Question 1

Which of the following is a non-value-added activity?

Accepted Answer

A) Inventory control 
B) Machining 
C) Assembly 
D) Painting 
A) Inventory control 
B) Machining 
C) Assembly 
D) Painting A

Question 2

Which of the following is true of activity-based costing?

Accepted Answer

A) More cost pools 
B) Same base as traditional costing 
C) Less costly to use 
D) Eliminates arbitrary allocations 
A) More cost pools 
B) Same base as traditional costing 
C) Less costly to use 
D) Eliminates arbitrary allocations A

Question 3

Just-in-time processing

Accepted Answer

A) is based on a just-in-case philosophy. 
B) results in a push approach. 
C) minimizes inventory storage and waiting time. 
D) all of these. 
A) is based on a just-in-case philosophy. 
B) results in a push approach. 
C) minimizes inventory storage and waiting time. 
D) all of these. C

Question 4

Use of activity-based costing will result in the development of

Accepted Answer

A) one overhead rate based on direct labor hours. 
B) one plantwide activity-based overhead rate. 
C) multiple activity-based overhead rates. 
D) no overhead rates; overhead rates are not used in activity-based costing. 
A) one overhead rate based on direct labor hours. 
B) one plantwide activity-based overhead rate. 
C) multiple activity-based overhead rates. 
D) no overhead rates; overhead rates are not used in activity-based costing.

Question 5

Estimated costs for activity cost pools and other item(s) are as follows: $$\begin{array} { l r } 
\text { Machining } & \$ 500,000 \
\text { Assembling } & 200,000 \
\text { Advertising } & 450,000 \
\text { Inspecting and testing } & 175,000
\end{array}$$ Total estimated overhead is

Accepted Answer

A) $700,000. 
B) $875,000. 
C) $1,150,000. 
D) $1,325,000. 
A) $700,000. 
B) $875,000. 
C) $1,150,000. 
D) $1,325,000.

Question 6

Kiner Co.computed an overhead rate for machining costs ($500,000) of $5 per machine hour.Machining costs are driven by machine hours.If computed based on direct labor hours, the overhead rate for machining costs would be $10 per direct labor hour.The company produces two products, Cape and Chap.Cape requires 60,000 machine hours and 20,000 direct labor hours, while Chap requires 40,000 machine hours and 30,000 direct labor hours.Using activity-based costing, machining costs assigned to each product is $$\begin{array} { l c c } 
&\text { Cape }& \text { Chap } \
\text { a. } & \$ 200,000 & \$ 300,000 \
\text { b. } & \$ 750,000 & \$ 250,000 \
\text { c. } & \$ 266,667 & \$ 233,333 \
\text { d. } & \$ 300,000 & \$ 200,000
\end{array}$$

Accepted Answer

The answer of Kiner Co.computed an overhead rate for machining...

Question 7

Non-value-added activities increase the cost of a product but not its perceived value.

Accepted Answer

A) True 
 B)False

Question 8

Ben Gordon, Inc.manufactures 2 products, wheels and seats.The company has estimated its overhead in the assembling department to be $660,000.The company produces 300,000 wheels and 600,000 seats each year.Each wheel uses 2 parts, and each seat uses 3 parts.How much of the assembly overhead should be allocated to wheels?

Accepted Answer

A) $165,000. 
B) $220,000. 
C) $264,000 
D) $282,856. 
A) $165,000. 
B) $220,000. 
C) $264,000 
D) $282,856.

Question 9

A company incurs $4,050,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing.The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime.The following data are available: $\begin{array}{crr}\text { Department }&\text { Expected use of Driver }&\text { Cost }\
\hline \text { Ordering and Receiving } & 2,000 & \$ 1,200,000 \
\text { Mixing } & 50,000 & 1,500,000 \
\text { Testing } & 1,500 & 1,350,000
\end{array}$

$\text { Production information for Slime is as follows: }$
$\begin{array}{cr}\text { Department }&\text { Expected use of Driver }\
\text { Ordering and Receiving } & 1,600 \
\text { Mixing } & 30,000 \
\text { Testing } & 1,000
\end{array}$ Compute the amount of overhead assigned to Goo.

Accepted Answer

A) $1,012,500 
B) $1,290,000 
C) $1,582,146 
D) $2,025,000 
A) $1,012,500 
B) $1,290,000 
C) $1,582,146 
D) $2,025,000

Question 10

Which would be an appropriate cost driver for the machining activity cost pool?

Accepted Answer

A) Machine setups 
B) Purchase orders 
C) Machine hours 
D) Inspections 
A) Machine setups 
B) Purchase orders 
C) Machine hours 
D) Inspections

Question 11

Gant Accounting performs two types of services, Audit and Tax.Gant's overhead costs consist of computer support, $300,000; and legal support, $150,000.Information on the two services is: $$\begin{array} { l r r } 
& { \text { Audit } } &{ \text { Tax } } \
\text { Direct labor cost } & \$ 50,000 & \$ 100,000 \
\text { CPU minutes } & 40,000 & 10,000 \
\text { Legal hours used } & 200 & 800
\end{array}$$ Overhead applied to tax services using activity-based costing is

Accepted Answer

A) $150,000. 
B) $180,000. 
C) $270,000. 
D) $300,000. 
A) $150,000. 
B) $180,000. 
C) $270,000. 
D) $300,000.

Question 12

Boswell Company manufactures two products, Regular and Supreme.Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000.Information on the two products is: $$\begin{array} { l c r } 
&\text { Regular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Regular using traditional costing using direct labor hours is

Accepted Answer

A) $1,290,000. 
B) $1,800,000. 
C) $2,700,000. 
D) $3,210,000. 
A) $1,290,000. 
B) $1,800,000. 
C) $2,700,000. 
D) $3,210,000.

Question 13

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

Accepted Answer

A) True 
 B)False

Question 14

Activity-based costing is used in $\begin{array}{lll}&\text { Service industries }&\text { Manufacturing industries }\
\text { a. } & \text { Yes } & \text { No } \
\text { b. } & \text { Yes } & \text { Yes } \
\text { c. } & \text { No } & \text { Yes } \
\text { d. } & \text { No } & \text { No }
\end{array}$

Accepted Answer

The answer of Activity-based costing is used in \(\begin{array}{lll}&\text {...

Question 15

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

Accepted Answer

A) True 
 B)False

Question 16

The costs that are easiest to trace directly to products are

Accepted Answer

A) direct materials and direct labor. 
B) direct labor and overhead. 
C) direct materials and overhead. 
D) none of the above; all three costs are equally easy to trace to the product. 
A) direct materials and direct labor. 
B) direct labor and overhead. 
C) direct materials and overhead. 
D) none of the above; all three costs are equally easy to trace to the product.

Question 17

Activity-based costing has been found to be useful in each of the following service industries except

Accepted Answer

A) banks. 
B) hospitals. 
C) telephone companies. 
D) ABC has been useful in any of these industries. 
A) banks. 
B) hospitals. 
C) telephone companies. 
D) ABC has been useful in any of these industries.

Question 18

As compared to a low-volume product, a high-volume product

Accepted Answer

A) usually requires less special handling. 
B) is usually responsible for more overhead costs per unit. 
C) requires relatively more machine setups. 
D) requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead. 
A) usually requires less special handling. 
B) is usually responsible for more overhead costs per unit. 
C) requires relatively more machine setups. 
D) requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead.

Question 19

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 20

Painting is a product-level activity.

Accepted Answer

A) True 
 B)False

Which of the following is a non-value-added activity?

Which of the following is true of activity-based costing?

Just-in-time processing

Use of activity-based costing will result in the development of

Estimated costs for activity cost pools and other item(s) are as follows: Machining \ 500,000 Assembling 200,000 Advertising 450,000 Inspecting and testing 175,000 Total estimated overhead is

Non-value-added activities increase the cost of a product but not its perceived value.

Which would be an appropriate cost driver for the machining activity cost pool?

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

Activity-based costing is used in Service industries Manufacturing industries a. Yes No b. Yes Yes c. No Yes d. No No

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

The costs that are easiest to trace directly to products are

Activity-based costing has been found to be useful in each of the following service industries except

As compared to a low-volume product, a high-volume product

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

Painting is a product-level activity.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

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Exam 4: Accrual Accounting Concepts

Which of the following is a non-value-added activity?

Which of the following is true of activity-based costing?

Just-in-time processing

Use of activity-based costing will result in the development of

Estimated costs for activity cost pools and other item(s) are as follows: Machining \ 500,000 Assembling 200,000 Advertising 450,000 Inspecting and testing 175,000 Total estimated overhead is

Non-value-added activities increase the cost of a product but not its perceived value.

Which would be an appropriate cost driver for the machining activity cost pool?

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

Activity-based costing is used in Service industries Manufacturing industries a. Yes No b. Yes Yes c. No Yes d. No No

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

The costs that are easiest to trace directly to products are

Activity-based costing has been found to be useful in each of the following service industries except

As compared to a low-volume product, a high-volume product

The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.

Painting is a product-level activity.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters