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activity based questions

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Question;Multiple Choice Questions;1. Consider;the following statements regarding traditional costing systems;I.;Overhead;costs are applied to products on the basis of volume-related measures.;II.;All;manufacturing costs are easily traceable to the goods produced.;III.;Traditional;costing systems tend to distort unit manufacturing costs when numerous goods;are made that have widely varying production requirements.;Which;of the above statements is (are) true?;A. I only.;B. II only.;C. III only.;D. I and III.;E. II and III.;2. Many;traditional costing systems;A. trace manufacturing overhead to individual;activities and require the development of numerous activity-costing rates.;B. write off manufacturing overhead as an;expense of the current period.;C. combine widely varying elements of overhead;into a single cost pool.;D. use a host of different cost drivers (e.g.;number of production setups, inspection hours, orders processed) to improve the;accuracy of product costing.;E. produce results far superior to those;achieved with activity-based costing.;3. The;following tasks are associated with an activity-based costing system;1?Calculation of cost application rates;2?Identification of cost drivers;3?Assignment of cost to products;4?Identification of cost pools;Which;of the following choices correctly expresses the proper order of the preceding;tasks?;A. 1, 2, 3, 4.;B. 2, 4, 1, 3.;C. 3, 4, 2, 1.;D. 4, 2, 1, 3.;E. 4, 2, 3, 1.;4. Which of the following is the proper sequence;of events in an activity-based costing system?;A. Identification of cost drivers;identification of cost pools, calculation of cost application rates, assignment;of cost to products.;B. Identification of cost pools, identification;of cost drivers, calculation of cost application rates, assignment of cost to;products.;C. Assignment of cost to products;identification of cost pools, identification of cost drivers, calculation of;cost application rates.;D. Calculation of cost application rates;identification of cost drivers, identification of cost pools, assignment of;cost to products.;E. Some other sequence of the four activities;listed above.;5. Which;of the following tasks is not normally associated with an activity-based;costing system?;A. Calculation of cost application rates.;B. Identification of cost pools.;C. Preparation of allocation matrices.;D. Identification of cost drivers.;E. Assignment of cost to products.;6. Which;of the following is not a broad, cost classification category typically;used in activity-based costing?;A. Unit-level.;B. Batch-level.;C. Product-sustaining level.;D. Facility-level.;E. Management-level.;7. In;an activity-based costing system, direct materials used would typically be;classified as a;A. unit-level cost.;B. batch-level cost.;C. product-sustaining cost.;D. facility-level cost.;E. matrix-level cost.;8. Which of the following is least likely;to be classified as a batch-level activity in an activity-based costing system?;A. Shipping.;B. Receiving and inspection.;C. Production setup.;D. Property taxes.;E. Quality assurance.;9. In;an activity-based costing system, materials receiving would typically be;classified as a;A. unit-level activity.;B. batch-level activity.;C. product-sustaining activity.;D. facility-level activity.;E. period-level activity.;10. Foster;Inc., an appliance manufacturer, is developing a new line of ovens that uses;controlled-laser technology. The;research and testing costs associated with the new ovens is said to arise from;a;A. unit-level activity.;B. batch-level activity.;C. product-sustaining activity.;D. facility-level activity.;E. competitive-level activity.;11. Consider;the following statements regarding product-sustaining activities;I.;They;must be done for each batch of product that is made.;II.;They;must be done for each unit of product that is made.;III.;They;are needed to support an entire product line.;Which;of the above statements is (are) true?;A. I only.;B. II only.;C. III only.;D. I and II.;E. II and III.;12. Which;of the following is least likely to be classified as a facility-level;activity in an activity-based costing system?;A. Plant maintenance.;B. Property taxes.;C. Machine processing cost.;D. Plant depreciation.;E. Plant management salaries.;13. The salaries of a manufacturing plant's;management are said to arise from;A. unit-level activities.;B. batch-level activities.;C. product-sustaining activities.;D. facility-level activities.;E. direct-cost activities.;14. Which;of the following choices correctly depicts a cost that arises from