Question 1

Number of purchase orders is an example of a(n):

Accepted Answer

A)  Cost driver 
B)  Cost pool 
C)  Allocation rate 
D)  Pool rate 
A)  Cost driver 
B)  Cost pool 
C)  Allocation rate 
D)  Pool rate

Question 2

Assume that direct labor and direct materials are the major cost components of a product and that the small amount of overhead cost can easily be associated with products using a simple overhead allocation basis such as direct labor hours. Which one of the following statements is the most correct?

Accepted Answer

A)  Activity-based costing should probably be used in this situation. 
B)  Activity-based costing is probably too expensive to justify using it in this situation. 
C)  Job order costing is probably too expensive to justify using it in this situation. 
D)  None of these are correct 
A)  Activity-based costing should probably be used in this situation. 
B)  Activity-based costing is probably too expensive to justify using it in this situation. 
C)  Job order costing is probably too expensive to justify using it in this situation. 
D)  None of these are correct

Question 3

Company A allocates one type of overhead cost on the basis of movement of materials. The number of movement of materials processed is an example of a(n):

Accepted Answer

A)  Cost driver 
B)  Pool rate 
C)  Overhead rate 
D)  Cost pool 
A)  Cost driver 
B)  Pool rate 
C)  Overhead rate 
D)  Cost pool

Question 4

Exhibit 17-2 BigView Monitors manufactures three different sizes of computer monitors: 15-inch, 17-inch, and 20-inch. The company has recently implemented an activity-based costing system. BigView has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
  The following information relates to each size of monitor and next year's anticipated manufacturing operations:
 
- Refer to Exhibit 17-2. Under an activity-based product costing system, what is the per unit cost for manufacturing overhead of 15-inch monitors (rounded)?

Accepted Answer

A)  $95 
B)  $155 
C)  $177 
D)  $273 
A)  $95 
B)  $155 
C)  $177 
D)  $273

Question 5

BigPlay Company manufactures playground equipment. BigPlay is shifting from a traditional costing system to an activity-based costing system. The company started by identifying four overhead cost activities. Listed below is the table that the controller for BigPlay created identifying the cost activities and the percentage of time spent on each activity by various factory employees.

Accepted Answer

BigPlay's controller also gathered the t

Question 6

Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
 
The following information relates to each size of bird cage and next year's anticipated manufacturing operations:
 
-Refer to Exhibit 17-3. What is Bird's Eye View cost per cost driver for parts insertion for next year (rounded)?

Accepted Answer

A)  $0.25 per part 
B)  $0.79 per part 
C)  $7.56 per part 
D)  $21.18 per part 
A)  $0.25 per part 
B)  $0.79 per part 
C)  $7.56 per part 
D)  $21.18 per part

Question 7

Activity-based costing differs from traditional product costing in the allocation of:

Accepted Answer

A)  Direct labor costs 
B)  Direct material costs 
C)  Manufacturing overhead costs 
D)  All of these are correct 
A)  Direct labor costs 
B)  Direct material costs 
C)  Manufacturing overhead costs 
D)  All of these are correct

Question 8

With activity-based costing, overhead costs are assigned using:

Accepted Answer

A)  Product costs 
B)  Cash flows 
C)  Cost drivers 
D)  Direct labor hours 
A)  Product costs 
B)  Cash flows 
C)  Cost drivers 
D)  Direct labor hours

Question 9

Which of the following types of costing systems identifies business activities that create overhead costs and then assigns overhead to products or divisions according to these activities?

Accepted Answer

A)  Unit-based costing 
B)  Job order costing 
C)  Activity-based costing 
D)  Process costing 
A)  Unit-based costing 
B)  Job order costing 
C)  Activity-based costing 
D)  Process costing

Question 10

Exhibit 17-1 Maggie's Motors manufactures boat motors. Maggie is shifting from a traditional costing system to an activity-based costing system. She has started by identifying four overhead cost activities. Listed below is the table that Maggie created identifying the cost activities and the percentage of time spent on each activity by various factory employees.
  Maggie also gathered the total overhead cost associated with each factory employee which is shown below:
  
-Refer to Exhibit 17-1. Using the information above, compute the amount of the cost pool associated with engineering changes.

Accepted Answer

A)  $130,250 
B)  $105,000 
C)  $88,500 
D)  $66,500 
A)  $130,250 
B)  $105,000 
C)  $88,500 
D)  $66,500

Question 11

Carolina manufactures two products. The following information is available concerning the manufacturing overhead costs:

Accepted Answer

The answer of Carolina manufactures two products. The following information...

Question 12

Which of the following would most likely NOT be considered a source of a product line activity?

Accepted Answer

A)  Product manager 
B)  In-house training for special services 
C)  Depreciation on the product warehouse 
D)  Maintenance of machinery 
A)  Product manager 
B)  In-house training for special services 
C)  Depreciation on the product warehouse 
D)  Maintenance of machinery

Question 13

For greater accuracy when using activity-based costing, management accountants should:

Accepted Answer

A)  Use the just-in-time inventory system 
B)  Carefully estimate the total amount of overhead costs 
C)  Compute a plant-wide rate of allocation based on volume 
D)  Have a larger number of cost pools 
A)  Use the just-in-time inventory system 
B)  Carefully estimate the total amount of overhead costs 
C)  Compute a plant-wide rate of allocation based on volume 
D)  Have a larger number of cost pools

Question 14

Exhibit 17-4 The Dormir Company uses an activity-based costing system to account for its process of manufacturing camping tents. Each tent has $140 of direct materials, includes 15 parts, and requires 3 hours of machine time. Information on conversion costs, manufacturing activities, and cost drivers is listed below.
  
-Refer to Exhibit 17-4. The cost of assembling per tent is:

Accepted Answer

A)  $3.00 
B)  $15.00 
C)  $20.00 
D)  $45.00 
A)  $3.00 
B)  $15.00 
C)  $20.00 
D)  $45.00

Question 15

If activity-based costing is used, property taxes would be classified as a:

Accepted Answer

A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity 
A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity

Question 16

An appropriate cost driver for inspection costs is:

Accepted Answer

A)  Number of inspected products sold 
B)  Quantity of items produced 
C)  Direct labor hours 
D)  Number of inspections completed 
A)  Number of inspected products sold 
B)  Quantity of items produced 
C)  Direct labor hours 
D)  Number of inspections completed

Question 17

Jantar Company makes three different styles of kitchen tables: round, oblong, and rectangle. The following information is provided about the company's costs:
  
    Determine the overhead cost per unit for each cost driver.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& Determine the overhead cost

Question 18

If activity-based costing is used, assembly would be classified as a:

Accepted Answer

A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity 
A)  Unit-level activity 
B)  Batch-level activity 
C)  Product line activity 
D)  Facility support activity

Question 19

The traditional overhead cost allocation system focuses the accumulation of overhead cost on:

Accepted Answer

A)  Cost pools 
B)  Cost drivers 
C)  Products 
D)  Pool rate 
A)  Cost pools 
B)  Cost drivers 
C)  Products 
D)  Pool rate

Question 20

Which of the following activities would most likely NOT be considered a batch activity:

Accepted Answer

A)  Hours required for set-up 
B)  Accounting for materials 
C)  Storage in warehouse 
D)  Hours required for inspection 
A)  Hours required for set-up 
B)  Accounting for materials 
C)  Storage in warehouse 
D)  Hours required for inspection

Number of purchase orders is an example of a(n):

Assume that direct labor and direct materials are the major cost components of a product and that the small amount of overhead cost can easily be associated with products using a simple overhead allocation basis such as direct labor hours. Which one of the following statements is the most correct?

Company A allocates one type of overhead cost on the basis of movement of materials. The number of movement of materials processed is an example of a(n):

Activity-based costing differs from traditional product costing in the allocation of:

With activity-based costing, overhead costs are assigned using:

Which of the following types of costing systems identifies business activities that create overhead costs and then assigns overhead to products or divisions according to these activities?

Carolina manufactures two products. The following information is available concerning the manufacturing overhead costs:

Which of the following would most likely NOT be considered a source of a product line activity?

For greater accuracy when using activity-based costing, management accountants should:

If activity-based costing is used, property taxes would be classified as a:

An appropriate cost driver for inspection costs is:

Jantar Company makes three different styles of kitchen tables: round, oblong, and rectangle. The following information is provided about the company's costs: Determine the overhead cost per unit for each cost driver.

If activity-based costing is used, assembly would be classified as a:

The traditional overhead cost allocation system focuses the accumulation of overhead cost on:

Which of the following activities would most likely NOT be considered a batch activity:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters

Exam 17: Activity-Based Costing

Number of purchase orders is an example of a(n):

Assume that direct labor and direct materials are the major cost components of a product and that the small amount of overhead cost can easily be associated with products using a simple overhead allocation basis such as direct labor hours. Which one of the following statements is the most correct?

Company A allocates one type of overhead cost on the basis of movement of materials. The number of movement of materials processed is an example of a(n):

Activity-based costing differs from traditional product costing in the allocation of:

With activity-based costing, overhead costs are assigned using:

Which of the following types of costing systems identifies business activities that create overhead costs and then assigns overhead to products or divisions according to these activities?

Carolina manufactures two products. The following information is available concerning the manufacturing overhead costs:

Which of the following would most likely NOT be considered a source of a product line activity?

For greater accuracy when using activity-based costing, management accountants should:

If activity-based costing is used, property taxes would be classified as a:

An appropriate cost driver for inspection costs is:

Jantar Company makes three different styles of kitchen tables: round, oblong, and rectangle. The following information is provided about the company's costs: Determine the overhead cost per unit for each cost driver.

If activity-based costing is used, assembly would be classified as a:

The traditional overhead cost allocation system focuses the accumulation of overhead cost on:

Which of the following activities would most likely NOT be considered a batch activity:

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Investments: Property, Plant, and Equipment and Intangible Assets

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters