Ch4 Activity-Based Costing And Analysis Test Bank Answers

Managerial Accounting, 7e (Wild)

Chapter 4 Activity-Based Costing and Analysis

1) Overhead costs are indirect costs so assigning these costs to products requires an allocation method.

2) The activity-based costing method uses volume-based measures to allocate overhead costs.

3) Product costs consist of direct labor, direct materials, and overhead (indirect) costs.

4) Distorted product cost information can result in poor decisions.

5) Overhead costs are not directly related to production and cannot be traced to units of product like direct materials and direct labor can.

6) The cost to heat a manufacturing facility can be directly linked to the number of units produced.

7) Examples of volume-related measures include direct labor hours and machine hours.

8) Departments are the cost objects when the plantwide overhead rate method is used.

9) The plantwide overhead rate is total plantwide allocation base divided by total budgeted plantwide overhead cost.

10) The unit of product is the cost object when the plantwide overhead rate method is used.

11) The plantwide overhead rate is determined using volume-related measures.

12) Data concerning volume-related measures are readily available in most manufacturing settings.

13) The departmental overhead rate method uses a different overhead rate for each production department.

14) The departmental overhead rate method uses the same overhead rate for each production department.

15) By definition, costs classified as overhead are consumed in basically the same manner regardless of the process involved.

16) Products are the first stage cost objects when using a departmental overhead rate method.

17) The departmental overhead rate method allows each department to have its own overhead rate and its own allocation base.

18) The departmental overhead rate method involves the following four steps: 1) Assign overhead costs to departmental cost pools, 2) select an allocation base for each department, 3) compute overhead allocation rates for each department, and 4) use departmental overhead rates to assign overhead costs to products.

19) The premise of ABC is that it takes activities to make products and provide services and these activities drive costs.

20) Activities are the cost objects of the second stage of ABC.

21) Activities are the cost objects of the first stage of ABC.

22) A cost pool is a collection of costs that are related to the same or similar activity.

23) Activity-based costing first assigns costs to products and then uses these product costs to assign costs to manufacturing activities.

24) A single cost pool is used when allocating overhead using the activity-based costing method.

25) Multiple cost pools are used when allocating overhead using the plantwide overhead rate method.

26) Management's pricing and cost decisions for a product are influenced by that product's cost assignments.

27) A major disadvantage of using a plantwide overhead rate is the extreme difficulty in gathering the needed information.

28) The usefulness of overhead allocations based on a plantwide overhead rate depends on two crucial assumptions: (1) the overhead cost is correlated with the allocation base; and (2) all products use overhead cost in dissimilar proportions.

29) The usefulness of overhead allocations based on a plantwide overhead rate depends on two crucial assumptions: (1) the overhead cost is correlated with the allocation base; and (2) all products use overhead cost in similar proportions.

30) Some companies allocate their overhead cost using a plantwide overhead rate largely because of its simplicity.

31) Allocated overhead costs vary depending upon the allocation methods used.

32) When products differ in batch size and complexity, they usually consume different amounts of overhead resources.

33) Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

34) Compared to the departmental overhead rate method, the plantwide overhead rate method usually results in more accurate overhead allocations.

35) Compared to the plantwide overhead rate method, the departmental overhead rate method usually results in more accurate overhead allocations.

36) Because departmental overhead costs are allocated based on measures closely related to production volume, they accurately assign overhead, such as utility costs.

37) The use of a plantwide overhead rate is not acceptable for external reporting under GAAP.

38) ABC allocates overhead costs to products based on activities rather than direct labor or machine hours.

39) ABC can be used to assign costs to any cost object that is of management interest.

40) ABC is significantly less costly to implement and maintain than more traditional overhead costing systems.

41) ABC is more costly to implement and maintain than more traditional overhead costing systems.

42) When using the plantwide overhead rate method, total budgeted overhead costs are combined into one overhead cost pool.

43) Kinetic Company estimates that overhead costs for the next year will be $1,600,000 for indirect labor and $400,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 50,000 direct labor hours are planned for this next year, then the plantwide overhead rate is $.025 per direct labor hour.

44) Kinetic Company estimates that overhead costs for the next year will be $1,600,000 for indirect labor and $400,000 for factory utilities. The company uses direct labor hours as its overhead allocation base, and plans to use 50,000 direct labor hours for this next year. If a product uses 5 direct labor hours, then it will be assigned $200 in overhead costs.

45) A company estimates that costs for the next year will be $500,000 for indirect labor, $50,000 for factory utilities, and $1,000,000 for the CEO's salary. The company uses machine hours as its overhead allocation base. If 25,000 machine hours are planned for this next year, then the plantwide overhead rate is $22 per machine hour.

46) A company estimates that costs for the next year will be $500,000 for indirect labor, $50,000 for factory utilities, and $1,000,000 for the CEO's salary. The company uses machine hours as its overhead allocation base. If 25,000 machine hours are planned for this next year, then a product requiring 10 machine hours will be assigned $220 in overhead.

47) A company estimates total overhead costs for the next year to be $1,200,000 and wishes to use direct labor hours as its overhead allocation base. This company makes two products: (1) Fancy X, which requires three direct labor hours per unit, and (2) Plain X, which requires one direct labor hour per unit. If the company plans to make 10,000 units of Fancy X and 10,000 units of Plain X, then each unit produced will be allocated the same amount of overhead.

[The following information applies to the questions displayed below.] 

Malone Company sells two products Big X and Little X. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $510,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 15,000 units of Big X and 18,000 units of Little X next year.

48) Malone has 33,000 total estimated direct labor hours for next year.

49) Malone's plantwide overhead rate will be $20.99 per direct labor hour next year.

50) If the direct labor time estimates are met, Malone will allocate $12.59 of overhead cost to each unit of Little X.

51) The first step in using the departmental overhead rate method requires that overhead be traced to each of the company's departments.

52) The departmental overhead rate method traces costs to each department and then determines an allocation base for each department.

53) Turtle Company produces t-shirts that go through two operations, cutting and sewing, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the cutting department based on direct labor hours is $2.69 per direct labor hour (rounded to two decimals).

54) A company produces heating elements that go through two operations, casting and assembling, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.

55) A company produces paint that goes through two operations, operation A and operation B, before it is complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for Department B based on machine hours is $4 per machine hour.

56) A company produces computer chips that go through two departments, department A1 and department B2, before they are complete. Expected costs and activities for the two departments are shown below. Departmental overhead rates are based on machine hours in department A1 and direct labor hours in department B2. Therefore, the overhead rates for department A1 and department B2 are $3.62 per machine hour and $5.73 per direct labor hour, respectively.

57) A company produces garden benches that go through two departments, department 1A1 and department 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.

58) A company produces surgical equipment that goes through three departments, 1A1, 2B2, and 3C3, before they are complete. Expected costs and activities for the three departments are shown below. All departments have departmental overhead rates based on direct labor hours. Therefore, the overhead rate for each department is $5 per direct labor hour.

59) Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.

60) The more activities tracked by activity-based costing, the more accurately overhead costs are assigned.

61) In activity-based costing, an activity can involve several related tasks.

62) Activities causing overhead cost in an organization are typically separated into four levels: (1) direct activities, (2) indirect activities, (3) batch level activities, and (4) facility level activities.

63) Machine setup costs are an example of a batch level activity.

64) Product design costs are an example of a unit level activity.

65) Facility-level costs are not traceable to individual product lines, batches or units.

66) Activity-based costing eliminates the need for overhead allocation rates.

67) Activity-based costing often shifts overhead costs from large volume, standardized products to low-volume, specialty products that consume disproportionate resources.

68) The final step of activity-based costing assigns overhead costs to pools rather than to products.

69) Batch-level costs vary with the number of units produced.

70) Unit-level costs vary with the number of units produced.

71) Batch-level costs do not vary with the number of units produced.

72) Product-level costs do not vary with the number of units or batches produced.

73) Facility-level costs vary with the number of units or batches produced.

74) A quality-inspection cost is an example of unit-level costs.

75) Plantwide overhead rates typically do a better job of matching each department's overhead costs to the products using the department's resources than do departmental overhead rates.

76) Two big benefits of ABC costing are a) more accurate product cost information and b) more detailed information on costs and the drivers of those costs.

77) A method of assigning overhead costs to a product using a single overhead rate is:

A) Plantwide overhead rate method.

B) Cost pool overhead rate method.

C) Departmental overhead rate method.

D) Activity-based costing.

E) Overhead cost allocation method.

78) Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?

A) Plantwide overhead rate method and departmental overhead rate method.

B) Cost pool overhead rate method and plantwide overhead rate method.

C) Departmental overhead rate method and activity-based costing.

D) Activity-based costing and plantwide overhead rate method.

E) Departmental overhead rate method and cost pool overhead rate method.

79) Which of the following would not be considered a product cost?

A) Direct labor costs.

B) Factory supervisor's salary.

C) Factory line worker's salary.

D) Cost accountant's salary.

E) Manufacturing overhead costs.

80) Overhead costs:

A) Are directly related to production.

B) Can be traced to units of product in the same way that direct materials can.

C) Cannot be traced to units of product in the same way that direct labor can.

D) Are period costs.

E) Include only fixed costs.

81) The cost object of the plantwide overhead rate method is:

A) The unit of product.

B) The production departments of the company.

C) The production activities of the company.

D) Manufacturing cost pools.

E) The time period.

82) Which of the following statements is true with regard to the plantwide overhead rate method?

A) The rate is determined using volume-related measures.

B) It is logical to use this method when overhead costs are not closely tied to volume-related measures.

C) This method uses multiple overhead rates.

D) The rate is determined using measures that are not closely related to volume.

E) The method provides the most accurate means of allocating overhead costs.

83) The cost object(s) of the departmental overhead rate method is:

A) The time period.

B) The production departments of the company.

C) The production departments in the first stage and the unit of product in the second stage.

D) The unit of product in the first stage and the production departments in the second stage.

E) The production activities of the company.

84) Which of the following statements is true with regard to the departmental overhead rate method?

A) It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments.

B) It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

C) Each department has the same rate for the same activity pool.

D) It requires one overhead cost pool and one rate.

E) It is the same as activity-based costing.

85) The cost object(s) of the activity-based costing method is(are):

A) The time period.

B) The production departments of the company.

C) The production activities of the company.

D) The production activities in the first stage and the unit of product in the second stage.

E) The unit of product in the first stage and the production activities in the second stage.

86) From an ABC perspective, what causes costs to be incurred?

A) Financial transactions.

B) The volume of units produced.

C) Debits and credits.

D) Management decisions.

E) Activities.

87) Which of the following statements is true with regard to activity-based costing rates?

A) The premise of ABC is that activities are what cause costs to be incurred.

B) ABC is another way to refer to a multiple departmental rate situation.

C) There one basic stage to ABC.

D) ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs.

E) All cost drivers used to determine the rates will be unit-level drivers.

88) What is the reason for pooling costs?

A) To shift costs from low-volume to high-volume products.

B) It is a budgeting technique designed to accurately track fixed costs.

C) Determining a pool rate for all costs incurred by the same activity reduces the number of cost assignments required.

D) This procedure helps to determine which costs are directly related to production volume.

E) It simplifies departmental overhead costing procedures.

89) Which of the following are advantages of using the plantwide overhead rate method?

A) The use of cost pools is considerably more accurate than other overhead allocations.

B) The necessary information is readily available.

C) It is more accurate than traditional overhead allocations.

D) Each department has its own overhead rate and its own allocation base.

E) It takes into account that when products differ in batch size and complexity, they usually consume different amounts of overhead resources.

90) Which of the following companies would be best served by a plantwide overhead rate?

A) A company that manufactures many different products and whose operations are an equal mix of labor and mechanized work.

B) A company that manufactures few products and whose operations are labor intensive.

C) A company that manufactures many different products and whose operations are highly mechanized.

D) A company whose products use overhead resources in very different ways.

E) A company whose products differ in batch size and complexity and consume different amounts of overhead resources.

91) Which of the following is true?

A) Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

B) The departmental overhead rate is not usually based on measures closely related to production volume.

C) The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume.

D) Allocated overhead costs will be the same no matter which allocation method is used.

E) When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.

92) Which of the following is a disadvantage of the departmental overhead rate method?

A) The departmental overhead rate method assigns overhead on the basis of volume-related measures.

B) The departmental overhead rate method is more refined than the plantwide overhead rate method.

C) The departmental overhead rate method does not assign overhead on the basis of volume-related measures.

D) The departmental overhead rate method is simpler and less costly to implement than the plantwide rate method.

E) There are no disadvantages of the departmental overhead rate method.

93) Which of the following is not true?

A) The departmental overhead method assigns overhead on the basis of volume-related measures.

B) The departmental overhead rate method is more refined than the plantwide overhead rate method.

C) Overhead costing accuracy is improved by the use of multiple departmental rates rather than a single overhead rate.

D) The departmental overhead rate method does not assign overhead on the basis of volume-related measures.

E) The departmental overhead rate method is more costly to implement than the plantwide overhead rate method.

94) What are three advantages of activity-based costing over traditional volume-based allocation methods?

A) Ease of use, more accurate product costing, and more effective cost control.

B) Fewer allocation bases, ease of use, and a direct correlation to production volume.

C) More accurate product costing, more effective cost control, and better focus on the relevant factors for decision making.

D) More accurate product costing, fewer cost objects, and a direct correlation to production volume.

E) More accurate product costing, ease of use, less costly to implement.

95) What are the main advantages of volume-based allocation methods compared to activity-based costing?

A) Volume-based methods are easier to use and less costly to implement and maintain.

B) Volume-based methods are more accurate and allowed by GAAP.

C) Volume-based methods are less accurate and easier to use.

D) Volume-based methods are harder to use and more costly to implement and maintain.

E) There are no advantages to using volume-based methods.

96) K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

A) $0.02 per direct labor hour.

B) $46.25 per direct labor hour.

C) $36.25 per direct labor hour.

D) $10 per direct labor hour.

E) $0.10 per direct labor hour.

97) K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, how much overhead would be assigned to a product requiring 4 direct labor hours?

A) $46.25

B) $36.25

C) $185.00

D) $145.00

E) None of the choices

98) Peterson Company estimates that overhead costs for the next year will be $6,520,000 for indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 140,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

A) $0.02 per machine hour.

B) $50.50 per machine hour.

C) $45.75 per machine hour.

D) $3.93 per machine hour.

E) $0.25 per machine hour.

99) A company estimates that overhead costs for the next year will be $8,320,000 for indirect labor and $155,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 400,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round your answer to two decimal places.)

A) $0.05 per machine hour.

B) $21.19 per machine hour.

C) $20.80 per machine hour.

D) $0.39 per machine hour.

E) $2.57 per machine hour.

100) The following data relates to Spurrier Company's estimated amounts for next year.

What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

A) $3.31 per direct labor hour.

B) $3.43 per direct labor hour.

C) $2.04 per direct labor hour.

D) $0.30 per direct labor hour.

E) $0.50 per direct labor hour.

101) The following data relates to Black-Out Company's estimated amounts for next year.

What is the company's plantwide overhead rate if machine hours are the allocation base? (Round your answer to two decimal places.)

A) $233.33 per MH

B) $150.00 per MH

C) $100.00 per MH

D) $4.90 per MH

E) $5.00 per MH

102) The following data relates to Patterson Company's estimated amounts for next year.

What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round your answer to two decimal places.)

A) $3.45 per DLH

B) $5.45 per DLH

C) $0.29 per DLH

D) $0.26 per DLH

E) $0.20 per DLH

103) Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking 0.75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A) $11.57 per unit

B) $8.17 per unit

C) $5.61 per unit

D) $12.43 per unit

E) $10.89 per unit

104) Red Raider Company uses a plantwide overhead rate with direct labor hours as the allocation base. Next year, 400,000 units are expected to be produced requiring 0.9 direct-labor hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A) $19.00 per unit

B) $17.10 per unit

C) $139.00 per unit

D) $125.10 per unit

E) None of the choices

105) Red Raider Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 400,000 units are expected to be produced requiring 1.2 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

A) $19.00 per unit

B) $139.00 per unit

C) $22.68 per unit

D) $166.80 per unit

E) None of the choices

106) Western Company allocates $10 overhead to products based on the number of machine hours used. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

A) 33,000 MH

B) 137,500 MH

C) 82,500 MH

D) 88,000 MH

E) 25,000 MH

107) A company allocates $7.50 overhead to products based on the number of direct labor hours worked. The company uses a plantwide overhead rate with direct labor hours as the allocation base. Given the amounts below, how many direct labor hours does the company expect in department 2?

A) 9,914 DLH

B) 6,612 DLH

C) 3,109 DLH

D) 7,454 DLH

E) 16,254 DLH

108) Gray Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product Q.

A) 50 MH per unit of Q.

B) 0.50 MH per unit of Q.

C) 0.75 MH per unit of Q.

D) 17.5 MH per unit of Q.

E) 30 MH per unit of Q.

109) Gold Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

A) 21 MH per unit of RST.

B) 2 MH per unit of RST.

C) 20 MH per unit of RST.

D) 37.5 MH per unit of RST.

E) 38 MH per unit of RST.

110) Bond Company uses a plantwide overhead rate with direct labor hours as the allocation base. Use the following information to solve for the amount of direct labor hours estimated per unit of product G2.

A) 1.75 DLH per unit of G2.

B) 6.14 DLH per unit of G2.

C) 9.3 DLH per unit of G2.

D) 0.66 DLH per unit of G2.

E) 11.25 DLH per unit of G2.

111) Kamper Company sells two products Big Z and Little Z. Current direct material and direct labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $475,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 32,000 units of Big Z and 9,000 units of Little Z next year.

What are total estimated direct labor hours for this next year?

A) 30,800 total DLH.

B) 616,000 total DLH.

C) 300,000 total DLH.

D) 1,025,000 total DLH.

E) 916,000 total DLH.

112) Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed below. Next year the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.

Compute the plantwide overhead rate for next year.

A) $28.00 per DLH.

B) $37.80 per DLH.

C) $1.35 per DLH.

D) $5.00 per DLH.

E) $0.20 per DLH.

[The following information applies to the questions displayed below.]

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below.

113) Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours.

A) $1.50 per DLH.

B) $5.00 per DLH.

C) $0.75 per DLH.

D) $0.50 per DLH.

E) $2.08 per DLH.

114) Compute Aztec's departmental overhead rate for the mixing department based on machine hours.

A) $1.50 per MH.

B) $5.00 per MH.

C) $0.75 per MH.

D) $0.50 per MH.

E) $2.08 per MH.

115) Compute Aztec's departmental overhead rate for the baking department based on direct labor hours.

A) $1.50 per DLH

B) $5.00 per DLH

C) $0.75 per DLH

D) $0.50 per DLH

E) $2.08 per DLH

116) Compute Aztec's departmental overhead rate for the baking department based on machine hours.

A) $1.50 per MH

B) $5.00 per MH

C) $0.75 per MH

D) $0.50 per MH

E) $2.08 per MH

[The following information applies to the questions displayed below.]

Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below.

117) Assume that the Assembly Department allocates overhead based on machine hours, and the Finishing Department allocates overhead based on direct labor hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the Assembly Department, and 3.5 direct labor hours and 0.5 machine hours in the Finishing Department?

A) $13.00.

B) $10.50.

C) $2.50.

D) $11.00.

E) $7.50.

118) Assume that Angle Max Industries allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the Assembly Department, and 3.5 direct labor hours and 0.5 machine hours in the Finishing Department?

A) $7.50.

B) $13.00.

C) $10.50.

D) $6.00.

E) $11.00.

[The following information applies to the questions displayed below.] 

Tarnish Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table: 

119) Tarnish Industries uses departmental overhead rates and is planning on a $2 per direct labor hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

A) $225,000

B) $196,000

C) $150,000

D) $321,000

E) $471,000

120) Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct labor hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

A) $41,667

B) $288,900

C) $256,800

D) $146,700

E) $323,100

121) Tarnish Industries uses departmental overhead rates and is planning on a $2 per machine hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.

A) $195,000

B) $196,000

C) $163,000

D) $321,000

E) $471,000

122) Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine hour overhead rate for the finishing department. Compute the estimated manufacturing overhead cost for the finishing department given the information shown in the table.

A) $307,500

B) $658,050

C) $401,800

D) $334,150

E) $735,950

[The following information applies to the questions displayed below.]

Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the best-selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:

Wall Nuts' total expected overhead costs and related overhead data are shown below.

123) Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.

A) $4.50 per MH in Dept. A; $4.50 per MH in Dept. B.

B) $7.50 per MH in Dept. A; $7.50 per MH in Dept. B.

C) $4.50 per MH in Dept. A; $7.50 per MH in Dept. B.

D) $2.70 per MH in Dept. A; $6.00 per MH in Dept. B.

E) $0.60 per MH in Dept. A; $0.80 per MH in Dept. B.

124) Use the data for Wall Nuts, Inc. to compute the dollar amount of overhead applied to each unit of oak paneling, assuming the company uses departmental overhead rates based on machine hours in Department A and machine hours in Department B.

A) $8.70

B) $1.40

C) $14.40

D) $26.25

E) $41.00

125) Use the above data for Wall Nuts, Inc. to compute the total manufacturing cost per unit of oak paneling assuming the company uses departmental overhead rates based on machine hours in Department A and machine hours in Department B.

A) $8.70

B) $18.20

C) $21.95

D) $27.30

E) $36.00

126) Aurora Corporation produces outdoor security lighting products. All products go through three processes before completion. Use the expected overhead costs and related data shown below to compute departmental overhead rates based on machine hours in Department A1A; based on direct labor hours in Department B2B; and machine hours in Department C3C.

A) Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH.

B) Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH.

C) Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.

D) Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.

E) Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.

127) Consider the following activities that take place in a veterinary clinic.

(a) Cleaning cages.

(b) Heating and air conditioning the clinic.

(c) Sending blood work to a lab.

(d) Dispensing medicine.

Which of the following statements is true?

A) Service entities cannot use ABC for overhead allocation.

B) Cleaning cages is a facility level activity.

C) Dispensing medicine is a facility level activity.

D) Heating and air conditioning the clinic is a facility level activity.

E) Sending blood work to a lab is a facility level activity.

128) Consider the following activities that take place in a medical clinic.

(a) Cleaning exam rooms.

(b) Heating and air conditioning the clinic.

(c) Sending blood work to a lab.

(d) Dispensing medicine.

Which of the following statements is true?

A) Cleaning rooms and heating the clinic are both unit level activities.

B) Sending blood work to the lab is a batch level activity.

C) Sending blood work and dispensing medicine are both batch level activities.

D) Cleaning rooms and dispensing medication are both product or service level activities.

E) Heating the clinic and dispensing medication are both batch level activities.

129) All of the following are examples of facility sustaining costs except:

A) Costs of cleaning the workplace.

B) Costs of custodial work.

C) Costs of personnel support.

D) Costs of sampling product quality.

E) Costs of employee recreational facilities.

130) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

Which of the following statements is true regarding this company's activity rates?

A) The activity rate under the activity-based costing system for Activity 2 is $2.00.

B) The activity rate under the activity-based costing system for Activity 2 is $16.00.

C) The activity rate under the activity-based costing system for Activity 2 is $1.50.

D) The activity rate under the activity-based costing system for Activity 2 is $19.50.

E) The activity rate under the activity-based costing system for Activity 2 is $2.81.

131) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

What are the activity rates for the three activities under activity-based costing?

A) (1) $2.00; (2) $3.00; (3) $3.50.

B) (1) $3.50; (2) $1.50; (3) $32,80.

C) (1) $3.50; (2) $3.00; (3) $16.00.

D) (1) $2.00; (2) $1.50; (3) $16.00.

E) (1) $2.00; (2) $1.50; (3) $32.80.

132) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

How much overhead will be assigned to Product B using activity-based costing?

A) $56,500

B) $78,000

C) $62,500

D) $197,000

E) $70,000

133) A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product B under activity-based costing?

A) $3.00

B) $2.00

C) $10.28

D) $15.00

E) $2.33

134) A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product A under activity-based costing?

A) $3.00

B) $2.00

C) $10.28

D) $15.00

E) $2.33

135) A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units. What is the approximate overhead cost per unit of Product A1 under activity-based costing?

A) $8.00

B) $9.00

C) $10.00

D) $12.00

E) $4.00

136) A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing?

A) $8.00

B) $9.00

C) $10.00

D) $12.00

E) $4.00

[The following information applies to the questions displayed below.]

Assume that a pet food manufacturer is considering adding two types of pet food to its existing product line. Research had determined that good demand exists for dog food in 40-pound bags and cat food in 0.5 pound cans.

The company identified the following partial list of activities, costs, and activity drivers expected for the next year: 

137) What are the overhead rates used to apply material handling (MH) and storage costs (SC) using activity-based costing?

A) MH $300/batch; SC $2.73/unit.

B) MH $300/batch; SC $.20/lb.

C) MH $525/batch; SC $.205/unit.

D) MH $700/batch; SC $.205/lb.

E) MH $700/batch; SC $8.20/lb.

138) How much overhead cost will be assigned to each product line using activity-based costing (ABC)?

A) Dog food: $462,500; cat food: $462,500.

B) Dog food: $860,000; cat food: $65,000.

C) Dog food: $60,000; cat food: $45,000.

D) Dog food: $800,000; cat food: $20,000.

E) Dog food: $320; cat food: $320.

139) How much overhead cost will be assigned to each unit of product using activity-based costing (ABC)?

A) Dog food: $4.62; cat food: $4.62.

B) Dog food: $2.64; cat food: $2.64.

C) Dog food: $8.60; cat food: $0.33.

D) Dog food: $0.26; cat food: $8.60.

E) Dog food: $0.12; cat food: $3.85.

[The following information applies to the questions displayed below.] 

Assume that the Oregon Ice Cream Company is considering the costs of two of their product lines—ice cream sandwiches and dessert bars. The company identified the following partial list of activities, costs, and activity drivers expected for the next year.

140) How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC)?

A) $340,000

B) $368,000

C) $28,000

D) $850.08

E) $433,682

141) How much overhead cost will be assigned to the dessert bar product line using activity-based costing (ABC)?

A) $340,750

B) $247,818

C) $16,000

D) $297,500

E) $313,500

142) A company identified the following partial list of activities, costs, and activity drivers expected for the next year:

Calculate activity rates for each of the three activities using activity-based costing (ABC).

A) Extrusion: $304 per batch; handling: $32 per unit; packaging: $0.03 per unit.

B) Extrusion: $88 per batch; handling: $32 per order; packaging: $0.03 per unit.

C) Extrusion: $88 per order; handling: $32 per unit; packaging: $0.03 per batch.

D) Extrusion: $418 per batch; handling: $117.33 per order; packaging: $0.054 per unit.

E) Extrusion: $118.13 per batch; handling: $44 per order; packaging: $0.0675 per unit.

143) A company identified the following partial list of activities, costs, and activity drivers expected for the next year:

How much overhead in total will be assigned to the Product A line using activity-based costing?

A) $42,500.

B) $132,900.

C) $90,400.

D) $66,000.

E) $66,450.

144) Which of the following would not be considered a product cost?

A) Direct material costs.

B) Factory supervisor's salary.

C) Direct labor costs.

D) Budget accountant's salary.

E) Manufacturing overhead costs.

145) Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

A) Departmental overhead allocation rates.

B) Plantwide overhead rate.

C) Activity-based costing.

D) Traditional costing system.

E) Direct costing.

146) Which of the following statements is true of activity-based costing?

A) ABC ignores the allocation of storage costs.

B) An activity cost pool collects costs related to the same activity.

C) ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products.

D) Activities are the cost objects of the second stage of ABC.

E) ABC uses a single overhead rate.

147) ABC assumes all costs in a ________ can be grouped together because they all impact the activity.

A) cost pool.

B) department.

C) time period.

D) organization.

E) product line.

148) Put the following ABC implementation steps in order ________.

A Use the activity overhead rates to assign overhead costs to cost objects.

B Compute the allocation rates.

C Trace overhead costs to cost pools.

D Identify the activities and the overhead costs they cause.

A) DACB

B) DBCA

C) BADC

D) CDAB

E) DCBA

149) ________ is considered while choosing a cost allocation base for activity costs in ABC costing.

A) The marketing strategy of the products being produced

B) The product sales price

C) The availability of reliable data and metrics

D) The number of employees in direct labor

E) The number of departments

150) Would the following activities at a manufacturer of shampoo be best classified as unit-level, batch-level, product-level, or facility level activities?

 Researching new formulas Shipping orders to stores

A) Batch Batch

B) Unit Unit

C) Product Batch

D) Product Unit

E) Facility Product

151) All of the following are examples of facility-level costs except:

A) Costs of cleaning the workplace.

B) Costs of custodial work.

C) Costs of personnel support.

D) Costs of receiving shipments.

E) Costs of providing electricity.

152) ________ costs support the company as a whole.

A) Batch-level

B) Product-level

C) Unit-level

D) Facility-level

E) Activity

153) Which of the following is a disadvantage of the departmental overhead rate method?

A) It may fail to accurately assign many overhead costs that are not driven by production volume.

B) Allows each department to have its own overhead rate.

C) Allows each department to have its own allocation base.

D) The departmental overhead rate is usually more accurate in overhead allocations than the plantwide overhead rate.

E) The departmental overhead rate is consistent with GAAP and can be used for external reporting.

154) The use of departmental overhead rates will generally result in:

A) The use of a single cost allocation base.

B) The use of a single overhead cost pool for the factory.

C) The use of a separate cost allocation base for each department in the factory.

D) The use of a separate cost allocation base for each activity in the factory.

E) The use of a separate cost allocation base for each month.

155) ABC systems ________.

A) usually will undercost complicated or complex products

B) will limit cost drivers to units of output

C) highlight the different levels of activities

D) will allocate costs based on volume

E) comply with GAAP

156) ABC costing might lead to:

A) increasing the sales price of low-volume products.

B) increasing the sales price of high-volume products.

C) increasing low-volume products that appear to be profitable.

D) decreasing high-volume products that appear to be unprofitable.

E) increasing materials cost.

157) West Company estimates that overhead costs for the next year will be $5,240,000 for indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 150,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?

A) $0.0259 per machine hour.

B) $34.93 per machine hour.

C) $38.60 per machine hour.

D) $3.67 per machine hour.

E) $0.2727 per machine hour.

158) The following data relates to Mangini Company's estimated amounts for next year.

What is the company's plantwide overhead rate if machine hours are the allocation base? (Round your answer to two decimal places.)

A) $200.00 per MH

B) $150.00 per MH

C) $160.00 per MH

D) $31.11 per MH

E) $5.14 per MH

[The following information applies to the questions displayed below.]

Tasty Bakery produces donuts which go through two operations, mixing and baking, before they are ready to be packaged. Next year's expected costs and activities are shown below. 

159) Compute Tasty's departmental overhead rate for the mixing department based on direct labor hours.

A) $1.50 per DLH.

B) $5.00 per DLH.

C) $0.75 per DLH.

D) $0.60 per DLH.

E) $1.67 per DLH.

160) Compute Tasty's departmental overhead rate for the mixing department based on machine hours.

A) $1.50 per MH.

B) $3.33 per MH.

C) $0.60 per MH.

D) $0.50 per MH.

E) $2.00 per MH.

161) When calculating the departmental overhead rate, the numerator should be?

A) The total estimated departmental overhead cost.

B) The total amount of departmental allocation base.

C) The total plantwide budgeted overhead cost.

D) The actual quantity of the departmental allocation base used by the job.

E) The actual department direct labor hours.

162) Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered:

The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Base model?

A) $15,450.

B) $21,375.

C) $13,500.

D) $17,625.

E) $15,625.

163) Cleveland Choppers manufactures two types of motorcycles, a Base and a Loaded model. The following activity and costs have been gathered:

The number of components and number of setups are chosen as activity-cost drivers for overhead. Assuming an ABC costing system is being used, what is the total overhead cost assigned to the Loaded model?

A) $31,875.

B) $36,000.

C) $28,125.

D) $34,050.

E) $31,125.

164) Match each of the following terms a through j with the appropriate definitions 1 through 10.

(a) Cost object

(b) Activity

(c) Facility-level activities

(d) Activity-based costing

(e) Batch level activities

(f) Activity-based management

(g) Pool rate

(h) Activity cost driver

(i) Value-added activities

(j) Cost pool

_____ (1) Actions which add value to a product.

_____ (2) Actions which cause costs to be incurred.

_____ (3) A collection of costs that are related to the same or similar activity.

_____ (4) An outgrowth of ABC that uses the link between activities and costs.

_____ (5) The target of a cost assignment.

_____ (6) Activities performed only on groups of units.

_____ (7) Factor that drives cost.

_____ (8) An allocation rate used to assign overhead costs to cost objects.

_____ (9) A cost allocation method that focuses on activities performed.

_____(10) Activities performed to sustain facility capacity as a whole.

165) Identify each of the following activities as unit level (U), batch level (B), product level (P), or facility level (F) to indicate the way each is incurred with respect to production.

_____ (1) Providing electricity

_____ (2) Sampling product quality

_____ (3) Cutting parts

_____ (4) Receiving shipments

_____ (5) Organizing production

_____ (6) Printing checks

_____ (7) Providing personnel support

_____ (8) Calibrating machines

_____ (9) Cleaning workplace

_____ (10) Assembling components

166) Direct labor, direct materials, and manufacturing overhead are all product costs. Why is overhead more difficult to account for than either direct labor or direct materials?

167) Name and briefly describe three overhead rate methods.

168) Explain cost flows for the plantwide overhead rate method.

169) Explain cost flows for the departmental overhead rate method.

170) Explain cost flows for activity-based costing.

171) What is the basic principle underlying activity-based costing?

172) How does ABC differ from using multiple departmental rates?

173) What are the major advantages of using a plantwide overhead rate?

174) Explain some of the disadvantages of the departmental overhead rate method.

175) Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?

176) Identify and explain the four control levels associated with activity-based costing.

177) A company estimates that overhead costs for the next year will be $7,200,000 for indirect labor, $400,000 for factory utilities, and $43,000 for depreciation on factory machinery. The company uses direct labor hours as its overhead allocation base. If 955,375 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?

178) A company estimates that overhead costs for the next year will be $3,600,000 for indirect labor, $200,000 for factory utilities, and $21,500 for depreciation on factory machinery. The company uses machine hours as its overhead allocation base. If 764,300 machine hours are planned for this next year, what is the company's plantwide overhead rate?

179) A company has two products: A and B. It uses a plantwide overhead allocation method based on activity 2 and has prepared the following analysis showing budgeted costs and activities. Use this information to compute (a) the company's plantwide overhead rate and (b) the amount of overhead allocated to Product A.

180) A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted costs and activities. Use this information to compute (a) the company's overhead rates for each of the three activities and (b) the amount of overhead allocated to Product A.

181) A company has two products: AA and BB. It uses a plantwide overhead allocation method based on activity 33 and has prepared the following analysis showing budgeted costs and activities. Use this information to compute the company's plantwide overhead rate.

182) A company expects next year's overhead costs to be $400,000. During this time, the company also expects to produce 1,000,000 units, have 200,000 direct labor hours, and 800,000 machine hours.

Make the following independent calculations.

a. Compute a plantwide overhead rate using units of production as the allocation base.

b. Compute a plantwide overhead rate using direct labor hours as the allocation base.

c. Compute a plantwide overhead rate using machine hours as the allocation base.

183) Superior Products Manufacturing identified the following data in its two production departments.

Make the following independent calculations (Round to two decimals).

a. Compute a plantwide overhead rate using machine hours as the allocation base.

b. Compute a plantwide overhead rate using direct labor hours as the allocation base.

184) Superior Products Manufacturing identified the following data in its two production departments:

Compute departmental overhead rates assuming the Assembly rate is based on machine hours and the Finishing rate is based on direct labor hours.

185) Fischer Company identified the following activities, costs, and activity drivers:

a. Compute a plantwide overhead rate assuming the company assigns overhead based on 70,000 budgeted direct labor hours (Round to two decimals).

b. Compute separate rates for each of the four activities using the activity-based costing.

186) Assume New Belgium Brewing Company manufactures and distributes three types of beer and that estimated per unit product costs and related information for the next year are shown in the following table:

a. If New Belgium Brewing Company uses a plantwide overhead rate based on machine hours, what is the total product cost per unit of Cocoa Mole Ale?

b. Blue Paddle is a traditional brew made in large quantities with long production runs. Somersault is a seasonal beer made in small batches. Cocoa Mole Ale is a specialty beer also made in small batches. Which of the overhead allocation methods studied in this chapter would you recommend that New Belgium Brewing Company use and why?

187) Time Bender Company makes watches and clocks. The following estimated data are available for the company's next fiscal year:

Total direct labor costs: $1,700,000

Total setup costs: $190,000

Determine the setup cost per unit for the watches and the clocks if setup costs are assigned using a plantwide overhead rate based on direct labor hours. (Round to two decimal places.)

188) Base Runner, Inc. manufactures baseball bats that go through two operations, cutting and sanding, before they are complete. Expected costs and activities for the two departments are shown in the following table:

a. Compute a departmental overhead rate for the cutting department based on machine hours.

b. Compute a departmental overhead rate for the sanding department based on machine hours.

189) Blast Rocket Company manufactures candy-coated popcorn treats that go through two operations, popping and baking, before they are complete. Expected costs and activities for the two departments are shown in the following table:

a. Compute a departmental overhead rate for the popping department based on direct labor hours.

b. Compute a departmental overhead rate for the baking department based on machine hours.

190) Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below.

Freeze Frame's total expected overhead costs and related overhead data are shown below:

a. Compute a departmental overhead rate for department A based on direct labor hours.

b. How much overhead is associated with model 789 from department A?

c. Compute a departmental overhead rate for department B based on direct labor hours.

d. How much overhead is associated with model 789 from department B?

e. Compute a departmental overhead rate for department C based on direct labor hours.

f. How much overhead is associated with model 789 from department C?

g. What is the per unit cost of the 550,000 units of model 789?

191) Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below:

Freeze Frame's total expected overhead costs and related overhead data are shown in the following table:

a. Compute a departmental overhead rate for department A based on machine hours.

b. How much overhead is associated with model 789 from department A?

c. Compute a departmental overhead rate for department B based on direct labor hours.

d. How much overhead is associated with model 789 from department B?

e. Compute a departmental overhead rate for department C based on machine hours.

f. How much overhead is associated with model 789 from department C?

g What is the per unit cost of the 550,000 units of model 789?

192) Outer Limits, Inc. produces fencing units which require two processes, A and B, to complete. The best-selling type of fence is made of PVC. Information related to the 8,000 units of pvc fencing produced annually is shown below.

Outer Limits' total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on machine hours in department A and direct labor hours in department B.

Determine the total amount of overhead assigned to each unit of PVC fencing.

193) A company's total expected overhead costs and related overhead data are shown below.

a. Compute estimated manufacturing overhead costs for Department A.

b. Compute estimated manufacturing overhead costs for Department B.

194) A company's total expected overhead costs and related overhead data are shown in the following table:

a. Compute estimated manufacturing overhead costs for Department A.

b. Compute estimated manufacturing overhead costs for Department B.

c. Compute the departmental overhead rate based on direct labor hours for Department A.

d. Compute the departmental overhead rate based on machine hours for Department B.

195) Rising Sun, Inc. produces granola that requires two processes, mixing and baking, to complete. The best-selling type of granola is cherry almond delight. Information related to the 100,000 units of cherry almond delight produced annually is shown in the following table:

Rising Sun's total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on machine hours in the mixing department and direct labor hours in the baking department.

Determine the total product cost of this product line and each unit of cherry almond delight.

196) Slosh, Inc. produces washing machines that require two processes, assembling and finishing, to complete. The company's bestselling machine is the commercial washer. Information related to the 500 commercial washers produced annually is shown below.

Slosh's total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on direct labor hours in the Assembling Department and machine hours in the Finishing Department.

Determine the total product cost of this product line and each individual commercial washer.

197) Lemon Yellow Company produces children's clothing that requires two processes, cutting and sewing, to complete. The company is concerned about one product, a hooded jacket, which hasn't been selling as well as it had in past years. Information related to the 20,000 jackets produced annually is shown in the following table:

Lemon Yellow's total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on direct labor hours in the Cutting Department and machine hours in the Sewing Department.

Assume this jacket currently sells for $10. How much profit does the company make per jacket?

198) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown below.

Compute the company's activity rates under activity-based costing for each of the three activities.

199) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

Compute the company's activity rates under activity-based costing for each of the three activities.

200) A company uses activity-based costing to determine the costs of its three products: A, B, and C. The activity rates and activity levels for each of the company's three activity cost pools are shown below.

Compute the company's budgeted cost for each of the three activities under activity-based costing.

201) A company uses activity-based costing to determine the costs of its three products: A, B and C. The activity rates and activity levels for each of the company's three activity cost pools are shown in the following table:

Compute the company's budgeted overhead cost for each of the three products under activity-based costing.

202) A company has two products: X and Y. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools.

Annual production and sales level of Product X is 161,100 units, and the annual production and sales level of Product Y is 275,200 units.

a. Compute the approximate overhead cost per unit of Product X under activity-based costing.

b. Compute the approximate overhead cost per unit of Product Y under activity-based costing.

203) A company has two products: Big and Little. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

Annual production and sales level of big product is 62,525 units, and the annual production and sales level of little product is 251,900 units.

a. Compute the approximate overhead cost per unit of big product under activity-based costing.

b. Compute the approximate overhead cost per unit of little product under activity-based costing.

204) Bark Mode, Incorporated produces and distributes two types of security systems, Standard and Deluxe. Budgeted cost and activity for each of its three activity cost pools are shown below.

The company plans to produce and sell 120,000 standard units and 80,000 deluxe units.

a. Compute the approximate overhead cost per unit of standard under activity-based costing.

b. Compute the approximate overhead cost per unit of deluxe under activity-based costing.

205) Sparks Company produces and distributes two types of garden sculptures, Plain and Fancy. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 64,000 plain units and 49,150 fancy units.

a. Compute the approximate overhead cost per unit of Plain under activity-based costing.

b. Compute the approximate overhead cost per unit of Fancy under activity-based costing.

206) Upside Down, Incorporated designs custom storage spaces to eliminate clutter in both residential and business settings. The following data pertain to a recent reporting period:

Required

a. Use ABC to compute overhead rates for each activity.

b. Assign costs to a 3,000 square foot job that requires 70 contact hours, 20 design hours, and 14 days to complete.

207) Inside Out, Company designs custom showroom spaces in interior design marts across the country. The following data pertain to a recent reporting period.

Required

a. Use ABC to compute overhead rates for each activity.

b. Assign costs to a 3,000 square-foot job that requires 70 contact hours, 20 design hours, and 14 days to complete.

208) Product costs consist of direct labor, direct materials, and ________.

209) Overhead costs cannot be ________ in the same way that direct materials and direct labor can.

210) The ________ overhead rate method uses a single rate for allocating overhead costs to products.

211) The ________ overhead rate method uses multiple volume-based measures to allocate overhead costs to products.

212) ________ focuses on activities and the cost of carrying out activities.

213) The ________ is the target of the cost assignment.

214) The ________ overhead rate is calculated by dividing total budgeted overhead cost by a chosen allocation base, such as direct labor hours.

215) The ________ overhead rate method uses a different overhead rate for each production department.

216) The departmental overhead rate method allows each department to have its own overhead rate and its own ________.

217) The premise of ABC is that it takes ________ to make products and provide services.

218) The ________ stage of ABC is to compute an activity rate for each cost pool and then use this rate to allocate overhead costs to products.

219) A ________ is a collection of costs that are related to the same or similar activity.

220) The major advantages of using a single plantwide overhead rate are ________ and ________.

221) Allocated overhead ________ vary depending upon the allocation method used.

222) When products differ in batch size and complexity, they usually consume different amounts of ________.

223) ________ is an outgrowth of ABC that draws on the link between activities and cost incurrence for better management.