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Exam 11: Cost Allocation and Activity-Based Costing

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Question 41

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Which of the following is not a factory overhead allocation method?

A) single plantwide rate
B) multiple departmental rates
C) factory costing
D) activity-based costing

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Question 42

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Determine the activity rate for procurement per purchase order.

A) $43.53
B) $18.50
C) $15.42
D) $37.00

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Question 43

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Activity-based costing can only be used to allocate manufacturing factory overhead.

Scoresby Co.uses 6 machine hours and 2 direct labor hours to produce Product X.It uses 8 machine hours and 16 direct labor hours to produce Product Y.Scoresby's Assembly and Finishing departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively.How much overhead cost will be charged to the two products?

Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are the same across all departments and products.

Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are different across different departments and products.

In an effort to simplify the multiple production department factory overhead rate method, the same rate can be used for all departments.

Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to regular widget production if budgeted production for the period is 75,000 units and actual production for the period is 72,000 units?

Tulip Company produces two products, T and U.The indirect labor costs include the following two items: The following activity-base usage and unit production information is available for the two products: a Determine the single plantwide factory overhead rate, using direct labor hours as the activity base. b Determine the factory overhead cost per unit for Products T and U, using the single plantwide factory overhead rate. c Determine the activity rate for plant supervision and setup labor, assuming that the activity base for supervision is direct labor hours and the activity base for setup labor is number of setups. d Determine the factory overhead cost per unit for Products T and U, using activity-based costing. e Why is the factory overhead cost per unit different for the two products under the two methods?

If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, how much factory overhead will the Kaumajet Factory allocate to each unit of desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours?

The Pikes Peak Leather Company manufactures leather handbags and moccasins.The company has been using the factory overhead rate method but has decided to evaluate activity based costing to allocate factory overhead.The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices. Total budgeted factory overhead cost = $360,000 Calculate the amount of factory overhead to be allocated to each unit using activity based costing.The factory plans to produce 60,000 handbags and 40,000 moccasins.

Multiple production department factory overhead rates are more accurate than are plantwide factory overhead rates.

When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.

Shubelik Company is changing to an activity-based costing method.They have determined that they will use three cost pools: setups, inspections, and assembly.Which of the following would not be used as the activity base for any of these three activities?

Transformations Hair Salon uses an activity-based costing system in its beauty salon to determine the cost of services.The salon has determined the costs of services by activity as follows: a Using the information provided, determine the cost of services for each of the following services provided by the salon: b If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and 5,500 highlights, determine the budget for cost of services.

Managers depend on product costing to make decisions regarding continuing operations and product mix.

Multiple production department factory overhead rates are less accurate than are plantwide factory overhead rates.

Calculate the cost of services for a haircut.

Determine the overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc.uses a multiple department rate system.

A plantwide factory overhead rate assumes that all overhead is directly related to one activity representing the entire plant.