Question 1

All of the following can be used as an allocation base for calculating factory overhead rates except:

Accepted Answer

A)   direct labor dollars
B)   direct labor hours
C)   machine hours
D)   total units produced D

Question 2

The Botosan Factory has determined that its budgeted factory overhead budget for the year is $13,500,000 and budgeted direct labor hours are 10,000,000.If the actual direct labor hours for the period are 350,000,how much overhead would be allocated to the period?

Accepted Answer

A)   $675,000
B)   $470,630
C)   $472,500
D)   $236,250 C

Question 3

Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

Accepted Answer

A) True 
 B)False  True

Question 4

In an effort to simplify the multiple production department factory overhead rate method,the same rate can be used for all departments.

Accepted Answer

A) True 
 B)False

Question 5

The Anazi Leather Company manufactures leather handbags and moccasins.The company has been using the factory overhead rate method but has decided to evaluate the multiple production department factory overhead rate to allocate factory overhead.The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices.
​
Handbags = 60,000 units,3 hours of direct labor
​
Moccasins= 40,000 units,2 hours of direct labor
​
Total budgeted factory overhead cost = $360,000
​
The company has two different production departments: Cutting and Sewing.The Cutting Department has a factory overhead budget of $80,000.Each unit will require 1 direct labor hour or a total of 100,000 direct labor hours.
​
The Sewing Department estimates factory overhead in the amount of $280,000.Handbags require 2 hours of sewing time and Moccasins require 1 hour for a total of 160,000 labor hours.
​
Calculate the total factory overhead to be allocated to each product using direct labor hours.

Accepted Answer

The answer of The Anazi Leather Company manufactures leather handbags...

Question 6

Service companies can effectively use multiple department overhead rate costing to compute product (service)costs.

Accepted Answer

A) True 
 B)False

Question 7

The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours.What is the overhead cost per unit for Dinks?

Accepted Answer

A)   $77.00
B)   $39.00
C)   $19.50
D)   $59.92

Question 8

Using the single plantwide factory overhead rate with an allocation base of direct labor hours,how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 118,000?

Accepted Answer

A)   $118,000
B)   $200,000
C)   $188,800
D)   $125,000

Question 9

What is the Fabrication Department overhead rate per machine hour?

Accepted Answer

A)   $10.50
B)   $9.00
C)   $8.12
D)   $3.75

Question 10

A plantwide factory overhead rate assumes that all overhead is directly related to one activity representing the entire plant.

Accepted Answer

A) True 
 B)False

Question 11

Product costing consists of only direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 12

Activity rates are determined by

Accepted Answer

A)   dividing the actual cost for each activity pool by the actual activity base for that pool.
B)   dividing the cost budgeted for each activity pool by the estimated activity base for that pool.
C)   dividing the actual cost for each activity pool by the estimated activity base for that pool.
D)   dividing the cost budgeted for each activity pool by the actual activity base in that pool.

Question 13

Which of the following is not a factory overhead allocation method?

Accepted Answer

A)   single plantwide rate
B)   multiple departmental rates
C)   factory costing
D)   activity-based costing

Question 14

Activity-based costing is much easier to apply than single plantwide factory overhead allocation.

Accepted Answer

A) True 
 B)False

Question 15

Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours.The production process is set up in three departments: Assembly,Finishing,and Calibrating.The following is information regarding the direct labor used to produce one unit of the two clocks:
The budget includes the following factory overhead by department:
  Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks.

Accepted Answer

The answer of Ratchford Clocks manufactures alarm clocks and wall...

Question 16

Calculate the plantwide factory overhead rate for Adirondack Marketing Inc.

Accepted Answer

A)   $25.00 per dlh
B)   $0.07 per dlh
C)   $14.77 per dlh
D)   $ 6.25 per dlh

Question 17

In a service organization,the multiple department overhead rate method is the most effective in providing information about the cost of services.

Accepted Answer

A) True 
 B)False

Question 18

Activity-based costing can only be used to allocate manufacturing factory overhead.

Accepted Answer

A) True 
 B)False

Question 19

Service organizations can use activity-based costing to allocate selling and administrative costs to services provided.

Accepted Answer

A) True 
 B)False

Question 20

Calculate the overhead rate per unit for Product A in the painting department of Adirondack Marketing Inc.

Accepted Answer

A)   $236.32 per unit
B)   $325.00 per unit
C)   $147.70 per unit
D)   $161.00 per unit

Exam 18: Activity-Based Costing

All of the following can be used as an allocation base for calculating factory overhead rates except:

The Botosan Factory has determined that its budgeted factory overhead budget for the year is $13,500,000 and budgeted direct labor hours are 10,000,000.If the actual direct labor hours for the period are 350,000,how much overhead would be allocated to the period?

Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

In an effort to simplify the multiple production department factory overhead rate method,the same rate can be used for all departments.

Service companies can effectively use multiple department overhead rate costing to compute product (service)costs.

The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours.What is the overhead cost per unit for Dinks?

Using the single plantwide factory overhead rate with an allocation base of direct labor hours,how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 118,000?

What is the Fabrication Department overhead rate per machine hour?

A plantwide factory overhead rate assumes that all overhead is directly related to one activity representing the entire plant.

Product costing consists of only direct materials and direct labor.

Activity rates are determined by

Which of the following is not a factory overhead allocation method?

Activity-based costing is much easier to apply than single plantwide factory overhead allocation.

Calculate the plantwide factory overhead rate for Adirondack Marketing Inc.

In a service organization,the multiple department overhead rate method is the most effective in providing information about the cost of services.

Activity-based costing can only be used to allocate manufacturing factory overhead.

Service organizations can use activity-based costing to allocate selling and administrative costs to services provided.

Calculate the overhead rate per unit for Product A in the painting department of Adirondack Marketing Inc.