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Exam 17: Activity-Based Costing

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Question 41

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A value-added activity in a service enterprise is

A) performing landscaping services.
B) reception.
C) billing.
D) ordering supplies.

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Question 42

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A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available: Production information for the two products is as follows: The amount of overhead assigned to Oil using ABC is

A) $1,800,000.
B) $1,942,500.
C) $1,657,500.
D) $1,380,000.

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Question 43

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Activity-based costing has been found to be useful in each of the following service industries except

Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.

Which of the following is a non-value-added activity?

Boswell Company manufactures two products, Regular and Supreme. Boswell's overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: Overhead applied to Regular using traditional costing using direct labor hours is

What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.

Activity-based costing uses

Which of the following is a batch-level activity?

Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: Overhead applied to Case 165 using activity-based costing is

When overhead is properly assigned in ABC, it will usually decrease the unit cost of high-volume products.

Which of the following is not a unit-level activity?

Painting is a product-level activity.

Which of the following is not typical of traditional costing systems?

Baxter Accounting Services estimates for next year revenues of $3,000,000, direct labor of $600,000, and overhead of $1,050,000. Under traditional costing, overhead is applied to audit jobs using the rate of

Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year. If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is

Which of the following is a facility-level activity?

ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.

In the hierarchy of activity levels, the four levels are __________, ___________, ____________, and _____________.

Which of the following is a non-value-added activity?