Question 1

Activity cost pools are assigned to products, using factory overhead rates for each activity.

Accepted Answer

A) True 
 B)False  True

Question 2

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?

Accepted Answer

A)  $391,500
B)  $225,000
C)  $261,000
D)  $337,500 A

Question 3

Calculate the overhead per unit to be charged to small lamps.

Accepted Answer

A)  $75.00
B)  $39.17
C)  $38.33
D)  $17.50 A

Question 4

Determine the activity rate for production per machine hour.

Accepted Answer

A)  $62.50
B)  $150.00
C)  $75.00
D)  $176.47

Question 5

Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year.Its plantwide allocation base, machine hours, is budgeted at 100,000 hours.Budgeted units to be produced are 200,000 units.Bob's plantwide factory overhead rate is $12.00 per machine hour.

Accepted Answer

A) True 
 B)False

Question 6

Determine the activity rate for materials handling per move.

Accepted Answer

A)  $58.82
B)  $50.00
C)  $20.83
D)  $80.65

Question 7

Which of the following is not a reason for banks to use activity-based costing?

Accepted Answer

A)  to determine the amounts charged to customers for services provided
B)  to determine service quality
C)  to determine profitability of services provided
D)  all of the above

Question 8

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 if the allocation is based on direct labor hours.

Accepted Answer

A) True 
 B)False

Question 9

Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours.The production process is set up in three departments: Assembly, Finishing, and Calibrating.The following is information regarding the direct labor used to produce one unit of the two clocks:
  
The budget includes the following factory overhead by department:
  
Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks.
a Determine the total number of hours that will be needed by department.
b Determine the factory overhead rate by department using the multiple production department factory overhead rate method.
c Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall clocks.
d Determine the amount of total factory overhead to be allocated to the alarm clocks and wall clocks.

Accepted Answer

The answer of Ratchford Clocks manufactures alarm clocks and wall...

Question 10

Determine the activity-based cost for each disk drive unit.

Accepted Answer

A)  $92.25
B)  $130.69
C)  $394.12
D)  $279.57

Question 11

Zorn Co.budgeted $600,000 of factory overhead cost for the coming year.Its plantwide allocation base, machine hours, is budgeted at 100,000 hours.Budgeted units to be produced are 200,000 units.Zorn's plantwide factory overhead rate is $6.00 per unit.

Accepted Answer

A) True 
 B)False

Question 12

A single plantwide overhead rate method is very expensive to apply.

Accepted Answer

A) True 
 B)False

Question 13

Determine the overhead rate in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc.uses a multiple department rate system.

Accepted Answer

A)  $49.60 per unit
B)  $99.20 per unit
C)  $28.80 per unit
D)  $64.00 per unit

Question 14

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to small lamp production if actual direct hours for the period is 285,000?

Accepted Answer

A)  $275,000
B)  $285,000
C)  $440,000
D)  $456,000

Question 15

The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost.

Accepted Answer

A) True 
 B)False

Question 16

Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

Accepted Answer

A) True 
 B)False

Question 17

If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 26,000 units are produced?

Accepted Answer

A)  $540,000
B)  $187,200
C)  $475,000
D)  $288,600

Question 18

The Valhalla Company manufactures small lamps and desk lamps.The following shows the activities per product:
  Using the following information prepared by the Valhalla Company, determine a the activity rates for each activity and b the activity-based factory overhead per unit for each product.

Accepted Answer

The answer of The Valhalla Company manufactures small lamps and...

Question 19

The Bonnington Company manufactures small lamps and desk lamps.The following shows the activities per product:  Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps.

Accepted Answer

A)  $314,000
B)  $209,333
C)  $202,000
D)  $104,000

Question 20

Which of the following does not rely on managerial decisions involving accurate product costing?

Accepted Answer

A)  product constraints
B)  emphasis of a product line
C)  product mix
D)  product price

Exam 11: Cost Allocation and Activity-Based Costing

Activity cost pools are assigned to products, using factory overhead rates for each activity.

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?

Calculate the overhead per unit to be charged to small lamps.

Determine the activity rate for production per machine hour.

Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year.Its plantwide allocation base, machine hours, is budgeted at 100,000 hours.Budgeted units to be produced are 200,000 units.Bob's plantwide factory overhead rate is $12.00 per machine hour.

Determine the activity rate for materials handling per move.

Which of the following is not a reason for banks to use activity-based costing?

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 if the allocation is based on direct labor hours.

Determine the activity-based cost for each disk drive unit.

Zorn Co.budgeted $600,000 of factory overhead cost for the coming year.Its plantwide allocation base, machine hours, is budgeted at 100,000 hours.Budgeted units to be produced are 200,000 units.Zorn's plantwide factory overhead rate is $6.00 per unit.

A single plantwide overhead rate method is very expensive to apply.

Determine the overhead rate in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc.uses a multiple department rate system.

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to small lamp production if actual direct hours for the period is 285,000?

The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost.

Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

The Valhalla Company manufactures small lamps and desk lamps.The following shows the activities per product: Using the following information prepared by the Valhalla Company, determine a the activity rates for each activity and b the activity-based factory overhead per unit for each product.

The Bonnington Company manufactures small lamps and desk lamps.The following shows the activities per product: Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps.

Which of the following does not rely on managerial decisions involving accurate product costing?