Question 1

A cost pool is a collection of costs that are related to the same or similar activity.

Accepted Answer

A) True 
 B)False

Question 2

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) .

Accepted Answer

A)   Extrusion: $304 per batch; handling: $32 per unit; packaging: $0.03 per unit.
B)   Extrusion: $88 per batch; handling: $32 per order; packaging: $0.03 per unit.
C)   Extrusion: $88 per order; handling: $32 per unit; packaging: $0.03 per batch.
D)   Extrusion: $418 per batch; handling: $117.33 per order; packaging: $0.054 per unit.
E)   Extrusion: $118.13 per batch; handling: $44 per order; packaging: $0.0675 per unit.F) A) and C)
G) D) and E)

Question 3

Activities causing overhead cost in an organization are typically separated into four levels: (1) direct activities, (2) indirect activities, (3) batch level activities, and (4) facility level activities.

Accepted Answer

A) True 
 B)False

Question 4

Superior Products Manufacturing identified the following data in its two production departments:
  Compute departmental overhead rates assuming the Assembly rate is based on machine hours and the Finishing rate is based on direct labor hours.

Accepted Answer

Assembly: $225,000/2...

Question 5

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?

Accepted Answer

A)   Cleaning rooms and heating the clinic are both unit level activities.
B)   Sending blood work to the lab is a batch level activity.
C)   Sending blood work and dispensing medicine are both batch level activities.
D)   Cleaning rooms and dispensing medication are both product or service level activities.
E)   Heating the clinic and dispensing medication are both batch level activities.F) A) and E)
G) B) and C)

Question 6

ABC systems ________.

Accepted Answer

A)   usually will undercost complicated or complex products
B)   will limit cost drivers to units of output
C)   highlight the different levels of activities
D)   will allocate costs based on volume
E)   comply with GAAPF) B) and C)
G) A) and E)

Question 7

[The following information applies to the questions displayed below.]
Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:
 [The following information applies to the questions displayed below.] Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:    -Tarnish Industries uses departmental overhead rates and is planning on a $2 per direct labor hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table. A)  $225,000 B)  $196,000 C)  $150,000 D)  $321,000 E)  $471,000" class="answers-bank-image d-inline" rel="preload" >
-Tarnish Industries uses departmental overhead rates and is planning on a $2 per direct labor 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)   $225,000
B)   $196,000
C)   $150,000
D)   $321,000
E)   $471,000F) None of the above
G) B) and E)

Question 8

When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following are advantages of using the plantwide overhead rate method?

Accepted Answer

A)   The use of cost pools is considerably more accurate than other overhead allocations.
B)   The necessary information is readily available.
C)   It is more accurate than traditional overhead allocations.
D)   Each department has its own overhead rate and its own allocation base.
E)   It takes into account that when products differ in batch size and complexity, they usually consume different amounts of overhead resources.F) B) and E)
G) A) and E)

Question 10

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) D) and E)
G) All of the above

Question 11

ABC assumes all costs in a ________ can be grouped together because they all impact the activity.

Accepted Answer

A)   cost pool.
B)   department.
C)   time period.
D)   organization.
E)   product line.F) A) and C)
G) All of the above

Question 12

Kinetic Company estimates that overhead costs for the next year will be $1,600,000 for indirect labor and $400,000 for factory utilities. The company uses direct labor hours as its overhead allocation base, and plans to use 50,000 direct labor hours for this next year. If a product uses 5 direct labor hours, then it will be assigned $200 in overhead costs.

Accepted Answer

A) True 
 B)False

Question 13

The following data relates to Patterson Company's estimated amounts for next year.  What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Accepted Answer

A)   $3.45 per DLH
B)   $5.45 per DLH
C)   $0.29 per DLH
D)   $0.26 per DLH
E)   $0.20 per DLHF) All of the above
G) B) and E)

Question 14

Activity-based costing first assigns costs to products and then uses these product costs to assign costs to manufacturing activities.

Accepted Answer

A) True 
 B)False

Question 15

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)   increasing materials cost.F) B) and E)
G) A) and E)

Question 16

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) C) and D)
G) A) and B)

Question 17

Examples of volume-related measures include direct labor hours and machine hours.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not true?

Accepted Answer

A)   The departmental overhead method assigns overhead on the basis of volume-related measures.
B)   The departmental overhead rate method is more refined than the plantwide overhead rate method.
C)   Overhead costing accuracy is improved by the use of multiple departmental rates rather than a single overhead rate.
D)   The departmental overhead rate method does not assign overhead on the basis of volume-related measures.
E)   The departmental overhead rate method is more costly to implement than the plantwide overhead rate method.F) A) and D)
G) C) and E)

Question 19

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

Question 20

A company's total expected overhead costs and related overhead data are shown in the following table:
 $$\begin{array} { | l | l | l | } 
\hline & \text { Department A } & \text { Department B } \
\hline \text { Direct labor hours } & 85,000 \mathrm { DLH } & 72,000 \mathrm { DLH } \
\hline \text { Machine hours } & 79,050 \mathrm { MH } & 37,395 \mathrm { MH } \
\hline \text { Manufacturing overhead costs } & ? & ? \
\hline \text { Departmental overhead rate } & \$ 4 \text { per } \mathrm { MH } & \$ 8.31 \text { per DLH } \
\hline
\end{array}$$ a. Compute estimated manufacturing overhead costs for Department A.
b. Compute estimated manufacturing overhead costs for Department B.
c. Compute the departmental overhead rate based on direct labor hours for Department A.
d. Compute the departmental overhead rate based on machine hours for Department B.

Accepted Answer

a. $4 per MH × 79,050 MH = $316,200 esti...

Exam 4: Activity-Based Costing and Analysis

ABC assumes all costs in a ________ can be grouped together because they all impact the activity.

Correct Answer
verified

ABC costing might lead to:

Correct Answer
verified

Superior Products Manufacturing identified the following data in its two production departments: Compute departmental overhead rates assuming the Assembly rate is based on machine hours and the Finishing rate is based on direct labor hours.

Correct Answer
verified
Assembly: $225,000/2...
View Answer

A cost pool is a collection of costs that are related to the same or similar activity.

Correct Answer
verified

Correct Answer
verified
a. $4 per MH × 79,050 MH = $316,200 esti...
View Answer

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) .

Correct Answer
verified

Correct Answer
verified

ABC systems ________.

Correct Answer
verified

What is the reason for pooling costs?

Correct Answer
verified

Activities causing overhead cost in an organization are typically separated into four levels: (1) direct activities, (2) indirect activities, (3) batch level activities, and (4) facility level activities.

Correct Answer
verified

Which of the following are advantages of using the plantwide overhead rate method?

Correct Answer
verified

Examples of volume-related measures include direct labor hours and machine hours.

Correct Answer
verified

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?

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

Activity-based costing first assigns costs to products and then uses these product costs to assign costs to manufacturing activities.

Correct Answer
verified

Correct Answer
verified

When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

Correct Answer
verified

The following data relates to Patterson Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

Correct Answer
verified

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

Which of the following is not true?

Correct Answer
verified

Exam 4: Activity-Based Costing and Analysis

ABC assumes all costs in a ________ can be grouped together because they all impact the activity.

Correct AnswerverifiedShow Answer

ABC costing might lead to:

Correct AnswerverifiedShow Answer

Superior Products Manufacturing identified the following data in its two production departments: Compute departmental overhead rates assuming the Assembly rate is based on machine hours and the Finishing rate is based on direct labor hours.

Correct AnswerverifiedAssembly: $225,000/2...View AnswerShow Answer

A cost pool is a collection of costs that are related to the same or similar activity.

Correct AnswerverifiedShow Answer

Correct Answerverifieda. $4 per MH × 79,050 MH = $316,200 esti...View AnswerShow Answer

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) .

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

ABC systems ________.

Correct AnswerverifiedShow Answer

What is the reason for pooling costs?

Correct AnswerverifiedShow Answer

Activities causing overhead cost in an organization are typically separated into four levels: (1) direct activities, (2) indirect activities, (3) batch level activities, and (4) facility level activities.

Correct AnswerverifiedShow Answer

Which of the following are advantages of using the plantwide overhead rate method?

Correct AnswerverifiedShow Answer

Examples of volume-related measures include direct labor hours and machine hours.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Activity-based costing first assigns costs to products and then uses these product costs to assign costs to manufacturing activities.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

Correct AnswerverifiedShow Answer

The following data relates to Patterson Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

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

Which of the following is not true?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Assembly: $225,000/2...
View Answer

Correct Answer
verified

Correct Answer
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a. $4 per MH × 79,050 MH = $316,200 esti...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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