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Exam 4: Activity-Based Costing

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Question 41

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Which of the following statements concerning the unit product cost of Product W2 is true?

A) The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $209.06.
B) The unit product cost of Product W2 under traditional costing is greater than its unit product under activity-based costing by $12.41.
C) The unit product cost of Product W2 under traditional costing is greater than its unit product under activity-based costing by $209.06.
D) The unit product cost of Product W2 under traditional costing is less than its unit product cost under activity-based costing by $12.41.

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Question 42

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When a company changes from a traditional costing system to an activity-based costing system, costs will ordinarily shift from high-volume products to low-volume products when the activity-based costing system includes batch-level or product-level costs.

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Question 43

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Overhead allocation based solely on a measure of volume such as direct labor-hours:

The unit product cost of Product I9 under activity-based costing is closest to:

Activity-based costing involves a two-stage allocation process in which overhead costs are first assigned to activity cost pools and then allocated to products using activity measures.

The unit product cost of Product Z5 under activity-based costing is closest to:

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product Q9 would be closest to:

Dooms, Inc., manufactures and sells two products: Product Y7 and Product I5.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $27.50 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.Determine the unit product cost of each product under the company's traditional costing method. b.Determine the unit product cost of each product under the activity-based costing method.

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product Z6 would be closest to:

The overhead applied to each unit of Product U1 under activity-based costing is closest to:

The activity rate for the Machine Setups activity cost pool under activity-based costing is closest to:

Senff Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Data concerning two products appear below: How much overhead cost would be assigned to Product V91Z using the activity-based costing system?

Jennifer Company has two products: A and B.The company uses activity-based costing.The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: The activity rate under the activity-based costing system for Supporting customers is closest to:

Rather than using a single allocation base such as direct labor-hours or machine-hours, in activity-based costing a company uses a number of allocation bases for assigning costs to products.

If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the prefab barns is closest to:

The total overhead applied to Product B0 under activity-based costing is closest to:

Reitler, Inc., manufactures and sells two products: Product A2 and Product N7.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $26.80 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method. b.How much overhead would be applied to each product under the company's traditional costing method? c.Determine the unit product cost of each product under the company's traditional costing method. d.Compute the activity rates under the activity-based costing system. e.Determine how much overhead would be assigned to each product under the activity-based costing system. f.Determine the unit product cost of each product under the activity-based costing method.

The activity rates in activity-based costing are used to determine how quickly a particular task should be done.

The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Decenzo, Inc., manufactures and sells two products: Product L4 and Product O1.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $18.20 per DLH.The direct materials cost per unit is $267.20 for Product L4 and $292.20 for Product O1.The estimated total manufacturing overhead is $774,120. The unit product cost of Product L4 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to: