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1. Drake Manufacturing sells a number of goods who...




1. Drake Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 520 revealed a traditionally-derived total cost of $1,623 and a selling price of $1,850 based on that figure. A newly computed activity-based total cost is $1,215. Which of the following statements is true? Answer -All other things being equal, Drake should consider increasing its sales price. -Drake should increase the product's selling price to maintain the same markup percentage. -Product no. 520 could be labeled as being overcosted by Drake's traditional costing procedures. -If product no. 520 is undercosted by traditional accounting procedures, then all of Drake's other products must be undercosted as well. -Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure. In comparison with a system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has: Answer -a large proportion of nonunit-level activities. -product-line diversity. -minimal product-line diversity and a small proportion of nonunit-level activities. -existing variances from budgeted amounts. -product-line diversity and a large proportion of nonunit-level activities. In an activity-based costing system, materials receiving would typically be classified as a: Answer -unit-level activity. -batch-level activity. -product-sustaining activity. -facility-level activity. -period-level activity. Fogg Company, which uses labor hours to apply overhead to manufacturing, may have increased amounts of underapplied overhead at month-end if: Answer -suppliers of direct materials have an across-the-board price increase. -an accountant failed to record the period's charges for plant maintenance and security. -employees are hit hard with a widespread outbreak of the flu. -direct laborers are granted a wage increase. -outlays for advertising expenditures are increased. Grist Enterprises is converting to an activity-based costing system It wishes to depict the various activities in its manufacturing process along with the activities' relationships. Which of the following is a tool that the company can use to accomplish this task? Answer -Storyboards. -Activity relationship charts (ARCs). -Decision trees. -Simulation games. -Process organizers. Just answers needed. Thank you!!!!


Paper#4393 | Written in 18-Jul-2015

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