Question 1

Lamon, Inc., manufactures and sells two products: Product J9 and Product R6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product J9 would be closest to:

Accepted Answer

A) $120.78 per unit 
B) $302.49 per unit 
C) $457.83 per unit 
D) $772.56 per unit

Question 2

Machuga, Inc., manufactures and sells two products: Product C1 and Product M2. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $18.70 per DLH. The direct materials cost per unit is $297.00 for Product C1 and $246.20 for Product M2. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product C1 would be closest to:

Accepted Answer

A) $337.32 per unit 
B) $615.60 per unit 
C) $918.18 per unit 
D) $886.41 per unit

Question 3

Drucker, Inc., manufactures and sells two products: Product F0 and Product M6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The overhead applied to each unit of Product M6 under activity-based costing is closest to:

Accepted Answer

A) $443.10 per unit 
B) $457.59 per unit 
C) $480.04 per unit 
D) $168.17 per unit

Question 4

Minon, Inc., manufactures and sells two products: Product J1 and Product E7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $19.90 per DLH. The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product J1 would be closest to:

Accepted Answer

A) $583.38 per unit 
B) $511.70 per unit 
C) $232.82 per unit 
D) $479.92 per unit

Question 5

Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:  Data for one of the company's products follow:  How much overhead cost would be assigned to Product U94W using the activity-based costing system?

Accepted Answer

A) $42,176.55 
B) $83.85 
C) $7,784.21 
D) $2,666.92

Question 6

Companies use three common approaches to assign overhead costs to products-plantwide overhead rate, departmental overhead rates, and activity-based costing. The most accurate of these three approaches is departmental overhead rates.

Accepted Answer

A) True 
 B)False

Question 7

Dunnivan, Inc., manufactures and sells two products: Product T4 and Product A1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $29.90 per DLH. The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The unit product cost of Product A1 under activity-based costing is closest to:

Accepted Answer

A) $1,190.92 per unit 
B) $1,197.37 per unit 
C) $857.20 per unit 
D) $1,146.32 per unit

Question 8

An activity in activity-based costing is an event that causes the consumption of overhead resources.

Accepted Answer

A) True 
 B)False

Question 9

The activity rates in activity-based costing are not intended to set targets for how quickly a task should be completed.

Accepted Answer

A) True 
 B)False

Question 10

Boutet, Inc., manufactures and sells two products: Product G5 and Product U1. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $21.10 per DLH. The direct materials cost per unit is $241.40 for Product G5 and $283.80 for Product U1. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  Which of the following statements concerning the unit product cost of Product U1 is true?

Accepted Answer

A) The unit product cost of Product U1 under traditional costing is greater than its unit product under activity-based costing by $93.64. 
B) The unit product cost of Product U1 under traditional costing is less than its unit product cost under activity-based costing by $93.64. 
C) The unit product cost of Product U1 under traditional costing is less than its unit product cost under activity-based costing by $82.26.

Question 11

Pachero, Inc., manufactures and sells two products: Product T1 and Product U6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $15.90 per DLH. The direct materials cost per unit is $259.80 for Product T1 and $188.80 for Product U6. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The unit product cost of Product T1 under activity-based costing is closest to:

Accepted Answer

A) $1,575.45 per unit 
B) $1,187.16 per unit 
C) $1,662.60 per unit 
D) $918.24 per unit

Question 12

The controller of Hartis Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below:  The total materials handling cost for the year is expected to be $38,448.00. If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the specialty windows is closest to:

Accepted Answer

A) $18,752 
B) $19,224 
C) $22,428 
D) $28,836

Question 13

Sampaga, Inc., manufactures and sells two products: Product S6 and Product U3. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $20.90 per DLH. The direct materials cost per unit is $145.30 for Product S6 and $221.50 for Product U3. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  Which of the following statements concerning the unit product cost of Product U3 is true?

Accepted Answer

A) The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $93.97. 
B) The unit product cost of Product U3 under traditional costing is less than its unit product cost under activity-based costing by $93.97. 
C) The unit product cost of Product U3 under traditional costing is greater than its unit product under activity-based costing by $463.26.

Question 14

Masiclat, Inc., manufactures and sells two products: Product K2 and Product O8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $21.10 per DLH. The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The unit product cost of Product K2 under activity-based costing is closest to:

Accepted Answer

A) $1,189.03 per unit 
B) $1,038.84 per unit 
C) $838.49 per unit 
D) $1,164.76 per unit

Question 15

Bohringer, Inc., manufactures and sells two products: Product A1 and Product X5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $28.20 per DLH. The direct materials cost per unit is $256.50 for Product A1 and $165.20 for Product X5. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Accepted Answer

A) $131.42 per order 
B) $38.23 per order 
C) $134.21 per order 
D) $102.44 per order

Question 16

Hammer, Inc., manufactures and sells two products: Product W7 and Product I5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $27.10 per DLH. The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  Required:
What is the difference between the unit product costs under the under the traditional costing method and the activity-based costing system for each of the two products?

Accepted Answer

The answer of Hammer, Inc., manufactures and sells two products:...

Question 17

Punches, Inc., manufactures and sells two products: Product H7 and Product Y2. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $17.80 per DLH. The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product Y2 would be closest to:

Accepted Answer

A) $320.12 per unit 
B) $195.52 per unit 
C) $153.52 per unit 
D) $735.12 per unit

Question 18

Karsten, Inc., manufactures and sells two products: Product M8 and Product I2. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $21.20 per DLH. The direct materials cost per unit for each product is given below:  The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The unit product cost of Product I2 under activity-based costing is closest to:

Accepted Answer

A) $1,133.78 per unit 
B) $1,179.38 per unit 
C) $1,439.33 per unit 
D) $969.56 per unit

Question 19

Hewett, Inc., manufactures and sells two products: Product E7 and Product U7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $29.50 per DLH. The direct materials cost per unit is $164.10 for Product E7 and $289.50 for Product U7. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The unit product cost of Product U7 under activity-based costing is closest to:

Accepted Answer

A) $1,277.42 per unit 
B) $1,199.08 per unit 
C) $1,951.54 per unit 
D) $1,431.02 per unit

Question 20

Pachero, Inc., manufactures and sells two products: Product T1 and Product U6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below:  The direct labor rate is $15.90 per DLH. The direct materials cost per unit is $259.80 for Product T1 and $188.80 for Product U6. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity:  The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Accepted Answer

A) $77.24 per order 
B) $138.89 per order 
C) $93.87 per order 
D) $126.64 per order

Exam 3: Activity-Based Costing

Hane Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Data for one of the company's products follow: How much overhead cost would be assigned to Product U94W using the activity-based costing system?

Companies use three common approaches to assign overhead costs to products-plantwide overhead rate, departmental overhead rates, and activity-based costing. The most accurate of these three approaches is departmental overhead rates.

An activity in activity-based costing is an event that causes the consumption of overhead resources.

The activity rates in activity-based costing are not intended to set targets for how quickly a task should be completed.