a;batch-level activity and one that arises from a facility-level activity?;Batch-Level;Activity;Facility-Level;Activity;A.;Direct materials;Plant depreciation;B.;Inspection;Property taxes;C.;Quality assurance;Shipping;D.;Plant maintenance;Insurance;E.;Management salaries;Material handling;15.;The division of;activities into unit-level, batch-level, product-sustaining level, and;facility-level categories is commonly known as a cost;A.;object.;B.;application;method.;C.;hierarchy.;D.;estimation;method.;classification scheme that is useful in traditional;volume-based systems;16. Alamo's customer service department follows;up on customer complaints by telephone inquiry.;During a recent period, the department initiated 7,000 calls and;incurred costs of $203,000. If 2,940 of;these calls were for the company's wholesale operation (the remainder were for;the retail division), costs allocated to the retail division should amount to;A. $0.;B. $29.;C. $85,260.;D. $117,740.;E. $203,000.;Use the;following to answer questions 17-18;Riverside;Florists uses an activity-based costing system to compute the cost of making;floral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $180,000 typically;perform both tasks, other firm-wide overhead is expected to total $70,000. These costs are allocated as follows;Bouquet Production;Delivery;Other;Wages and;salaries;60%;30%;10%;Other overhead;50%;35%;15%;Riverside;anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year.;17. The cost of wages and salaries and other;overhead that would be charged to each bouquet made is;A. $7.15.;B. $8.75.;C. $12.50.;D. $13.75.;E. some other amount.;18. The;cost of wages and salaries and other overhead that would be charged to each;delivery is;A. $19.63.;B. $20.31.;C. $26.75.;D. $40.63.;E. some other amount.;Use the;following to answer questions 19-27;HiTech Products;manufactures three types of remote-control devices: Economy, Standard, and;Deluxe. The company, which uses;activity-based costing, has identified five activities (and related cost;drivers). Each activity, its budgeted;cost, and related cost driver is identified below.;Activity;Cost;Cost;Driver;Material;handling;$;225,000;Number of;parts;Material;insertion;2,475,000;Number of;parts;Automated;machinery;840,000;Machine hours;Finishing;170,000;Direct labor;hours;Packaging;170,000;Orders;shipped;Total;$3,880,000;The following;information pertains to the three product lines for next year;Economy;Standard;Deluxe;Units to be;produced;10,000;5,000;2,000;Orders to be;shipped;1,000;500;200;Number of;parts per unit;10;15;25;Machine hours;per unit;1;3;5;Labor hours;per unit;2;2;2;19. What is HiTech's cost application rate for;the material-handling activity?;A. $1.00 per part.;B. $2.25 per part.;C. $6.62 per labor hour.;D. $13.23 per part.;E. A rate other than those listed above.;20. What is HiTech's cost application rate for;the automated machinery activity?;A. $24.00 per machine hour.;B. $24.50 per labor hour.;C. $49.42 per unit.;D. $50.00 per machine hour.;E. A rate other than those listed above.;21. What is HiTech's cost application rate for;the finishing activity?;A. $5.00 per labor hour.;B. $5.00 per machine hour.;C. $5.00 per unit.;D. $7.50 per unit.;E. A rate other than those listed above.;22. What is HiTech's cost application rate for;the packaging activity?;A. $4.86 per machine hour.;B. $5.00 per labor hour.;C. $10.00 per unit.;D. $100.00 per order shipped.;E. A rate other than those listed above.;23. Under;an activity-based costing system, what is the per-unit cost of Economy?;A. $141.;B. $164.;C. $225.;D. $228.;E. An amount other than those listed above.;24. Under;an activity-based costing system, what is the per-unit cost of Standard?;A. $164.;B. $228.;C. $272.;D. $282.;E. An amount other than those listed above.;25. Under;an activity-based costing system, what is the per-unit cost of Deluxe?;A. $272.;B. $282.;C. $320.;D. $440.;E. An amount other than those listed above.;26. Assume that HiTech is using a volume-based;costing system, and the preceding manufacturing costs are applied to all;products based on direct labor hours.;How much of the preceding cost would be assigned to Deluxe?;A. $456,471.;B. $646,471.;C. $961,176.;D. $1,141,176.;E. An amount other than those listed above.;27. Assume that HiTech is using a volume-based;costing system, and the preceding manufacturing costs are applied to all;products based on direct labor hours.;How much of the preceding cost would be assigned to Standard?;A. $456,471.;B. $646,471.;C. $961,176.;D. $1,141,176.;E. An amount other than those listed above.

 

Paper#45032 | Written in 18-Jul-2015

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