This Website Has Been Moved to a New Link


Loading

ACC560 Week4 Quiz

Price: $6.00


1. Which of the following is not a unit-level activity?
Inspecting
Drilling
Cutting
Sanding

2. The costs that are easiest to trace directly to products are
direct materials and direct labor.
direct labor and overhead.
direct materials and overhead.
None of these; all three costs are equally easy to trace to the product.

3. Which of the following is a batch-level activity?

Purchase ordering
Assembling
Engineering changes
Product design

4. Port Accounting performs two types of services, Audit and Tax. Port's overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:


Audit
Tax
Direct labor cost
$50,000
$100,000
CPU minutes
40,000
10,000
Legal hours used
200
800

Port Accounting performs tax services for Cathy Kane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Kane job using activity-based costing?

$4,080
$3,000
$4,200
$2,880

5. Non-value-added activities

increase both the cost and perceived value of a product.
cannot be differentiated from value-added activities.
involve those activities that are essential to a company's operations.
should be minimized or eliminated.

6. Which of the following is a limitation of activity-based costing?
Some arbitrary allocations continue
Less control over overhead costs
Poorer management decisions
More cost pools

7. An activity-based overhead rate is computed as follows:
actual overhead divided by estimated use of cost drivers.
estimated overhead divided by estimated use of cost drivers.
actual overhead divided by actual use of cost drivers.
estimated overhead divided by actual use of cost drivers.

8. The first step in activity-based costing is to

assign overhead costs to products, using overhead rates determined for each cost pool.
compute the activity-based overhead rate per cost driver.
identify and classify activities involved in the manufacture of specific products, and allocate overhead to cost pools.
identify the cost driver that has a strong correlation to the activity cost pool.

9. The primary benefit of ABC is it provides

more cost pools.
more accurate product costing.
enhanced control over overhead costs.
better management decisions.

10. The presence of any of the following factors would suggest a switch to ABC except when
production managers are ignoring data provided by the existing system.
product lines differ greatly in volume.
overhead costs constitute a minor portion of total costs.
the manufacturing process has changed significantly.

11. Sitwell Corporation manufactures titanium and aluminum tennis racquets. Sitwell's total overhead costs consist of assembly costs and inspection costs. The following information is available:

Cost
Titanium
Aluminum
Total Cost
Assembly
500 mach. hours
500 mach. hours
$45,000
Inspections
350
150
$75,000

2,100 labor hours
1,900 labor hours


Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much inspections cost is assigned to titanium racquets?

$22,500
$37,500
$52,500
$35,625

12. Wilder Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model requires 10,000 direct labor hours and the Luxury requires 30,000 direct labor hours. The company produces 3,400 units of the Basic model and 600 units of the Luxury model each year. The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced. The company expects to incur $84,600 of total inspecting costs this year. How much of the inspecting costs should be allocated to the Basic model using ABC costing?

$71,910
$42,300
$21,150
$30,600

13. Which of the following is true about activity-based costing?

Eliminates arbitrary allocations
Same base as traditional costing
Less cost pools
More costly to use

14. A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available:
Department
Expected use of Driver
Cost
Ordering and Receiving
2,000
$800,000
Mixing
50,000
1,000,000
Testing
1,500
900,000
Production information for Slime is as follows:

Department
Expected use of Driver
Ordering and Receiving
1,600
Mixing
30,000
Testing
1,000

Compute the amount of overhead assigned to Slime.

$1,840,000
$1,350,000
$2,025,000
$1,645,234

15. Berg Company incurs $320,000 overhead costs each year in its three main departments, setup ($20,000), machining ($220,000), and packing ($80,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Berg's two products is as follows:


Product A1
Product B1
Number of setups
20
20
Machining hours
1,000
4,000
Orders packed
150
350
Number of products manufactured
600
400

Using ABC, how much overhead is assigned to Product B1 each year?

$256,000
$160,000
$242,000
$128,000

No comments:

Post a Comment