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Exam 5: Activity-Based Costing and Activity-Based Management

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Question 31

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Stark Corporation has two departments,Car Rental and Truck Rental.Central costs may be allocated to the two departments in various ways. If advertising expense of $456,000 is allocated on the basis of sales,the cost per cost driver rate would be ________.

A) $0.60
B) $1.20
C) $0.40
D) $0.43

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Question 32

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For a company which produce its products in batches,the CEO's salary is a(n) ________ cost.

A) batch-level
B) output unit-level
C) facility-sustaining
D) product-sustaining

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Question 33

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Explain how activity-based costing systems can provide more accurate product costs than traditional cost systems.

Which of the following statements is true of a peanut-butter costing system?

________ is considered while choosing a cost allocation base for activity costs in ABC costing.

For each of the following activities identify an appropriate activity-cost driver. a.machine maintenance b.machine setup c.quality control d.material ordering e.production scheduling f.warehouse expense g.engineering design

Dartmouth Corporation manufactures two models of office chairs,a standard and a deluxe model.The following activity and cost information has been compiled: Assume a traditional costing system applies the overhead costs based on direct labor hours.What is the total amount of overhead costs assigned to the deluxe model?

It only makes sense to implement an ABC system when ________.

Tiger Pride produces two product lines: T-shirts and Sweatshirts.Product profitability is analyzed as follows: Tiger Pride's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Under the revised ABC system,supervision costs allocated to Sweatshirts will be ________.(Do not round interim calculations.Round the final answer to the nearest whole dollar. )

Demand for refinements to the costing system has accelerated due to ________.

Milan Manufacturing Company has identified three cost pools to allocate overhead costs.The following estimates are provided for the coming year: The accounting records show the Mossman Job consumed the following resources: If direct labor-hours are considered the only overhead cost driver,what is the single cost driver rate for Milan?

Nichols Inc.manufactures remote controls.Currently the company uses a plant-wide rate for allocating manufacturing overhead.The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows: The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $600 per labor hour. What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 460 parts,5 direct manufacturing labor hours,and 18 minutes of inspection time.

Columbus Company provides the following ABC costing information: The above activities used by their three departments are: If labor hours are used to allocate the non-labor,overhead costs,what is the overhead allocation rate?

Companies often use costing systems that have features of ABC systems but that do not emphasize individual activities.

Only indirect costs are included in the cost pools of ABC.

Extreme Manufacturing Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of the account billing cost will be assigned to Department B?

With traditional costing systems,products manufactured in small batches and in small annual volumes may be ________ because batch-related and product-sustaining costs are assigned using unit-related drivers.

Columbus Company provides the following ABC costing information: The above activities used by their three departments are: How much of invoice cost will be assigned to the Bush Department?

A single indirect-cost rate distorts product costs because ________.

Which of the following reasons explain why ABC concepts may be of great value to service companies?