Exam 7: A Closer Look at Overhead Costs

The following information relates to the Moonie Park Manufacturing Company for the year 2012. The predetermined overhead rates per machine hour based on practical capacity, normal capacity and budgeted capacity respectively are:

Which of the following statements is correct?

Consider the following statements about the two-stage cost allocation process. i. Costs in various cost pools are distributed to all departments, including support and production departments. ii. Support department costs are allocated to production departments. iii. Costs are assigned to each production department that has worked on the product. Which statement/s is/are correct?

The support department cost allocation method that recognises some of the reciprocal services between support departments is called the:

The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning's production activity for the year is: What is the value of closing inventory of finished goods under variable costing?

The process of assigning the costs in a cost pool to the cost objects is called:

Which of the following would NOT be a volume-based cost driver in a traditional costing system?

The Kelsey Manufacturing Company Ltd has two production departments (Assembly and Finishing) and two support departments (Janitorial and Personnel). The usage of the two support departments in 2012 is as follows: The budgeted costs in the support departments of 2012 were as follows: Using the step-down method, what is the total support department costs allocated to the Finishing Department with the Personnel Department cost allocated first?

Management would prefer to use either absorption costing or variable costing depending on:

Jasmine Doh is considering using cost drivers that are measured in dollars (rather than physical units) for her company. Your advice is:

The Lots More Store has a Janitorial Department and a Personnel Department that provide services to three Sales Departments. The Janitorial Department cost is allocated based on space and the Personnel Department cost is allocated based on employees. The following information is available. Using the direct method, calculate the amount of Janitorial Department cost allocated to Sales Department #2.

The Browning Company manufactures a single product; the standard costs per unit being variable manufacturing $8, fixed manufacturing $6. Selling and administrative costs are $2 per unit sold. The selling price is $20 per unit. Actual and budgeted fixed overhead is $900 000 for the year. Information about Browning's production activity for the year is: What is the profit under absorption costing?

Using the information below, what would be the profit under variable costing and absorption costing, respectively?

The first step under the step-down method is:

A cost pool is:

Monex reported $65 000 in net profit for the year using absorption costing. The company had no units in beginning inventory, planned and actual production was 20 000 units and sales were 18 000 units during the year. Variable manufacturing costs were $20 per unit and total budgeted fixed manufacturing overhead was $100 000. There was no underapplied or overapplied overhead reported during the year. Determine the net profit under variable costing.

Explain the difference between theoretical capacity and practical capacity when estimating the denominator volume. Discuss how the choice of capacity affects the overhead rate.

Which of the following is a common base to distribute the cost of building depreciation to responsibility centres?

Which of the following statements is false? Manufacturing overhead costs are: