Question 1

Organization-sustaining overhead costs should be allocated to products just like unit-level and product-level activities.

Accepted Answer

A) True 
 B)False

Question 2

Garhart Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products.  Data concerning two products appear below:  Required:
a. How much overhead cost would be assigned to Product R57J using the company's activity-based costing system? Show your work!
b. How much overhead cost would be assigned to Product W17B using the company's activity-based costing system? Show your work!

Accepted Answer

The answer of Garhart Corporation uses the following activity rates...

Question 3

Ginger Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:   How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?

Accepted Answer

A) $528,000 
B) $454,000 
C) $418,000 
D) $396,000

Question 4

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ruise wedding cake to just break even?

Accepted Answer

A) $229.40 
B) $84.03 
C) $277.57 
D) $17.30

Question 5

What is the product margin for Product O7 under activity-based costing?

Accepted Answer

A) $46,400 
B) $10,111 
C) -$600 
D) $14,271

Question 6

In activity-based costing, nonmanufacturing costs are not assigned to products.

Accepted Answer

A) True 
 B)False

Question 7

What is the overhead cost assigned to Product L2 under activity-based costing?

Accepted Answer

A) $50,000 
B) $26,136 
C) $12,720 
D) $38,856

Question 8

Jennifer Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows:  The activity rate under the activity-based costing system for Activity 3 is closest to:

Accepted Answer

A) $36.24 
B) $38.44 
C) $84.56 
D) $115.33

Question 9

Futter Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs:  The distribution of resource consumption across the three activity cost pools is given below:  How much cost, in total, would be allocated in the first-stage allocation to the Fabricating activity cost pool?

Accepted Answer

A) $84,000 
B) $300,000 
C) $238,000 
D) $462,000

Question 10

The cost per unit of Product P under activity-based costing is closest to:

Accepted Answer

A) $4.00 
B) $30.16 
C) $10.00 
D) $6.88

Question 11

What is the overhead cost assigned to Product O7 under activity-based costing?

Accepted Answer

A) $32,129 
B) $36,289 
C) $4,160 
D) $47,000

Question 12

Laguna Corporation has provided the following data concerning its overhead costs for the coming year:  The company has an activity-based costing system with the following three activity cost pools and estimated activity for the coming year:  The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of idle capacity and organization-sustaining costs. The distribution of resource consumption across activity cost pools is given below:  The activity rate for the Order Processing activity cost pool is closest to:

Accepted Answer

A) $415 per order 
B) $405 per order 
C) $495 per order 
D) $270 per order

Question 13

Product-level activities relate to how many batches are run or units of product are made.

Accepted Answer

A) True 
 B)False

Question 14

Flyer Corporation manufactures two products, Product A and Product
A.Product B is produced on an automated production line.Overhead is currently assigned to the products on the basis of direct-labor-hours.The company estimated it would incur $396,000 in manufacturing overhead costs and produce 5,500 units of Product B and 22,000 units of Product A during the current year.Unit costs for materials and direct labor are:
  Required:
a.Compute the predetermined overhead rate under the current method of allocation and determine the unit product cost of each product for the current year.b.The company's overhead costs can be attributed to four major activities.These activities and the amount of overhead cost attributable to each for the current year are given below:
  Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. 
A.Product B is the more complex of the two products, requiring three hours of direct labor time per unit to manufacture compared to one and one-half hours of direct labor time for Product
B.Product B is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of Product

Accepted Answer

The answer of Flyer Corporation manufactures two products, Product A...

Question 15

Vassallo Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources.   Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products.  Additional data concerning the company's products appears below:  Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-based costing.
d. Determine the product margins for each product using activity-based costing.

Accepted Answer

The answer of Vassallo Corporation's activity-based costing system has three...

Question 16

Activity rates in activity-based costing are computed by dividing costs from the second-stage allocations by the activity measure for each activity cost pool.

Accepted Answer

A) True 
 B)False

Question 17

Bera 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 Q79P using the activity-based costing system?

Accepted Answer

A) $7,119.92 
B) $43,659.54 
C) $4,770.99 
D) $125.82

Question 18

The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

Accepted Answer

A) $2.86 per order 
B) $49.00 per order 
C) $5.10 per order 
D) $2.00 per order

Question 19

The Thornes Cleaning Brigade Company provides housecleaning services to its clients. The company uses an activity-based costing system for its overhead costs. The company has provided the following data from its activity-based costing system.  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Lazzara family, requested 37 jobs during the year that required a total of 222 hours of housecleaning. For this service, the client was charged $2,350.
Required:
a. Using the activity-based costing system, compute the customer margin for the Lazzara family. Round off all calculations to the nearest whole cent.
b. Assume the company decides instead to use a traditional costing system in which ALL costs are allocated to customers on the basis of cleaning hours. Compute the margin for the Lazzara family. Round off all calculations to the nearest whole cent.

Accepted Answer

The answer of The Thornes Cleaning Brigade Company provides housecleaning...

Question 20

If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to:

Accepted Answer

A) $19,696 
B) $16,020 
C) $19,224 
D) $17,280

Exam 13: Activity-Based Costing: a Tool to Aid Decision Making

Organization-sustaining overhead costs should be allocated to products just like unit-level and product-level activities.

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ruise wedding cake to just break even?

What is the product margin for Product O7 under activity-based costing?

In activity-based costing, nonmanufacturing costs are not assigned to products.

What is the overhead cost assigned to Product L2 under activity-based costing?

Jennifer Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to:

The cost per unit of Product P under activity-based costing is closest to:

What is the overhead cost assigned to Product O7 under activity-based costing?

Product-level activities relate to how many batches are run or units of product are made.

Activity rates in activity-based costing are computed by dividing costs from the second-stage allocations by the activity measure for each activity cost pool.

Bera 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 Q79P using the activity-based costing system?

The activity rate for the Order Filling activity cost pool under activity-based costing is closest to:

If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the wall mirrors is closest to: