FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Activity Based Costing and Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 101

Multiple Choice

Review LaterAdd Note

Review Later

Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the Assembly Department, and 3.5 direct labor hours and 0.5 machine hours in the Finishing Department?

A) $13.00.
B) $10.50.
C) $2.50.
D) $11.00.
E) $7.50.

F) C) and D)
G) All of the above

Correct Answer

verified

Show Answer

Question 102

Multiple Choice

Review LaterAdd Note

Review Later

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: Calculate activity rates for each of the three activities using activity-based costing (ABC) .

A) Extrusion: $304 per batch; handling: $32 per unit; packaging: $.03 per unit.
B) Extrusion: $88 per batch; handling: $32 per order; packaging: $.03 per unit.
C) Extrusion: $88 per order; handling: $32 per unit; packaging: $.03 per batch.
D) Extrusion: $418 per batch; handling: $117.33 per order; packaging: $.054 per unit.
E) Extrusion: $118.13 per batch; handling: $44 per order; packaging: $.0675 per unit.

F) A) and D)
G) A) and C)

Correct Answer

verified

Show Answer

Question 103

True/False

Review LaterAdd Note

Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.

Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

Blast Rocket Company manufactures candy-coated popcorn treats that go through two operations, popping and baking, before they are complete. Expected costs and activities for the two departments are shown in the following table : a. Compute a departmental overhead rate for the popping department based on direct labor hours. b. Compute a departmental overhead rate for the baking department based on machine hours.

When products differ in batch size and complexity, they usually consume different amounts of overhead resources.

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: How much overhead will be assigned to Product B using activity-based costing?

Consider the following activities that take place in a medical clinic. (a.) Cleaning exam rooms. (b) ) Heating and air conditioning the clinic. (c) ) Sending blood work to a lab. (d) ) Dispensing medicine. Which of the following statements is true?

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

ABC systems ________.

Turtle Company produces t-shirts that go through two operations, cutting and sewing, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the cutting department based on direct labor hours is $2.69 per direct labor hour (rounded to two decimals).

What are the major advantages of using a plantwide overhead rate?

Facility-level costs vary with the number of units or batches produced.

The ________ overhead rate method uses a different overhead rate for each production department.

Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

A company allocates $7.50 overhead to products based on the number of direct labor hours worked. The company uses a plantwide overhead rate with direct labor hours as the allocation base. Given the amounts below, how many direct labor hours does the company expect in department 2?

Red Raider Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 400,000 units are expected to be produced requiring 1.2 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

Slosh, Inc. produces washing machines that require two processes, assembling and finishing, to complete. The company's bestselling machine is the commercial washer. Information related to the 500 commercial washers produced annually is shown below. Slosh's total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on direct labor hours in the Assembling Department and machine hours in the Finishing Department. Determine the total product cost of this product line and each individual commercial washer.

A single cost pool is used when allocating overhead using the activity-based costing method.