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Exam 7: Activity-Based Costing and Activity Based Management

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Question 31

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Gooding Company manufactures two models of its skillet,the Kitchen and the Campfire.The Kitchen model requires 10,000 direct labor hours and the Campfire requires 30,000 direct labor hours.The company produces 3,400 units of the Kitchen model and 600 units of the Campfire model each year. The company inspects one Kitchen for every 100 produced, and inspects one Campfire 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 Kitchen model using ABC costing?

A) $21,150
B) $30,600
C) $42,300
D) $71,910

E) B) and D)
F) B) and C)

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Question 32

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In changing from a traditional costing system to an activity-based costing system,overhead costs tend to shift from high-volume standard products to low-volume premium products because

A) All overhead costs are indirect.
B) Premium products usually consume more activities per
C) Standard products use more total activities than premium products.
D) None of these ans choices are correct.

E) A) and D)
F) A) and B)

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Question 33

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A difference in GAAP-based product costing and activity-based costing is that under activity-based costing

In an activity-based costing system,the benefits of defining more detailed activities will always outweigh the effort needed to monitor activity performance,and the resulting potential for error.

Which of the following would be a likely activity driver for product design?

The examination of business processes to identify incremental changes that may reduce operating costs is referred to as

In an activity-based costing system, after the manufacturing overhead costs have been assigned to activity cost pools, the next step is to calculate the unit product cost.

Although the total amount of allocated overhead differs between a traditional overhead allocation method and activity-based overhead allocations,we can still compare the percentage of overhead allocated to each product.

Which of the following activities would be classified as non-value added in the manufacture of wooden bird houses?

Turnbull Company produces two products and their overhead consists of setups $20,000; machining $2,220,000; and packing $80,000.Data for the current year follow: The overhead allocated to Beta assuming a single overhead rate based on machine hours and assuming ABC, respectively, are:

In an activity-based costing system,which of the following is $\textbf{ not }$ a category in which activities are classified?

First-stage allocation is the process of assigning manufacturing overhead costs to activity pools.

Assigning manufacturing overhead cost to activity pools is referred to as first-stage allocation because

Mantle Co.manufactures baseball bats.The company's total overhead consists of assembly costs and inspection costs.The following data is available: Total overhead assigned to wood bats assuming a single overhead rate and using activity based costing, respectively, are:

Megan Industries manufactures several products including a basic case for a popular smart phone.The company is considering adopting an activity-based costing approach for setting its budget.The company's production activities,budgeted activity costs,and cost drivers for the coming year are as follows. The budgeted data for smart phone case production are as follows. a.Calculate the activity rate for each cost pool. b.Calculate the activity-based

Brandon Consulting Company is headquartered in Atlanta and has branch offices in Nashville and Birmingham.Brandon uses an activity-based costing system.The Atlanta office has its costs for Administration and Legal allocated to the two branch offices.Brandon has provided the following information: How much of Atlanta's cost will be allocated to Birmingham?

Which of the following would be considered a customer-level activity?

A&W Manufacturing uses an activity-based costing system for its cutting department.The activity cost totals $148,000.The number of cuts is the cost driver.The cutting department processed a total of 9,000 batches with an average cuts per batch of 6 and total cuts of 46,250.What is the activity rate for the cutting department?

Since a batch-level activity is based on the existence of the batch,a batch consumes resources

Camilla,Inc.uses activity-based costing to cost its two products: Standard and Deluxe.The company has provided the following data relating to its activities: a.What is the activity rate for the sales cost pool? b.If actual activity is the same as that estimated,what is the total amount of overhead cost allocated to the Deluxe product?