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Exam 7: Activity-Based Costing: a Tool to Aid Decision Making

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Question 51

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The total production cost per unit of Product D under activity-based costing is closest to which of the following?

A) $16.15.
B) $12.87.
C) $16.37.
D) $16.57.

E) None of the above
F) B) and D)

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Question 52

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(Appendix 7A)Welk Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHs).The company has two products,H16Z and P25P,about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,464,480 and the company's estimated total direct labour-hours for the year is 24,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports.Data for this proposed activity-based costing system appear below: Required: a.Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system. b.Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.

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a.Traditional Manufacturing Overhead Cos...

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Question 53

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Changing a cost accounting system is likely to meet with little resistance in an organization since it is a technical matter of little interest to individuals outside of the accounting department.

Ingersol Draperies makes custom draperies for homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity cost pools: Distribution of Resource Consumption: The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows: Required: a)Prepare the first-stage allocation of overhead costs to the activity cost pools by filling in the table below:

When there are batch-level or product-level costs,in comparison to a traditional cost system,an activity-based costing system ordinarily will shift costs from high-volume to low-volume products.

Most organizations that use ABC have two costing systems-the official costing system,which is used to prepare external financial reports,and the ABC system,which is used for internal decision making and for managing activities.

According to the activity-based costing system,what is the total profit margin for this function?

The activity rate under the activity-based costing system for Activity 2 is closest to which of the following?

(Appendix 7A) The predetermined overhead rate (i.e. ,activity rate) for Activity 2 under the activity-based costing system is closest to:

Transaction drivers usually take more effort to record than duration drivers.

The cost per unit of Product B under activity-based costing is closest to which of the following?

What would be the total overhead cost per customer according to the activity-based costing system,rounded to the nearest whole dollar? In other words,what would be the overall activity rate for the Customer Support activity cost pool?

According to the activity-based costing system,what was the total cost (including the costs of raw ingredients) of the function mentioned above,rounded to the nearest whole dollar?

How much cost,in total,would be allocated in the first-stage allocation to the Customer Support activity cost pool?

In activity-based costing,as in traditional costing systems,non-manufacturing costs are not assigned to products.

The overhead cost per unit of Product S under activity-based costing is closest to which of the following? Do not round intermediate calculations.

How much cost,in total,would be allocated in the first-stage allocation to the Order Size activity cost pool?

(Appendix 7A)Torri Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labour-hours (DLHs).The company has two products,B40W and C63J,about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,656,000 and the company's estimated total direct labour-hours for the year is 64,000. The company is considering using a variation of activity-based costing to determine its unit product costs for external reports.Data for this proposed activity-based costing system appear below: Required: a.Determine the unit product cost of each of the company's two products under the traditional costing system. b.Determine the unit product cost of each of the company's two products under activity-based costing system.

Which of the following is a distinctive feature of an ABC system in comparison to a departmental overhead application system?

(Appendix 7A) The overhead cost per unit of Product B under the traditional costing system is closest to: