Question 1

What is the reason for pooling costs?

Accepted Answer

A)   To shift costs from low-volume to high-volume products.
B)   It is a budgeting technique designed to accurately track fixed costs.
C)   Determining a pool rate for all costs incurred by the same activity reduces the number of cost assignments required.
D)   This procedure helps to determine which costs are directly related to production volume.
E)   It simplifies departmental overhead costing procedures.F) None of the above
G) A) and D)

Question 2

ABC costing might lead to:

Accepted Answer

A)   increasing the sales price of low-volume products.
B)   increasing the sales price of high-volume products.
C)   increasing low-volume products that appear to be profitable.
D)   decreasing high-volume products that appear to be unprofitable.E) A) and D)
F) B) and C)

Question 3

Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.

Accepted Answer

A) True 
 B)False

Question 4

Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered:  The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Loaded model?

Accepted Answer

A)   $31,875
B)   $36,000
C)   $28,125
D)   $34,050E) All of the above
F) None of the above

Question 5

Malone has 33,000 total estimated direct labor hours for next year.

Accepted Answer

A) True 
 B)False

Question 6

Activity-based costing often shifts overhead costs from large volume, standardized products to low-volume, specialty products that consume disproportionate resources.

Accepted Answer

A) True 
 B)False

Question 7

Compute Aztec's departmental overhead rate for the mixing department based on machine hours.

Accepted Answer

A)   $1.50 per MH.
B)   $5.00 per MH.
C)   $0.75 per MH.
D)   $0.50 per MH.
E)   $2.08 per MH.F) D) and E)
G) None of the above C

Question 8

Sparks Company produces and distributes two types of garden sculptures, Plain and Fancy. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 64,000 plain units and 49,150 fancy units.  a. Compute the approximate overhead cost per unit of Plain under activity-based costing.
b. Compute the approximate overhead cost per unit of Fancy under activity-based costing.

Accepted Answer

The answer of Sparks Company produces and distributes two types...

Question 9

A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:  Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product A under activity-based costing?

Accepted Answer

A)   $3.00
B)   $2.00
C)   $10.28
D)   $15.00
E)   $2.33F) All of the above
G) C) and E)

Question 10

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

Accepted Answer

A) True 
 B)False  False

Question 11

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)   $471,000F) A) and D)
G) A) and C)

Question 12

Explain cost flows for activity-based costing.

Accepted Answer

There are two basic stages to activity-b...

Question 13

Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Accepted Answer

A)   $307,500
B)   $658,050
C)   $401,800
D)   $334,150
E)   $735,950F) A) and E)
G) B) and E) D

Question 14

The ________ is the target of the cost assignment.

Accepted Answer

The answer of The ________ is the target of the...

Question 15

A quality-inspection cost is an example of unit-level costs.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   (1)  $2.00; (2)  $3.00; (3)  $3.50.
B)   (1)  $3.50; (2)  $1.50; (3)  $32,80.
C)   (1)  $3.50; (2)  $3.00; (3)  $16.00.
D)   (1)  $2.00; (2)  $1.50; (3)  $16.00.
E)   (1)  $2.00; (2)  $1.50; (3)  $32.80.F) A) and B)
G) A) and E)

Question 17

Multiple cost pools are used when allocating overhead using the plantwide overhead rate method.

Accepted Answer

A) True 
 B)False

Question 18

Facility-level costs are not traceable to individual product lines, batches or units.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are examples of facility sustaining costs except:

Accepted Answer

A)   Costs of cleaning the workplace.
B)   Costs of custodial work.
C)   Costs of personnel support.
D)   Costs of sampling product quality.
E)   Costs of employee recreational facilities.F) D) and E)
G) C) and D)

Question 20

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

Accepted Answer

A)   The marketing strategy of the products being produced
B)   The product sales price
C)   The availability of reliable data and metrics
D)   The number of employees in direct laborE) C) and D)
F) All of the above

Exam 4: Activity Based Costing and Analysis

What is the reason for pooling costs?

Correct Answer
verified

ABC costing might lead to:

Correct Answer
verified

Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.

Correct Answer
verified

Correct Answer
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Malone has 33,000 total estimated direct labor hours for next year.

Correct Answer
verified

Activity-based costing often shifts overhead costs from large volume, standardized products to low-volume, specialty products that consume disproportionate resources.

Correct Answer
verified

Compute Aztec's departmental overhead rate for the mixing department based on machine hours.

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified
False

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.

Correct Answer
verified

Explain cost flows for activity-based costing.

Correct Answer
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There are two basic stages to activity-b...
View Answer

Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Correct Answer
verified
D

The ________ is the target of the cost assignment.

Correct Answer
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A quality-inspection cost is an example of unit-level costs.

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

Correct Answer
verified

Multiple cost pools are used when allocating overhead using the plantwide overhead rate method.

Correct Answer
verified

Facility-level costs are not traceable to individual product lines, batches or units.

Correct Answer
verified

All of the following are examples of facility sustaining costs except:

Correct Answer
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________ is considered while choosing a cost allocation base for activity costs in ABC costing.

Correct Answer
verified

Exam 4: Activity Based Costing and Analysis

What is the reason for pooling costs?

Correct AnswerverifiedShow Answer

ABC costing might lead to:

Correct AnswerverifiedShow Answer

Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Malone has 33,000 total estimated direct labor hours for next year.

Correct AnswerverifiedShow Answer

Activity-based costing often shifts overhead costs from large volume, standardized products to low-volume, specialty products that consume disproportionate resources.

Correct AnswerverifiedShow Answer

Compute Aztec's departmental overhead rate for the mixing department based on machine hours.

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedFalse

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.

Correct AnswerverifiedShow Answer

Explain cost flows for activity-based costing.

Correct AnswerverifiedThere are two basic stages to activity-b...View AnswerShow Answer

Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Correct AnswerverifiedD

The ________ is the target of the cost assignment.

Correct AnswerverifiedShow Answer

A quality-inspection cost is an example of unit-level costs.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Multiple cost pools are used when allocating overhead using the plantwide overhead rate method.

Correct AnswerverifiedShow Answer

Facility-level costs are not traceable to individual product lines, batches or units.

Correct AnswerverifiedShow Answer

All of the following are examples of facility sustaining costs except:

Correct AnswerverifiedShow Answer

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

Correct AnswerverifiedShow Answer

Correct Answer
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C

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False

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There are two basic stages to activity-b...
View Answer

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D

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