FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Activity-Based Costing and Analysis

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 81

True/False

Review LaterAdd Note

Review Later

The departmental overhead rate method uses a different overhead rate for each production department.

Correct Answer

verified

Show Answer

Question 82

True/False

Review LaterAdd Note

Review Later

A company produces computer chips that go through two operations, operation A1 and operation B2, before they are complete.Expected costs and activities for the two departments are shown below.Departmental overhead rates are based on machine hours in department A1 and direct labor hours in department B2.Therefore, the overhead rates for department A1 and department B2 are $3.62 per machine hour and $5.73 per direct labor hour, respectively. $\begin{array} { l c c } & \text { Department } & \text { Department } \\& \text { Al } & \text { B2 } \\\text { Machine hours } & 40,000 \mathrm { MH } & 30,000 \mathrm { MH } \\\text { Direct labor hours } & 36,200 \mathrm { DLH } & 28,650 \mathrm { DLH } \\\text { Overhead costs } & \$ 144,800 & \$ 171,900\end{array}$

Correct Answer

verified

Show Answer

Question 83

True/False

Review LaterAdd Note

Product design costs are an example of a unit level activity.

Batch level costs vary with the number of units produced.

In competitive markets, price is established through the forces of _______________ and _______________.

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: $\begin{array}{r}{\text { Budgeted Activity }} \quad \quad \quad \quad \quad \quad \\\begin{array}{|l|r|r|r|r|}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & {\begin{array}{l}\text { Budgeted } \\\text { Cost }\end{array}} & \text { Product A } & \text { Product B } & \text { Product C } \\\hline \text { Activity 1 } & \$ 425,000 & 1,700 & 680 & 1,870 \\\hline \text { Activity 2 } & \$ 144,900 & 1,890 & 1,575 & 2,835 \\\hline \text { Activity 3 } & \$ 85,000 & 2,400 & 1,000 & 1,600 \\\hline\end{array}\end{array}$ Compute the company's activity rates under activity-based costing for each of the three activities.

Which of the following would not be considered a product cost?

Greene Company uses a plantwide overhead rate with direct labor hours as the allocation base.Use the following information to solve for the amount of direct labor hours estimated per unit of product G2. $\begin{array}{lr} \text { Dreect material cost per unit of G 2 } &\$ 7 \\ \text { Total estimated manufacturing overhead } &\$ 795,000 \\ \text {Total cost per unit of G 2 } &\$ 20 \\ \text { Total estimated direct labor hours } &530,000 \\&\mathrm{DLH} \\ \text { Direct labor cost per unit of G 2 } &\$ 3.70\end{array}$

In activity-based costing, an activity can involve several related tasks.

Activity-based costing often shifts overhead costs from large volume, standardized products to low-volume, specialty products that consume disproportionate resources.

Which of the following is true?

Identify and explain the four control levels associated with activity-based costing.

Which of the following statements is true with regard to the plantwide overhead rate method?

Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?

A company uses activity-based costing to determine the costs of its three products: A, B, and C.The activity rates and activity levels for each of the company's three activity cost pools are shown below. $\begin{array}{r}{\text { Budgeted Activity }} \quad \quad \quad \quad \quad \quad \\\begin{array}{|l|r|r|r|r|}\hline \begin{array}{l}\text { Activity Cost } \\\text { Pool }\end{array} & \text { Activity Rate } & \text { Product A } & \text { Product B } & \text { Product C } \\\hline \text { Activity 1 } & \$ 19 & 700 & 1,150 & 650 \\\hline \text { Activity 2 } & \$ 27 & 2,400 & 2,100 & 1,500 \\\hline \text { Activity 3 } & \$ 62 & 600 & 1,350 & 1,050\\\hline\end{array}\end{array}$ Compute the company's budgeted cost for each of the three activities under activity-based costing.

Match each of the following terms a through j with the appropriate definitions 1 through 10.

A company allocates $7.50 overhead to each unit produced.The company uses a plantwide overhead rate with direct labor hours as the allocation base.Given the amounts below, how many direct labor hours does the company expect in department 2? $\begin{array} { l c c } \text { Estirnated: } & \text { Department 1 } & \text { Departrnent } 2 \\\text { Maruffacturing overhead costs } & \$ 74,358 & \$ 49,572 \\\text { Direct labor hours } & 6,610 \mathrm { DLH } & ? \mathrm { DLH } \\\text { Machinehours } & 700 \mathrm { MH } & \mathbf { 8 0 \mathrm { MH } }\end{array}$

A company has two products: A1 and B2.It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: $\begin{array} { | l | l | r | r | } \hline & &{ \text { Budgeted Activity } } \\\hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \begin{array} { l } \text { Budgeted } \\\text { Cost }\end{array} & \text { Product A1 } & \text { Product B2 } \\\hline \text { Activity 1 } & \$ 48,000 & 1,200 & 4,800 \\\hline \text { Activity 2 } & \mathbf { \$ 3 , 0 0 0 } & \mathbf { 2 , 2 4 0 } & 4,760 \\\hline \text { Activity 3 } & \mathbf { \$ 8 0 , 0 0 0 } & 7,200 & \mathbf { 8 0 0 } \\\hline\end{array}$ Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units.What is the approximate overhead cost per unit of Product A1 under activity-based costing?

A company has two products: A1 and B2.It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools: $\begin{array} { | l | l | r | r | } \hline & &{ \text { Budgeted Activity } } \\\hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \begin{array} { l } \text { Budgeted } \\\text { Cost }\end{array} & \text { Product A1 } & \text { Product B2 } \\\hline \text { Activity 1 } & \$ 48,000 & 1,200 & 4,800 \\\hline \text { Activity 2 } & \mathbf { \$ 3 , 0 0 0 } & \mathbf { 2 , 2 4 0 } & 4,760 \\\hline \text { Activity 3 } & \mathbf { \$ 8 0 , 0 0 0 } & 7,200 & \mathbf { 8 0 0 } \\\hline\end{array}$ Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units.What is the approximate overhead cost per unit of Product B2 under activity-based costing?

A _______________________ overhead rate is a single overhead rate determined by using volume-related measures.