Question 1

When calculating a departmental overhead rate, what should the denominator be?

Accepted Answer

A) Total estimated amount of the departmental allocation base 
B) Total estimated departmental overhead cost pool 
C) Total estimated amount of manufacturing overhead for the factory 
D) Actual quantity of the departmental allocation base used by the job 
A) Total estimated amount of the departmental allocation base 
B) Total estimated departmental overhead cost pool 
C) Total estimated amount of manufacturing overhead for the factory 
D) Actual quantity of the departmental allocation base used by the job

Question 2

Costs incurred to detect poor-quality goods and services refer to

Accepted Answer

A) activity-based costing. 
B) appraisal costs. 
C) value engineering. 
D) prevention costs. 
A) activity-based costing. 
B) appraisal costs. 
C) value engineering. 
D) prevention costs.

Question 3

Platinum Company manufactures several different products and uses an activity-based costing system. Information from its system for the year for all products follows:   The annual production and sales of one of its products, the Zinger, are 1000 units. The following data relate to the production and sales of Zingers in the most recent year:
  What is the average cost of one Zinger? (Round all answers to two decimal places.)

Accepted Answer

A) $17.48 
B) $170.90 
C) $232.16 
D) $200.68 
A) $17.48 
B) $170.90 
C) $232.16 
D) $200.68

Question 4

Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Assembly and Sanding. The Assembly Department uses a departmental overhead rate of $50 per machine hour, while the Sanding Department uses a departmental overhead rate of $25 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the two departments:   The cost for direct labor is $25 per direct labor hour and the cost of the direct materials used by Job 603 is $1600.
How much manufacturing overhead would be allocated to Job 603 using the departmental overhead rates?

Accepted Answer

A) $675 
B) $575 
C) $700 
D) $300 
A) $675 
B) $575 
C) $700 
D) $300

Question 5

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:   Potter & Weasley uses activity based costing.
The above activities are used by Departments P and Q as follows:
  How much of the account verification costs will be assigned to Department P? (Do not round intermediate calculations and round the final answer to the nearest dollar.)

Accepted Answer

A) $8563.83 
B) $6563.83 
C) $11,989.36 
D) $4080.75 
A) $8563.83 
B) $6563.83 
C) $11,989.36 
D) $4080.75

Question 6

The cost of depreciation, insurance, and property tax on the entire production plant would be considered a facility-level cost.

Accepted Answer

A) True 
 B)False

Question 7

The Sweetheart Corporation uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: cutting and painting. The Cutting Department uses a departmental overhead rate of $12 per machine hour, while the Painting Department uses a departmental overhead rate of $17 per direct labor hour. Job 422 used the following direct labor hours and machine hours in the two departments:
   The cost for direct labor is $20 per direct labor hour and the cost of the direct materials used by Job 422 is $800.
Required: What was the total cost of Job 422 if the Sweetheart Corporation used the departmental overhead rates to allocate manufacturing overhead?

Accepted Answer

The answer of The Sweetheart Corporation uses departmental overhead rates...

Question 8

The costs incurred when poor quality goods or services are detected and corrected before delivery to customers are called ________ costs.

Accepted Answer

A) appraisal 
B) external failure 
C) prevention 
D) internal failure 
A) appraisal 
B) external failure 
C) prevention 
D) internal failure

Question 9

Alexander Inc. uses activity-based costing. The company produces two products: Snaps and Pops. The expected annual production of Snaps is 1700 units, while the expected annual production of Pops is 2400 units. There are three activity cost pools: Assembly, Testing, and Packing. The estimated costs and activities for each of these three activity pools follows:   The cost pool activity rate for Testing would be (Round all answers to two decimal places.)

Accepted Answer

A) $21.68 per activity. 
B) $14.37 per activity. 
C) $42.65 per activity. 
D) $7.19 per activity. 
A) $21.68 per activity. 
B) $14.37 per activity. 
C) $42.65 per activity. 
D) $7.19 per activity.

Question 10

Facility-level activities and costs are incurred for every individual unit.

Accepted Answer

A) True 
 B)False

Question 11

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:   Potter & Weasley uses activity based costing.
The above activities are used by Departments P and Q as follows:
  What is the cost per driver unit for the account inquiry activity? (Round all answers to two decimal places.)

Accepted Answer

A) $1.70 
B) $8.52 
C) $8.90 
D) $21.30 
A) $1.70 
B) $8.52 
C) $8.90 
D) $21.30

Question 12

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division.   The following units were produced in December with the following information:
  Total manufacturing costs for Part 001 is

Accepted Answer

A) $3775 
B) $1900 
C) $5275 
D) $3400 
A) $3775 
B) $1900 
C) $5275 
D) $3400

Question 13

The storage of raw materials is considered a value-added activity.

