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Formosa Steel Products makes steel building materials for export, and uses an activity-based

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1. The main difference between activity-based costing and traditional costing systems is that activity-based costing uses a separate allocation rate for each activity. (Points : 1)
True
False

2. Activity-based costing creates more precise matching of indirect costs with products (Points : 1)
True
False

3. Jenny was reviewing the water bill for her doggy day spa and determined that her highest bill, $1,700, occurred in July when she washed 800 dogs and her lowest bill, $900, occurred in November when she washed 400 dogs. What was the variable cost per dog associated with Jenny's water bill? (Points : 1)
$0.67
$1.00
$0.50
$2.00

4. A traditional costing system employs multiple allocation rates, but an activity-based costing system uses only one single allocation rate. (Points : 1)
True
False

5. Jenny was reviewing the water bill for her doggy day spa and determined that her highest bill, $1,700, occurred in July when she washed 800 dogs and her lowest bill, $900, occurred in November when she washed 400 dogs. What was the fixed cost associated with Jenny's water bill? (Points : 1)
$150
$300
$100
$200
None of these is correct

6. Formosa Steel Products makes steel building materials for export, and uses an activity-based costing system to account for the indirect manufacturing costs of its various products. Indirect costs for the whole factory are broken down into three activities—casting, materials handling, and milling. The cost driver for casting is machine hours; the cost driver for material handling is kilograms, and the cost driver for milling is direct labor hours. Activity costs and volumes for the year were estimated as follows:


Activity
Cost
Volume
Casting
$2,000,000
800,000.00
Machine hours
Material Handling
$400,000
500,000.00
Kilograms
Milling
$1,120,000
140,000.00
Direct labor hours


One product is steel reinforcement rods, sold by the metric ton. Engineering reports show that one metric ton of steel reinforcement rods requires $100 of direct materials cost plus $50 of direct labor cost. Producing one metric ton of steel rods also requires 24 machine hours for casting, weighs 1,000 kilograms, and requires 15 direct labor hours.

What is the activity rate for the milling activity? (Points : 1)
$8.00 per direct labor hr
$4.40 per direct labor hr
$0.13 per direct labor hr
$0.80 per direct labor hr

7. Activity-based costing systems and traditional costing systems will produce the same results for product cost and profitability, although they use different methods of calculation. (Points : 1)
True
False

8. Dalian Company provides the following information:

Price per unit: $20
Variable cost per unit: $8
Fixed costs per month: $15,000

What is the breakeven point in terms of units sold? (Points : 1)
1,150
1,200
1,875
1,250

9. JB Company has fixed costs of $300,000. Total costs, both fixed and variable, are $378,000 when 40,000 units are produced. How much is the variable cost per unit? (Please round to the nearest cent.) (Points : 1)
$9.45
$2.78
$7.50
$1.95
None of these is correct

10. The first step in the activity-based costing system is to identify each activity and its total indirect cost. (Points : 1)
True
False

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