 |
| 1 | |
Overhead costs are more difficult to trace to products because of which of the following reasons? |
| | A) | Overhead costs are not directly related to production. |
| | B) | They cannot be physically traced to units of product in the same way that direct materials and direct labor can. |
| | C) | Many overhead costs apply to factory wide activities or costs. |
| | D) | All of the above |
| | E) | None of the above. |
|
|
|
| 2 | |
The general calculation in determining the rate used (under the Plant-wide Overhead Method) for a company who uses direct labor hours as their allocation basis would be best described by which of the following: |
| | A) | Plant-wide factory overhead divided by direct labor cost. |
| | B) | Plant-wide factory overhead divided by direct labor hours. |
| | C) | Direct labor hours/Plant-wide factory overhead. |
| | D) | Direct labor costs/Plant-wide factory overhead. |
| | E) | None of the above. |
|
|
|
| 3 | |
A company produces two models of ice chests. The total overhead for the company is estimated to be $4,800,000. The total direct labor hours is estimated to be 1,000,000. If a deluxe model of an ice chest uses 4 hours of direct labor in production, how much overhead should be assigned to it using the plant-wide rate method? |
| | A) | $4.80 |
| | B) | $19.20 |
| | C) | $.84 |
| | D) | $1.20 |
| | E) | None of the above |
|
|
|
| 4 | |
Which of the following would be an advantage to using a single plant-wide rate? |
| | A) | Information is generally readily available. |
| | B) | The ease of implementation, when compared to other methods. |
| | C) | It is sufficient to meet external financial reporting needs. |
| | D) | All of the above. |
| | E) | None of the above. |
|
|
|
| 5 | |
Which of the following is true regarding the use of multiple departmental overhead rates? |
| | A) | This method uses a different overhead rate for each production department. |
| | B) | The method usually follows a two-stage assignment process, each with its different cost object. |
| | C) | In the first stage the departments are the cost objects. |
| | D) | In the second state the products are the cost objects. |
| | E) | All of the above. |
|
|
|
| 6 | |
A company produces two models of ice chests. The total overhead for the company is estimated to be $4,800,000 ($3,600,000 in department A and $1,200,000 in department B). The total direct labor hours is estimated to be 600,000 in department A and 400,000 in department B. If a deluxe model of an ice chest uses 3 hours of direct labor in production in department A and 1 hour of labor in department B, how much overhead should be assigned to it using the departmental overhead rate method? |
| | A) | $19.20 |
| | B) | $21.00 |
| | C) | $29.00 |
| | D) | $31.00 |
| | E) | None of the above |
|
|
|
| 7 | |
All of the following are examples of batch-level activities except: |
| | A) | Purchase order processing. |
| | B) | Setting up equipment. |
| | C) | Clerical activity associated with processing purchase orders to produce an order for a standard product. |
| | D) | Worker recreational facilities. |
| | E) | None of the above |
|
|
|
| 8 | |
All of the following are examples of product-level activities except: |
| | A) | Human resource management. |
| | B) | Advertising a product. |
| | C) | Testing a prototype of a new product. |
| | D) | Parts administration. |
|
|
|
| 9 | |
Elgin Company has two products: X and Y. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools: | | Expected Activity | Activity Cost Pool | Estimated Overhead Cost | Product X | Product Y | Total | #1 | $29,200 | 1,000 | 500 | 1,500 | #2 | $40,000 | 200 | 800 | 1,000 | #3 | $180,000 | 600 | 5,400 | 6,000 |
The annual production and sales level of Product X is 9,094 units. The annual production and sales level of Product Y is 15,826. The activity rate under the activity-based costing system for Activity 3 is closest to: |
| | A) | $29.32. |
| | B) | $30.00. |
| | C) | $33.33. |
| | D) | $41.53. |
|
|
|
| 10 | |
Elgin Company has two products: X and Y. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools: | | Expected Activity | Activity Cost Pool | Estimated Overhead Cost | Product X | Product Y | Total | #1 | $29,200 | 1,000 | 500 | 1,500 | #2 | $40,000 | 200 | 800 | 1,000 | #3 | $180,000 | 600 | 5,400 | 6,000 |
The annual production and sales level of Product X is 9,094 units. The annual production and sales level of Product Y is 15,826. (Note that this is the same information as provided for the previous question.) The overhead cost per unit of Product X under activity-based costing is closest to: |
| | A) | $1.83. |
| | B) | $1.98. |
| | C) | $5.00. |
| | D) | $10.00. |
|
|
|
| 11 | |
Kendall Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools:
| Estimated Overhead Cost | Expected Activity | Activity 1 | $60,048 | 4,800 | Activity 2 | $58,656 | 2,400 | Activity 3 | $130,324 | 4,400 |
Actual costs and activities for the current year were as follows:
| Actual Overhead Cost | Actual Activity | Activity 1 | $59,798 | 4,830 | Activity 2 | $58,476 | 2,370 | Activity 3 | $130,234 | 4,450 |
The total amount of the debits to the Manufacturing Overhead account (hint: remember how the T-account for overhead works) during the year was approximately: |
| | A) | $248,508. |
| | B) | $248,988. |
| | C) | $251,110. |
| | D) | $250,334. |
|
|
|
| 12 | |
Kendall Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools:
| Estimated Overhead Cost | Expected Activity | Activity 1 | $60,048 | 4,800 | Activity 2 | $58,656 | 2,400 | Activity 3 | $130,324 | 4,400 |
Actual costs and activities for the current year were as follows:
| Actual Overhead Cost | Actual Activity | Activity 1 | $59,798 | 4,830 | Activity 2 | $58,476 | 2,370 | Activity 3 | $130,234 | 4,450 |
(Note that this is the same information as provided for the previous question.) The total amount of overhead applied during the year was closest to: |
| | A) | $248,508. |
| | B) | $248,988. |
| | C) | $250,155. |
| | D) | $251,334. |
|
|
|
| 13 | |
Which of the following statement(s) is (are) true? |
| | A) | Activity-based costing uses a number of activity cost pools, each of which is allocated to products on the basis of direct labor-hours. |
| | B) | Activity rates in activity-based costing are computed by dividing costs from the first-stage allocations by the activity measure for each activity cost pool. |
| | C) | An activity-based costing system is generally easier to implement and maintain than traditional costing system. |
| | D) | One of the goals of activity-based management is the elimination of waste by allocating costs to products that waste resources. |
|
|
|
| 14 | |
Carothers Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools:
| Estimated Overhead Cost | Expected Activity | Activity 1 | $20,000 | 2,000 | Activity 2 | $36,000 | 1,800 | Activity 3 | $40,000 | 2,500 |
Actual activity for the current year was as follows:
| Actual Activity | Activity 1 | 2,005 | Activity 2 | 1,815 | Activity 3 | 2,490 |
The amount of overhead applied for Activity 3 during the year was approximately: |
| | A) | $36,300. |
| | B) | $39,840. |
| | C) | $40,000. |
| | D) | $96,190. |
|
|
|
| 15 | |
Assume that Jessica's flower arrangements applies the plantwide overhead rate method and uses direct labor hours (DLH) as its overhead allocation base. Jessica's DLH information is in the Exhibit below.
Number of Units Direct Labor Total Direct Labor Hours |
|
| Hours per Unit | Standard Arrangement | 1,500 | 12 | 18,000 | Custom Arrangement | 500 | 14 | 7,000 | Total hours | | | 25,000 |
Jessica's flower arrangements overhead cost information is below. Its overhead cost consists of indirect labor and factory utilities.Indirect labor cost | $2,000,000 | Factory utilities | 400,000 | Total overhead cost | $2,400,000 |
What is the Plantwide overhead rate? |
| | A) | $1200 |
| | B) | $1000 |
| | C) | $690 |
| | D) | $96 |
| | E) | none of the above |
|
|
.