 25,000.The actual manufacturing overhead incurred was $47,000,and 24,000 actual direct labour hours were worked.How much was overhead either overapplied or underapplied last year?

A)$1,000 underapplied
B)$1,000 overapplied
C)$2,000 underapplied
D)$3,000 overapplied

Question 43

The Ogunquit Company uses a predetermined overhead rate. The following accounts have these unadjusted balances:
$\begin{array}{ll}\text { Raw Materials } & \$ 20,000 \\\text { Work in Process } & \$ 40,000 \\\text { Finished Goods } & \$ 10,000 \\\text { Cost of Goods Sold } & \$ 50,000\end{array}$

-Refer to the figure.If Manufacturing Overhead was $12,000 overapplied and considered immaterial,what is the journal entry?

A) $\begin{array}{lr}\text { Cost of Goods Sold}&\$12,000\\\text {Manufacturing Overhead }&&\$12,000\\\end{array}$

B) $$\begin{array} { c c } \text { Manufacturing Overhead }& \$ 12,000 \\\text { Cost of Goods Sold }&&\$ 12,000 \\\end{array}$$
C) $$\begin{array} { l l l } \text { Manufacturing Overhead } & \$ 12,000 & \\\text { Raw Materials } & & \$ 2,000 \\\text { Work in Process } && \$ 4,000 \\\text { Finished Goods } & &\$ 1,000 \\\text { Cost of Goods Sold } && \$ 5,000\end{array}$$
D) $$\begin{array} { c c c } \text { Manufacturing Overhead } & \$ 12,000 & \\\text { Work in Process } & & \$ 4,800 \\\text { Finished Goods } && \$ 1,200 \\\text { Cost of Goods Sold } && \$ 6,000\end{array}$$

Question 44

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.What is the consumption ratio for the plant-wide activity rate?

A)0.2; 0.8
B)0.25; 0.75
C)0.71; 0.29
D)0.8; 0.2

Question 45

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.What is the unit product cost for mops if a plant-wide rate is used?

A)$4.00
B)$4.12
C)$5.40
D)$11.00

Question 46

Bangor Company applies manufacturing overhead.At the end of the year the following data were available: $\begin{array}{|l|l|}\hline \text { Actual manufacturing overhead } & \$ 115,000 \\\hline \text { Estimated manufacturing overhead } & \$ 120,000 \\\hline \text { Applied manufacturing overhead } & \$ 118,000 \\\hline\end{array}$ What is the journal entry if the amount is considered small?

A) $\begin{array}{c}\text { Manufacturing Overhead } &\$ 3,000 \\\text { Cost of Goods Sold }&&\$ 3,000\end{array}$
B) $\begin{array}{c}\text { Manufacturing Overhead } &\$ 5,000 \\\text { Cost of Goods Sold }&&\$ 5,000\end{array}$
C) $\begin{array}{ccc}\text { Cost of Goods Sold } & \$ 2,000 & \\\text { Manufacturing Overhead } && \$ 2,000\end{array}$
D) $\begin{array}{ccc}\text { Cost of Goods Sold } & \$ 3,000 & \\\text { Manufacturing Overhead } && \$ 3,000\end{array}$

Question 47

When can product costs be distorted if a unit-based activity driver is used?

A)when non-unit-based overhead costs are an insignificant proportion of total overhead
B)when the consumption ratios differ between unit-based and non-unit-based input categories
C)when the amount of overhead that each product consumes is insignificant
D)when the degree of product diversity produced is small

Question 48

The Ogunquit Company uses a predetermined overhead rate. The following accounts have these unadjusted balances:
$\begin{array}{ll}\text { Raw Materials } & \$ 20,000 \\\text { Work in Process } & \$ 40,000 \\\text { Finished Goods } & \$ 10,000 \\\text { Cost of Goods Sold } & \$ 50,000\end{array}$

-Refer to the figure.If Manufacturing Overhead was $12,000 underapplied and considered material,what is the journal entry?

A)Cost of Goods Sold $12,000 Manufacturing Overhead $12,000
B)Work in Process $4,800 Finished Goods $1,200
Cost of Goods Sold $6,000
Manufacturing Overhead $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

Question 49

Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
$$\begin{array} { l c c c } \text { Product } & \text { Number of setups } & \text { Machine Hours } & \text { Packine Orders } \\\mathbf { X } & 10 & 500 & 75 \\Y & 10 & 2,000 & 175 \\\\\text { Cost per pod } & \$ 9,000 & \$ 60,000 & \$ 15,000\end{array}$$

-Refer to the figure.If the number of machine hours is used to assign machine hour cost,what is the amount of machine hour cost to be assigned to Product X?

A)$12,000
B)$16,800
C)$48,000
D)$60,000

Question 50

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.Emmanuele Company uses departmental overhead rates: Moulding uses machine hours and Assembly uses labour hours.What is the unit product cost for brooms if departmental overhead rates are used?

A)$1.40
B)$3.00
C)$3.50
D)$8.50

Question 51

Portland Company applies manufacturing overhead.At the end of the year the following data were available: $\begin{array}{|l|l|}\hline \text { Actual manufacturing overhead } & \$ 115,000 \\\hline \text { Estimated manufacturing overhead } & \$ 110,000 \\\hline \text { Applied manufacturing overhead } & \$ 100,000 \\\hline\end{array}$ The following accounts had the unadjusted balances:
$\begin{array}{|l|l|}\hline \text { Raw materials inventory } & \$ 100,000 \\\hline \text { Work-in-process inventory } & \$ 100,000 \\\hline \text { Finished goods inventory } & \$ 100,000 \\\hline \text { Cost of goods sold } & \$ 300,000 \\\hline\end{array}$ What is the journal entry if the amount is considered material?

A) $\begin{array}{ll}\text { Work in Process } & \$ 1,000 \\\text { Finished Goods } & \$ 1,000 \\\text { Cost of Goods Sold } & \$ 3,000\\\text { Manufacturing Overhead }&&\$5,000\end{array}$
B) $$\begin{array} { c c c } \text { Manufacturing Overhead } & \$ 5,000 & \\\text { Work in Process } & & \$ 1,000 \\\text { Finished Goods } && \$ 1,000 \\\text { Cost of Goods Sold } && \$ 3,000\end{array}$$
C) $\begin{array}{l}\begin{array}{ll}\text { Work in Process } & \$ 3,000 \\\text { Finished Goods } & \$ 3,000 \\\text { Cost of Goods Sold } & \$ 9,000\end{array}\\\text { Manufacturing Overhead } &\$ 15,000\end{array}$
D) $\begin{array} { c c c } \text { Manufacturing Overhead } & \$ 15,000 & \\\text { Work in Process } & &\$ 3,000 \\\text { Finished Goods } && \$ 3,000 \\\text { Cost of Goods Sold } && \$ 9,000\end{array}$

Question 52

Providence Company uses departmental manufacturing overhead rates to apply overhead.Direct labour cost is used to apply manufacturing overhead in Department A and machine hours are used for Department B. $\begin{array}{|l|c|c|}\hline & \text { Dept. A } & \text { Dept. B } \\\hline \text { Direct labour cost } & \$ 56,000 & \$ 33,000 \\\hline \text { Factory overhead } & \$ 67,200 & \$ 45,000 \\\hline \text { Direct labour hours } & 8,000 & \\& & 9,000 \\\hline \text { Machine hours } & 4,000 & 15,000 \\\hline\end{array}$ What predetermined overhead rate would be used for departments A and B,respectively?

A)83%; $3
B)83%; $5
C)120%; $3
D)$130%; $5

Question 53

Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
$$\begin{array} { l c c c } \text { Product } & \text { Number of setups } & \text { Machine Hours } & \text { Packine Orders } \\\mathbf { X } & 10 & 500 & 75 \\Y & 10 & 2,000 & 175 \\\\\text { Cost per pod } & \$ 9,000 & \$ 60,000 & \$ 15,000\end{array}$$

-Refer to the figure.What is the allocation rate per packing order using activity-based costing?

A)$60
B)$200
C)$7,500
D)$15,000

Question 54

The Ogunquit Company uses a predetermined overhead rate. The following accounts have these unadjusted balances:
$\begin{array}{ll}\text { Raw Materials } & \$ 20,000 \\\text { Work in Process } & \$ 40,000 \\\text { Finished Goods } & \$ 10,000 \\\text { Cost of Goods Sold } & \$ 50,000\end{array}$

-Refer to the figure.If Overhead is underapplied by $12,000 and considered immaterial,what would be the journal entry?

A)Cost of Goods Sold $\quad\quad\$ 12,000$
Manufacturing Overhead $\quad\quad\quad\quad\quad\$ 12,000$
B) $$\begin{array} { l } \text { Manufacturing Overhead } &\$ 12,000 \\\text { Cost of Goods Sold } && \$ 12,000\end{array}$$
C) $\begin{array}{l}\begin{array}{ll}\text { Raw Materials } & \$ 2,000 \\\text { Work in Process } & \$ 4,000 \\\text { Finished Goods } & \$ 1,000 \\\text { Cost of Goods Sold } & \$ 5,000\end{array}\\\text { Manufacturing Overhead }& \$ 12,000\end{array}$
D) $$\begin{array} { l l l } \text { Manufacturing Overhead } & \$ 12,000 & \\\text { Raw Materials } & & \$ 2,000 \\\text { Work in Process } && \$ 4,000 \\\text { Finished Goods } & &\$ 1,000 \\\text { Cost of Goods Sold } && \$ 5,000\end{array}$$

Question 55

Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
$$\begin{array} { l c c c } \text { Product } & \text { Number of setups } & \text { Machine Hours } & \text { Packine Orders } \\\mathbf { X } & 10 & 500 & 75 \\Y & 10 & 2,000 & 175 \\\\\text { Cost per pod } & \$ 9,000 & \$ 60,000 & \$ 15,000\end{array}$$

-Refer to the figure.What is the allocation rate per setup using activity-based costing?

A)$450
B)$900
C)$2,100
D)$9,000

Question 56

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.What are the consumption ratios for mops and brooms,respectively,for the inspection of products activity?

A)0.2; 0.8
B)0.3; 0.7
C)0.4; 0.6
D)0.67; 0.33

Question 57

Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
$$\begin{array} { l c c c } \text { Product } & \text { Number of setups } & \text { Machine Hours } & \text { Packine Orders } \\\mathbf { X } & 10 & 500 & 75 \\Y & 10 & 2,000 & 175 \\\\\text { Cost per pod } & \$ 9,000 & \$ 60,000 & \$ 15,000\end{array}$$

-Refer to the figure.Using functional-based costing,what is the amount of overhead cost to be assigned to Product X using machine hours as the allocation base?

A)$12,000
B)$16,800
C)$48,000
D)$60,000

Question 58

Kryzski Company has a predetermined overhead rate of $6 per direct labour hour.Last year the company incurred $156,600 of actual manufacturing overhead cost and the account was $12,600 underapplied.How many direct labour hours were worked during the year?

A)24,000
B)25,000
C)26,000
D)28,200

Question 59

Winter Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed as follows:
$\begin{array}{lr}\text { Maintenance } & \$ 255,000 \\\text { Materials handling } & 125,000 \\\text { Setups } & 30,000 \\\text { Inspection } & 105,000\end{array}$ Currently,overhead is applied using a predetermined overhead rate based upon budgeted direct labour hours; 100,000 direct labour 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:
$\begin{array}{lr}\text { Direct materials } & \$ 15,000 \\\text { Direct labour (8,000 hours) } & \$ 12,000 \\\text { Number of material moves } & 100 \\\text { Number of inspections } & 120 \\\text { Number of setups } & 24 \\\text { Number of machine hours } & 4,000\end{array}$ 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:
$\begin{array}{lr}\text { Machine hours } & 60,000 \\\text { Material moves } & 20,000 \\\text { Setups } & 3,000 \\\text { Quality inspections } & 12,000\end{array}$

-Refer to the figure.What is the total cost of the proposed job if Winter Manufacturing uses direct labour hours as its only activity driver?

A)$53,200
B)$56,200
C)$68,200
D)$72,000

Question 60

Winter Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed as follows:
$\begin{array}{lr}\text { Maintenance } & \$ 255,000 \\\text { Materials handling } & 125,000 \\\text { Setups } & 30,000 \\\text { Inspection } & 105,000\end{array}$ Currently,overhead is applied using a predetermined overhead rate based upon budgeted direct labour hours; 100,000 direct labour 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:
$\begin{array}{lr}\text { Direct materials } & \$ 15,000 \\\text { Direct labour (8,000 hours) } & \$ 12,000 \\\text { Number of material moves } & 100 \\\text { Number of inspections } & 120 \\\text { Number of setups } & 24 \\\text { Number of machine hours } & 4,000\end{array}$ 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:
$\begin{array}{lr}\text { Machine hours } & 60,000 \\\text { Material moves } & 20,000 \\\text { Setups } & 3,000 \\\text { Quality inspections } & 12,000\end{array}$

-Refer to the figure.What is the amount of overhead allocated to the proposed job if Winter Manufacturing uses direct labour hours as its only activity driver?

A)$20,800
B)$30,000
C)$30,400
D)$41,200

Question 61

How does activity-based costing assign cost to cost objects?

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

Question 62

What are consumption ratios?

A)the proportion of variable costs consumed by an activity
B)the proportion of an activity consumed by variable costs
C)the proportion of a product consumed by the activity
D)the proportion of an activity consumed by the individual products

Question 63

What is the term for a simple list of activities identified in an ABC system?

A)activity inventory
B)activity dictionary
C)activity attributes
D)activity driver

Question 64

What is a secondary activity?

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

Question 65

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.What are the consumption ratios for mops for the departments on the basis of the departmental drivers (moulding; assembly)?

A)0.33; 0.25
B)0.33; 0.87
C)0.85; 0.125
D)0.85; 0.5

Question 66

What aids management in achieving objectives such as product or customer costing,continuous improvement,and environmental management?

A)activity driver
B)concatenated key
C)primary key
D)activity classification

Question 67

More accurate product costing information is produced by assigning costs using what rate?

A)volume-based plant-wide rate
B)variable-based departmental rates
C)activity-based pool rates
D)consumption-based product rates

Question 68

What is the term for the proportion of an overhead activity utilized by a product?

A)overhead ratio
B)consumption ratio
C)quick ratio
D)fixed ratio

Question 69

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.What is the unit product cost for mops?

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

Question 70

What will be the effect when a firm implements activity-based procedures for home office expenses?

A)They will allocate all home office expenses on the basis of sales revenues.
B)They will allocate all home office expenses to homogeneous cost pools.
C)They will allocate the costs in a pool using a predetermined rate per unit of activity.
D)They will allocate the costs in a pool using the actual rate per unit of activity.

Question 71

When do unit-level cost drivers create distortions?

A)when products use resources similarly
B)when products are produced using resources homogeneously
C)when different products consume resources differently
D)when different products consume resources at the same rate

Question 72

What costing system first traces costs to activities and then to products?

A)direct costing
B)absorption costing
C)functional-based costing
D)activity-based costing

Question 73

What is the impact of the use of unit-based activity drivers to assign costs?

A)It will overcost low-volume products.
B)It will overcost high-volume products.
C)It will undercost all products.
D)It will overcost all products.

Question 74

Which of the following is NOT a limitation of a plant-wide overhead rate?

A)Predetermined rates using budgeted overhead are usually the best estimate of the amount of overhead.
B)Overhead usage is not strictly linked to the units produced because some products are more complex and diverse than others.
C)Product diversity may consume overhead activities under differing consumption ratios.
D)Overhead costs tend to be underallocated to highly complex products.

Question 75

The Emmanuele Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
$\begin{array}{|l|l|l|l|}\hline & \text { Mops } & \text { Brooms } & \text { Total } \\\hline \text { Units produced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct labour hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of setups } & 25 & 75 & 100 \\\hline \text { Inspection hours } & 1,200 & 2,800 & 4,000 \\\hline \text { Number of moves } & 140 & 210 & 350\\\hline\end{array}$ Departmental Data: (expected and actual)
$\begin{array}{|l|r|r|r|}\hline & \text { Moulding } & {\text { Assembly }} & \text { Total } \\\hline \text { Direct labour hours } & & & \\\hline \text { Mops } & 5,000 & 5,000 & 10,000 \\\hline \text { Brooms } & 5,000 & 35,000 & 40,000 \\\hline \text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine hours } & & & \\\hline \text { Mops } & 17,000 & 3,000 & 20,000 \\\hline \text { Brooms } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead costs } & & & \\\hline \text { Machining } & \$ 120,000 & \$ 30,000 & \$ 150,000 \\\hline \text { Moving materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting products } & 20,000 & 30,000 & 50,000 \\\hline \text { Total } & 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$

-Refer to the figure.What is the activity rate for moving materials?

A)$1100
B)$1000
C)$800
D)$200

Question 76

Which of the following quantities is an example of an activity driver in used when the activity is providing hygienic care to patients in a hospital?

A)number of setups
B)number of orders placed
C)number of machine hours
D)number of labour hours

Question 77

Yang Manufacturing Company manufactures two products (A and B). The overhead costs ($58,000) have been divided into three cost pools that use the following activity drivers:
$\begin{array}{ccrr}&&\text { Number of Labour }\\ \underline{\text { Product }}&\underline{\text { Number of Orders }} & \underline{\text { Transactions }} & \underline{\text { Labour Hours }}\\\text { A } & 15 & 50 & 500 \\\text {B} & 10 & 150 & 2,000 \\\\\text { Cost per pool } & \$ 10,000 & \$ 8,000 & \$ 40,000\end{array}$


-Refer to the figure.What is the allocation rate per order using ABC?

A)$400
B)$2,320
C)$10,000
D)$58,000

Question 78

An activity-based costing system uses which of the following procedures?

A)Overhead costs are traced to departments,then costs are traced to products.
B)Overhead costs are traced to activities,then costs are traced to products.
C)Overhead costs are traced directly to products.
D)Overhead costs are traced to the company as a whole.

Question 79

What is the term for nonfinancial and financial data that describe individual actions?

A)activity dictionaries
B)activity attributes
C)concatenated keys
D)ABC inventories

Question 80

What would contribute to distortions caused by unit level rates?

A)Assign costs by multiplying activity rates by the amount of activity consumed.
B)Calculate individual rates for each activity with activity drivers.
C)Increase the number of rates used that reflect the diverse activity and non-unit overhead drivers.
D)Have one unit level of cost drivers.