Question 1

Plant management is a batch-level activity.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not typical of traditional costing systems?

Accepted Answer

A) Use of a single predetermined overhead rate. 
B) Use of direct labor hours or direct labor cost to assign overhead. 
C) Assumption of correlation between direct labor and incurrence of overhead cost. 
D) Use of multiple cost drivers to allocate overhead. 
A) Use of a single predetermined overhead rate. 
B) Use of direct labor hours or direct labor cost to assign overhead. 
C) Assumption of correlation between direct labor and incurrence of overhead cost. 
D) Use of multiple cost drivers to allocate overhead.

Question 3

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 traditional 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 4

Engineering design is a value-added activity.

Accepted Answer

A) True 
 B)False

Question 5

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: $$\begin{array} { l c c } 
& \text { Regular } & \text { Supreme } \
\text { Direct labor hours } & 10,000 & 15,000 \
\text { Machine hours } & 10,000 & 30,000 \
\text { Number of parts } & 90,000 & 160,000
\end{array}$$ Overhead applied to Supreme using activity-based costing 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 6

A non-value-added activity in a service enterprise is

Accepted Answer

A) taking appointments. 
B) traveling. 
C) advertising. 
D) all of these. 
A) taking appointments. 
B) traveling. 
C) advertising. 
D) all of these.

Question 7

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

Accepted Answer

A) Painting 
B) Finishing 
C) Packaging 
D) Building maintenance 
A) Painting 
B) Finishing 
C) Packaging 
D) Building maintenance

Question 8

Nott Company manufactures two products, pillows and comforters.The company has estimated its overhead in the order-processing department to be $600,000.The company produces 50,000 pillows and 80,000 comforters each year.Pillow production requires 25,000 machine hours, comforter production requires 50,000 machine hours.The company places raw materials orders 10 times per month, 2 times for raw materials for pillows and the remainder for raw materials for comforters.How much of the order processing overhead should be allocated to comforters?

Accepted Answer

A) $300,000 
B) $400,000 
C) $369,232 
D) $480,000 
A) $300,000 
B) $400,000 
C) $369,232 
D) $480,000

Question 9

Foxx Company incurs $480,000 overhead costs each year in its three main departments, setup ($30,000), machining ($330,000), and packing ($120,000).The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year.Information about Foxx's two products is as follows: $$\begin{array} { l c c } 
& \text { ProductA1 } & \text { Product B1 } \
\text { Number of setups } & 20 & 20 \
\text { Machining hours } & 1,000 & 4,000 \
\text { Orders packed } & 150 & 350 \
\text { Number of products manufactured } & 600 & 400
\end{array}$$ Using ABC, how much overhead is assigned to Product B1 each year?

Accepted Answer

A) $240,000 
B) $192,000 
C) $363,000 
D) $384,000 
A) $240,000 
B) $192,000 
C) $363,000 
D) $384,000

Question 10

Which of the following is not a batch-level activity?

Accepted Answer

A) Engineering changes 
B) Equipment setups 
C) Inspection 
D) Materials handling 
A) Engineering changes 
B) Equipment setups 
C) Inspection 
D) Materials handling

Question 11

Rework costs typically increase in just-in-time processing.

Accepted Answer

A) True 
 B)False

Question 12

Hale Company manufactures two models of its couch, the Mini and the Maxi.The Mini model requires 10,000 direct labor hours and the Maxi model requires 40,000 direct labor hours.The company produces 4,000 units of the Mini model and 1,000 units of the Maxi model each year.The company produces the Mini model in batch sizes of 200, while it produces the Maxi model in batch sizes of 100.The company expects to incur $360,000 of total setup costs this year.How much of the setup costs are allocated to the Mini model using ABC costing?

Accepted Answer

A) $240,000 
B) $180,000 
C) $72,000 
D) $300,000 
A) $240,000 
B) $180,000 
C) $72,000 
D) $300,000

Question 13

An activity-based overhead rate is computed as follows:

Accepted Answer

A) actual overhead divided by actual use of cost drivers. 
B) estimated overhead divided by actual use of cost drivers. 
C) actual overhead divided by estimated use of cost drivers. 
D) estimated overhead divided by estimated use of cost drivers. 
A) actual overhead divided by actual use of cost drivers. 
B) estimated overhead divided by actual use of cost drivers. 
C) actual overhead divided by estimated use of cost drivers. 
D) estimated overhead divided by estimated use of cost drivers.

Question 14

Which of the following is not a unit-level activity?

Accepted Answer

A) Drilling 
B) Cutting 
C) Sanding 
D) Inspecting 
A) Drilling 
B) Cutting 
C) Sanding 
D) Inspecting

Question 15

Which of the following is a value-added activity?

Accepted Answer

A) Engineering design 
B) Machinery repair 
C) Inventory storage 
D) Inspections 
A) Engineering design 
B) Machinery repair 
C) Inventory storage 
D) Inspections

Question 16

Inventory storage costs are reduced in just-in-time processing.

Accepted Answer

A) True 
 B)False

Question 17

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: Overhead applied to audit 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 18

The presence of any of the following factors would suggest a switch to ABC except when

Accepted Answer

A) product lines differ greatly in volume. 
B) overhead costs constitute a major portion of total costs. 
C) the manufacturing process has changed significantly. 
D) production managers are using data provided by the existing system 
A) product lines differ greatly in volume. 
B) overhead costs constitute a major portion of total costs. 
C) the manufacturing process has changed significantly. 
D) production managers are using data provided by the existing system

Question 19

Identifying and classifying activities is the

Accepted Answer

A) last step under ABC. 
B) first step under ABC. 
C) second step under ABC. 
D) None of these answers is correct. 
A) last step under ABC. 
B) first step under ABC. 
C) second step under ABC. 
D) None of these answers is correct.

Question 20

Which of the following is a unit-level activity?

Accepted Answer

A) Painting 
B) Purchase ordering 
C) Inspection 
D) Material handling 
A) Painting 
B) Purchase ordering 
C) Inspection 
D) Material handling

Plant management is a batch-level activity.

Which of the following is not typical of traditional costing systems?

Engineering design is a value-added activity.

A non-value-added activity in a service enterprise is

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

Which of the following is not a batch-level activity?

Rework costs typically increase in just-in-time processing.

An activity-based overhead rate is computed as follows:

Which of the following is not a unit-level activity?

Which of the following is a value-added activity?

Inventory storage costs are reduced in just-in-time processing.

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: Overhead applied to audit services using activity-based costing is

The presence of any of the following factors would suggest a switch to ABC except when

Identifying and classifying activities is the

Which of the following is a unit-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

Exam 4: Accrual Accounting Concepts

Plant management is a batch-level activity.

Which of the following is not typical of traditional costing systems?

Engineering design is a value-added activity.

A non-value-added activity in a service enterprise is

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

Which of the following is not a batch-level activity?

Rework costs typically increase in just-in-time processing.

An activity-based overhead rate is computed as follows:

Which of the following is not a unit-level activity?

Which of the following is a value-added activity?

Inventory storage costs are reduced in just-in-time processing.

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: Overhead applied to audit services using activity-based costing is

The presence of any of the following factors would suggest a switch to ABC except when

Identifying and classifying activities is the

Which of the following is a unit-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