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Managerial Accounting, Ch.4




Question;Multiple Choice Question 45Sitwell Corporation manufactures titanium and aluminum tennis racquets. Sitwell's total overhead costs consist of assembly costs and inspection costs. The following information is available:CostTitaniumAluminumTotal CostAssembly500 mach. hours500 mach. hours$45,000Inspections350150$75,0002,100 labor hours1,900 labor hoursSitwell is considering switching from one overhead rate based on labor hours to activity-based costing.Using activity-based costing, how much assembly cost is assigned to titanium racquets?A$23,625B$31,500C$15,750D$22,500Multiple Choice Question 50The first step in activity-based costing is toidentify the cost driver that has a strong correlation to the activity 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.assign overhead costs to products, using overhead rates determined for each cost pool.Multiple Choice Question 56One of Hartman Company's activity cost pools is inspecting, with estimated overhead of $140,000. Hartman produces throw rugs (700 inspections) and area rugs (1,300 inspections). How much of the inspecting cost pool should be assigned to throw rugs?A$75,384B$140,000C$49,000D$70,000Multiple Choice Question 72Teller, Inc. produces 3 products: P1, Q2, and R3. P1 requires 400 purchase orders, Q2 requires 600 purchase orders, and R3 requires 1,000 purchase orders. Teller has identified an ordering and receiving activity cost pool with allocated overhead of $180,000 for which the cost driver is purchase orders. Direct labor hours used on each product are 50,000 for P1, 40,000 for Q2, and 110,000 for R3. How much ordering and receiving overhead is assigned to each product?P1Q2R3A$36,000$54,000$90,000B$60,000$60,000$60,000C$40,500$45,000$94,500D$45,000$36,000$99,000Multiple Choice Question 82As compared to a high-volume product, a low-volume productArequires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead.Busually requires less special handling.Cis usually responsible for more overhead costs per unit.Drequires relatively fewer machine setups.Multiple Choice Question 94A company incurs $2,400,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available:DepartmentExpected Use of DriverCostProcessing800$1,000,000Packaging200,000 1,000,000Testing2,000 400,000Production information for the two products is as follows:DepartmentOilExpected Use of DriverSludgeExpected Use of DriverProcessing300500Packaging120,00080,000Testing1,600400The amount of overhead assigned to Oil isA$1,295,000B$1,105,000C$920,000.D$1,200,000.Multiple Choice Question 103The presence of any of the following factors would suggest a switch to ABC except whenAproduction managers are ignoring data provided by the existing system.Bproduct lines differ greatly in volume.Cthe manufacturing process has changed significantly.Doverhead costs constitute a minor portion of total costs.Multiple Choice Question 121Value-added activitiesAcannot be differentiated from non-value-added activities.Badd cost to a product without affecting selling price.Cshould be minimized or eliminated.Dinvolve those activities that are essential to a company's operations.Multiple Choice Question 127Which of the following is a batch-level activity?AProduct designBAssemblingCPlant managementDEquipment setupsMultiple Choice Question 147Port 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:AuditTaxDirect labor cost$50,000$100,000CPU minutes40,00010,000Legal hours used200800Port 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?A$2,880B$4,080C$4,200D$3,000Multiple Choice Question 148Activity-based costing has been found to be useful in each of the following service industries exceptAbanks.Bhospitals.Ctelephone companies.DABC has been useful in any of these industries.


Paper#37608 | Written in 18-Jul-2015

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