Question 1

The overhead cost per unit of Product S under activity-based costing is closest to:

Accepted Answer

A)   $1.83.
B)   $1.98.
C)   $5.00.
D)   $10.00.E) C) and D)
F) A) and B)

Question 2

Matt Company uses activity-based costing.The company has two products: A andB.The annual production and sales of Product A are 8,000 units and of Product B are 6,000 units.There are three activity cost pools,with estimated total cost and expected activity as follows:  The cost per unit of Product A under activity-based costing is closest to:

Accepted Answer

A)   $2.40.
B)   $3.90.
C)   $6.60.
D)   $10.59.E) B) and C)
F) A) and D)

Question 3

Assuming that actual activity turns out to be the same as expected activity,the total amount of overhead cost allocated to Product X would be closest to:

Accepted Answer

A)   $235,000.
B)   $316,600.
C)   $357,500.
D)   $563,000.E) A) and B)
F) B) and D)

Question 4

Suki Company uses activity-based costing to compute product costs for external reports.The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool.Estimated costs and activities for the current year are presented below for the three activity cost pools:  Actual activity for the current year was as follows:  The amount of overhead applied for Activity 3 during the year was closest to

Accepted Answer

A)   $30,026.50.
B)   $35,773.45.
C)   $36,107.00.
D)   $36,112.00.E) A) and B)
F) None of the above

Question 5

Departmental overhead rates applied on the basis of a volume measure such as direct labour-hours or machine-hours will eliminate any distortions in unit costs due to product diversity.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would be considered as a prevention cost?

Accepted Answer

A)   Inspection of completed products prior to shipment to customers.
B)   Supplier management.
C)   Rework costs.
D)   Scrap costs.E) All of the above
F) B) and D)

Question 7

The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

Accepted Answer

A)   $54.50.
B)   $71.80.
C)   $74.00.
D)   $197.60.E) None of the above
F) B) and C)

Question 8

The overhead cost per unit of Product B under the activity-based costing system is closest to

Accepted Answer

A)   $26.09.
B)   $35.28.
C)   $38.16.
D)   $50.66.E) A) and C)
F) B) and D)

Question 9

Testing a prototype of a new product is an example of a:

Accepted Answer

A)   unit-level activity.
B)   batch-level activity.
C)   product-level activity.
D)   facility-level activity.E) A) and D)
F) A) and C)

Question 10

Overhead allocation based on volume alone:

Accepted Answer

A)   is a key aspect of the activity-based costing model.
B)   will systematically overcost high-volume products and undercost low-volume products.
C)   will systematically overcost low-volume products and undercost high-volume products.
D)   must be used for external financial reporting.E) B) and D)
F) None of the above

Question 11

The activity rate for Activity 3 is closest to:

Accepted Answer

A)   $26.67.
B)   $56.74.
C)   $116.18.
D)   $119.72.E) All of the above
F) C) and D)

Question 12

Unit-level activities are performed each time a unit is made.

Accepted Answer

A) True 
 B)False

Question 13

Using activity-based costing is not useful in determining costs of quality.

Accepted Answer

A) True 
 B)False

Question 14

Batch-level activities are performed each time a batch is handled or processed,regardless of how many units are in the batch.

Accepted Answer

A) True 
 B)False

Question 15

Bridget Company uses activity-based costing.The company has two products: A andB.The annual production and sales of Product A are 2,000 units and of Product B are 3,000 units.There are three activity cost pools,with estimated total cost and expected activity as follows:  The cost per unit of Product A under activity-based costing is closest to:

Accepted Answer

A)   $6.40.
B)   $8.63.
C)   $9.60.
D)   $13.80.E) B) and C)
F) None of the above

Question 16

Which of the following is not a limitation of activity-based costing?

Accepted Answer

A)   More accurate product costs may result in better decisions.
B)   Changing from a traditional direct labour based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers.
C)   Implementing an activity based costing system is more costly than implementing a traditional direct labour-based costing system.
D)   In practice,most managers insist on fully allocating all costs to products,customers,and other costing objects in an activity based costing system.This results in overstated costs.E) B) and C)
F) A) and D)

Question 17

The overhead cost per unit of Product B under the traditional costing system is closest to:

Accepted Answer

A)   $5.49.
B)   $11.45.
C)   $26.09.
D)   $50.66.E) C) and D)
F) All of the above

Question 18

Setting up equipment is an example of a:

Accepted Answer

A)   unit-level activity.
B)   batch-level activity.
C)   product-level activity.
D)   facility-level activity.E) A) and B)
F) A) and C)

Question 19

When there are batch-level or product-level costs,in comparison to a traditional cost system,an activity-based costing system ordinarily will shift costs from high-volume to low-volume products.

Accepted Answer

A) True 
 B)False

Question 20

Facility-level costs can be easily and accurately allocated to different products using activity-based costing.

Accepted Answer

A) True 
 B)False

Exam 6: Cost-Volume-Profit Relationships

The overhead cost per unit of Product S under activity-based costing is closest to:

Correct Answer
verified

Batch-level activities are performed each time a batch is handled or processed,regardless of how many units are in the batch.

Correct Answer
verified

Correct Answer
verified

Setting up equipment is an example of a:

Correct Answer
verified

The overhead cost per unit of Product B under the traditional costing system is closest to:

Correct Answer
verified

Using activity-based costing is not useful in determining costs of quality.

Correct Answer
verified

Testing a prototype of a new product is an example of a:

Correct Answer
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Correct Answer
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Correct Answer
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Assuming that actual activity turns out to be the same as expected activity,the total amount of overhead cost allocated to Product X would be closest to:

Correct Answer
verified

Facility-level costs can be easily and accurately allocated to different products using activity-based costing.

Correct Answer
verified

Which of the following would be considered as a prevention cost?

Correct Answer
verified

When there are batch-level or product-level costs,in comparison to a traditional cost system,an activity-based costing system ordinarily will shift costs from high-volume to low-volume products.

Correct Answer
verified

Overhead allocation based on volume alone:

Correct Answer
verified

The activity rate for Activity 3 is closest to:

Correct Answer
verified

The overhead cost per unit of Product B under the activity-based costing system is closest to

Correct Answer
verified

Which of the following is not a limitation of activity-based costing?

Correct Answer
verified

Departmental overhead rates applied on the basis of a volume measure such as direct labour-hours or machine-hours will eliminate any distortions in unit costs due to product diversity.

Correct Answer
verified

Unit-level activities are performed each time a unit is made.

Correct Answer
verified

The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

Correct Answer
verified

Exam 6: Cost-Volume-Profit Relationships

The overhead cost per unit of Product S under activity-based costing is closest to:

Correct AnswerverifiedShow Answer

Batch-level activities are performed each time a batch is handled or processed,regardless of how many units are in the batch.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Setting up equipment is an example of a:

Correct AnswerverifiedShow Answer

The overhead cost per unit of Product B under the traditional costing system is closest to:

Correct AnswerverifiedShow Answer

Using activity-based costing is not useful in determining costs of quality.

Correct AnswerverifiedShow Answer

Testing a prototype of a new product is an example of a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assuming that actual activity turns out to be the same as expected activity,the total amount of overhead cost allocated to Product X would be closest to:

Correct AnswerverifiedShow Answer

Facility-level costs can be easily and accurately allocated to different products using activity-based costing.

Correct AnswerverifiedShow Answer

Which of the following would be considered as a prevention cost?

Correct AnswerverifiedShow Answer

When there are batch-level or product-level costs,in comparison to a traditional cost system,an activity-based costing system ordinarily will shift costs from high-volume to low-volume products.

Correct AnswerverifiedShow Answer

Overhead allocation based on volume alone:

Correct AnswerverifiedShow Answer

The activity rate for Activity 3 is closest to:

Correct AnswerverifiedShow Answer

The overhead cost per unit of Product B under the activity-based costing system is closest to

Correct AnswerverifiedShow Answer

Which of the following is not a limitation of activity-based costing?

Correct AnswerverifiedShow Answer

Departmental overhead rates applied on the basis of a volume measure such as direct labour-hours or machine-hours will eliminate any distortions in unit costs due to product diversity.

Correct AnswerverifiedShow Answer

Unit-level activities are performed each time a unit is made.

Correct AnswerverifiedShow Answer

The activity rate computed at the beginning of the year for the batch setup activity cost pool is closest to:

Correct AnswerverifiedShow Answer

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