Accepted Answer

A) True 
 B)False

Question 14

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:   Potter & Weasley uses activity based costing.
The above activities are used by Departments P and Q as follows:
  How much of the correspondence cost will be assigned to Department P?

Accepted Answer

A) $6455 
B) $3727 
C) $3227 
D) $1859 
A) $6455 
B) $3727 
C) $3227 
D) $1859

Question 15

Which of the following is one of the four cost categories typically found on a Cost of Quality report?

Accepted Answer

A) Development costs 
B) Inventory failure costs 
C) Prevention costs 
D) Marketing costs 
A) Development costs 
B) Inventory failure costs 
C) Prevention costs 
D) Marketing costs

Question 16

Managers who practice total quality management

Accepted Answer

A) invest more resources at the front end of the value chain in research and development and design to produce a superior product. 
B) invest more resources in inspecting and repairing products once they are produced. 
C) practice both A and B. 
D) practice neither A nor B. 
A) invest more resources at the front end of the value chain in research and development and design to produce a superior product. 
B) invest more resources in inspecting and repairing products once they are produced. 
C) practice both A and B. 
D) practice neither A nor B.

Question 17

Gwynnie Pie Company makes dessert pies for national fast food chains. Gwynnie Pie Company is considering using ABC costing and has the following activity cost pools and information available:   Gwynnie Pie Company currently uses a plantwide overhead rate based on total estimated machine hours of 100,000 hours.
Based on the above information, what would the allocated cost for packaging be for Job 607 if Job 607 contains 5,000 units?

Accepted Answer

A) $150 
B) $75,000 
C) $11,250 
D) $15 
A) $150 
B) $75,000 
C) $11,250 
D) $15

Question 18

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

Accepted Answer

A) types of activities used by the product. 
B) the extent to which the activities are used. 
C) both A and B. 
D) none of the above. 
A) types of activities used by the product. 
B) the extent to which the activities are used. 
C) both A and B. 
D) none of the above.

Question 19

Traditional cost systems with a single-allocation base tend to overcost high-volume products and undercost low-volume products as compared to activity-based costing systems.

Accepted Answer

A) True 
 B)False

Question 20

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases:   Potter & Weasley uses activity based costing.
The above activities are used by Departments P and Q as follows:
  What is the cost per driver unit for the correspondence activity? (Round all answers to two decimal places.)

Accepted Answer

A) $6.92 
B) $1.68 
C) $27.67 
D) $28.97 
A) $6.92 
B) $1.68 
C) $27.67 
D) $28.97

When calculating a departmental overhead rate, what should the denominator be?

Costs incurred to detect poor-quality goods and services refer to

The cost of depreciation, insurance, and property tax on the entire production plant would be considered a facility-level cost.

The costs incurred when poor quality goods or services are detected and corrected before delivery to customers are called ________ costs.

Facility-level activities and costs are incurred for every individual unit.

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. The following units were produced in December with the following information: Total manufacturing costs for Part 001 is

The storage of raw materials is considered a value-added activity.

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Potter & Weasley uses activity based costing. The above activities are used by Departments P and Q as follows: How much of the correspondence cost will be assigned to Department P?

Which of the following is one of the four cost categories typically found on a Cost of Quality report?

Managers who practice total quality management

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

Traditional cost systems with a single-allocation base tend to overcost high-volume products and undercost low-volume products as compared to activity-based costing systems.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 4: Activity-Based Costing, Lean Operations, and the Costs of Quality

When calculating a departmental overhead rate, what should the denominator be?

Costs incurred to detect poor-quality goods and services refer to

The cost of depreciation, insurance, and property tax on the entire production plant would be considered a facility-level cost.

The costs incurred when poor quality goods or services are detected and corrected before delivery to customers are called ________ costs.

Facility-level activities and costs are incurred for every individual unit.

Beartowne Enterprises uses an activity-based costing system to assign costs in its auto-parts division. The following units were produced in December with the following information: Total manufacturing costs for Part 001 is

The storage of raw materials is considered a value-added activity.

Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Potter & Weasley uses activity based costing. The above activities are used by Departments P and Q as follows: How much of the correspondence cost will be assigned to Department P?

Which of the following is one of the four cost categories typically found on a Cost of Quality report?

Managers who practice total quality management

ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on

Traditional cost systems with a single-allocation base tend to overcost high-volume products and undercost low-volume products as compared to activity-based costing systems.

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evalulation

Standard Costs and Variances

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters