Question 1

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

Accepted Answer

A)  ABC ignores the allocation of storage costs. 
B)  An activity cost pool collects costs related to the same activity. 
C)  ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. 
D)  Activities are the cost objects of the second stage of ABC. 
E)  ABC uses a single overhead rate. 
A)  ABC ignores the allocation of storage costs. 
B)  An activity cost pool collects costs related to the same activity. 
C)  ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. 
D)  Activities are the cost objects of the second stage of ABC. 
E)  ABC uses a single overhead rate.

Question 2

A company uses activity-based costing to determine the costs of its three products: A, B and C. The activity rates and activity levels for each of the company's three activity cost pools are shown in the following table:

Compute the company's budgeted overhead cost for each of the three products under activity-based costing.

Accepted Answer

The answer of A company uses activity-based costing to determine...

Question 3

ABC is more costly to implement and maintain than more traditional overhead costing systems.

Accepted Answer

A) True 
 B)False

Question 4

A method of assigning overhead costs to a product using a single overhead rate is:

Accepted Answer

A)  Plantwide overhead rate method. 
B)  Cost pool overhead rate method. 
C)  Departmental overhead rate method. 
D)  Activity-based costing. 
E)  Overhead cost allocation method. 
A)  Plantwide overhead rate method. 
B)  Cost pool overhead rate method. 
C)  Departmental overhead rate method. 
D)  Activity-based costing. 
E)  Overhead cost allocation method.

Question 5

A company's total expected overhead costs and related overhead data are shown below.
 $$\begin{array} { | l | l | l | } 
\hline & \text { Department A } & \text { Department B } \
\hline \text { Direct labor hours } & 75,000 \mathrm { DLH } & 30,000 \mathrm { DLH } \
\hline \text { Machine hours } & 3,000 \mathrm { MH } & 6,000 \mathrm { MH } \
\hline \text { Manufacturing overhead costs } & ? & ? \
\hline \text { Departmental overhead rate } & \$ 2.40 \text { per DLH } & \$ 36 \text { per MIH } \
\hline
\end{array}$$ a. Compute estimated manufacturing overhead costs for Department A.
b. Compute estimated manufacturing overhead costs for Department B.

Accepted Answer

a. $2.40 per DLH × 75,000 DLH

Question 6

________ costs support the company as a whole.

Accepted Answer

A)  Batch-level 
B)  Product-level 
C)  Unit-level 
D)  Facility-level 
E)  Activity 
A)  Batch-level 
B)  Product-level 
C)  Unit-level 
D)  Facility-level 
E)  Activity

Question 7

[The following information applies to the questions displayed below.]
Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:
  
-Tarnish Industries uses departmental overhead rates and is planning on a $2 per machine hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

Accepted Answer

A)  $195,000 
B)  $196,000 
C)  $163,000 
D)  $321,000 
E)  $471,000 
A)  $195,000 
B)  $196,000 
C)  $163,000 
D)  $321,000 
E)  $471,000

Question 8

Compared to the plantwide overhead rate method, the departmental overhead rate method usually results in more accurate overhead allocations.

Accepted Answer

A) True 
 B)False

Question 9

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Accepted Answer

A)  21 MH per unit of RST. 
B)  2 MH per unit of RST. 
C)  20 MH per unit of RST. 
D)  37.5 MH per unit of RST. 
E)  38 MH per unit of RST. 
A)  21 MH per unit of RST. 
B)  2 MH per unit of RST. 
C)  20 MH per unit of RST. 
D)  37.5 MH per unit of RST. 
E)  38 MH per unit of RST.

Question 10

Two big benefits of ABC costing are a) more accurate product cost information and b) more detailed information on costs and the drivers of those costs.

Accepted Answer

A) True 
 B)False

Question 11

A company has two products: A and B. It uses a plantwide overhead allocation method based on activity 2 and has prepared the following analysis showing budgeted costs and activities. Use this information to compute (a) the company's plantwide overhead rate and (b) the amount of overhead allocated to Product A.

Accepted Answer

(a) $450,000/3,000 units of ac

Question 12

A company estimates that overhead costs for the next year will be $3,600,000 for indirect labor, $200,000 for factory utilities, and $21,500 for depreciation on factory machinery. The company uses machine hours as its overhead allocation base. If 764,300 machine hours are planned for this next year, what is the company's plantwide overhead rate?

Accepted Answer

($3,600,000 + $200,0

Question 13

Aurora Corporation produces outdoor security lighting products. All products go through three processes before completion. Use the expected overhead costs and related data shown below to compute departmental overhead rates based on machine hours in Department A1A; based on direct labor hours in Department B2B; and machine hours in Department C3C.

Accepted Answer

A)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH. 
B)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH. 
C)  Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
D)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
E)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH. 
A)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH. 
B)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH. 
C)  Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
D)  Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH. 
E)  Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.

Question 14

Activities are the cost objects of the first stage of ABC.

Accepted Answer

A) True 
 B)False

Question 15

ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

Accepted Answer

A) True 
 B)False

Question 16

A company identified the following partial list of activities, costs, and activity drivers expected for the next year:     How much overhead in total will be assigned to the Product A line using activity-based costing?

Accepted Answer

A)  $42,500. 
B)  $132,900. 
C)  $90,400. 
D)  $66,000. 
E)  $66,450. 
A)  $42,500. 
B)  $132,900. 
C)  $90,400. 
D)  $66,000. 
E)  $66,450.

Question 17

Data concerning volume-related measures are readily available in most manufacturing settings.

Accepted Answer

A) True 
 B)False

Question 18

The following data relates to Mangini Company's estimated amounts for next year. $\begin{array}{lcc}
\text { Estimated: } & \text { Department 1 } & \text { Department 2 } \
\text { Manufacturing overhead costs } & \$ 320,000 & \$ 400,000 \
\text { Direct labor hours } & 65,000 \mathrm{DLH} & 75,000 \mathrm{DLH} \
\text { Machine hours } & 2,000 \mathrm{MH} & 2,500 \mathrm{MH}
\end{array}$ What is the company's plantwide overhead rate if machine hours are the allocation base? (Round your answer to two decimal places.)

Accepted Answer

A)  $200.00 per MH 
B)  $150.00 per MH 
C)  $160.00 per MH 
D)  $31.11 per MH 
E)  $5.14 per MH 
A)  $200.00 per MH 
B)  $150.00 per MH 
C)  $160.00 per MH 
D)  $31.11 per MH 
E)  $5.14 per MH

Question 19

Allocated overhead ________ vary depending upon the allocation method used.

Accepted Answer

The answer of Allocated overhead ________ vary depending upon the...

Question 20

[The following information applies to the questions displayed below.]
Tasty Bakery produces donuts which go through two operations, mixing and baking, before they are ready to be packaged. Next year's expected costs and activities are shown below.
 $\begin{array}{lcc} 
& \text { Mixing } & \text { Baking } \
\text { Direct labor hours } & 300,000 \mathrm{DLH} & 70,000 \mathrm{DLH}\\text { Machine hours } & 1,000,000 \mathrm{MH} & 800,000 \mathrm{MH} \
\text { Overhead costs } & \$ 500,000 & \$ 400,00 0
\end{array}$
-Compute Tasty's departmental overhead rate for the mixing department based on machine hours.

Accepted Answer

A)  $1.50 per MH. 
B)  $3.33 per MH. 
C)  $0.60 per MH. 
D)  $0.50 per MH. 
E)  $2.00 per MH. 
A)  $1.50 per MH. 
B)  $3.33 per MH. 
C)  $0.60 per MH. 
D)  $0.50 per MH. 
E)  $2.00 per MH.

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

ABC is more costly to implement and maintain than more traditional overhead costing systems.

A method of assigning overhead costs to a product using a single overhead rate is:

________ costs support the company as a whole.

Compared to the plantwide overhead rate method, the departmental overhead rate method usually results in more accurate overhead allocations.

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Two big benefits of ABC costing are a) more accurate product cost information and b) more detailed information on costs and the drivers of those costs.

Activities are the cost objects of the first stage of ABC.

ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: How much overhead in total will be assigned to the Product A line using activity-based costing?

Data concerning volume-related measures are readily available in most manufacturing settings.

Allocated overhead ________ vary depending upon the allocation method used.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

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Exam 4: Activity-Based Costing and Analysis

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

ABC is more costly to implement and maintain than more traditional overhead costing systems.

A method of assigning overhead costs to a product using a single overhead rate is:

________ costs support the company as a whole.

Compared to the plantwide overhead rate method, the departmental overhead rate method usually results in more accurate overhead allocations.

Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

Two big benefits of ABC costing are a) more accurate product cost information and b) more detailed information on costs and the drivers of those costs.

Activities are the cost objects of the first stage of ABC.

ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: How much overhead in total will be assigned to the Product A line using activity-based costing?

Data concerning volume-related measures are readily available in most manufacturing settings.

Allocated overhead ________ vary depending upon the allocation method used.

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters