FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: Activity-Based Costing and Cost Management

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Essay

Review LaterAdd Note

Review Later

Magnolia Company has identified seven activities as part of its manufacturing process and chosen corresponding activity drivers for each activity.The chart below lists the total cost of each activity,the amount of activity driver used for each of Magnolia's two products,the activity rate,and the activity cost assigned to each product.Fill in the blanks below:

Correct Answer

verified

a.$30.00 = $60,000/(800 + 1,200)
b.$24,0...

View Answer

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

Jefferson,Inc.produces two different products (Product 5 and Product Z) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.The activity drivers are used as follows: What proportion of Machining activity is used by Product 5?

A) 20%
B) 33%
C) 67%
D) 75%

E) A) and C)
F) A) and D)

Correct Answer

verified

Show Answer

Question 23

Essay

Review LaterAdd Note

Carter,Inc.produces two different products,Product A and Product B.Carter uses a traditional volume-based costing system in which direct labor hours are the allocation base.Carter is considering switching to an ABC system by splitting its manufacturing overhead cost across three activities: Design,Production,and Inspection.The cost of each activity and usage of the activity drivers are as follows: Carter manufactures 10,000 units of Product A and 7,500 units of Product B per month. Required: a.Calculate the predetermined overhead rate under the traditional costing system. b.Calculate the activity rate for Design. c.Calculate the activity rate for Machining. d.Calculate the activity rate for Inspection. e.Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system. f.Calculate the indirect manufacturing costs assigned to each unit of Product B under the traditional costing system. g.Calculate the indirect manufacturing costs assigned to each unit of Product A under the ABC system. h.Calculate the indirect manufacturing costs assigned to each unit of Product B under the ABC system. i.Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC?

Prevention costs are incurred to prevent quality problems from occurring in the first place.

The first step in ABC is:

Activity-based costing systems include non-volume-based cost drivers.

Cricket Company has identified seven activities as part of its manufacturing process and chosen corresponding activity drivers for each activity.The chart below lists the total cost of each activity,the proportion of activity driver used for each of Cricket's two products,and the activity cost assigned to each product.Fill in the blanks below:

Which of the following best defines a product-level activity?

Magenta Company has identified seven activities as part of its manufacturing process and chosen corresponding activity drivers for each activity.The chart below lists the total cost of each activity,the proportion of activity driver used for each of Magenta's two products,and the activity cost assigned to each product.Fill in the blanks below:

Harwell,Inc.produces two different products,Product A and Product B.Harwell uses a traditional volume-based costing system in which direct labor hours are the allocation base.Harwell is considering switching to an ABC system by splitting its manufacturing overhead cost of $400,000 across three activities: Setup,Production,and Finishing.Under the traditional volume-based costing system,the predetermined overhead rate is $4.00/direct labor hour.Under the ABC system,the rate for each activity and usage of the activity drivers are as follows: Required: a.Calculate the indirect manufacturing costs assigned to Product A under the traditional costing system. b.Calculate the indirect manufacturing costs assigned to Product B under the traditional costing system. c.Calculate the indirect manufacturing costs assigned to Product A under the ABC system. d.Calculate the indirect manufacturing costs assigned to Product B under the ABC system. e.Which product is under-costed and which is over-costed under the volume-based cost system compared to ABC?

Prevention costs are costs that:

Which type of quality cost would a firm most want to eliminate or reduce as much as possible?

Calverton,Inc.produces two different products (Standard and Luxury) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard is assigned $150,000 in Machining cost,and $22,500 in Inspection cost.What proportion of Machining activity is used by Standard?

Cottonwood,Inc.produces two different products (Standard and Luxury) using two different activities: Machining,which uses machine hours as an activity driver,and Inspection,which uses number of batches as an activity driver.The cost of Machining is $500,000,while the cost of Inspection is $30,000.Standard uses 30% of total machine hours and 70% of total batches.What is the total activity cost assigned to Standard?

Garfield Personal Training Services is owned by Gina Garfield.Gina provides personal training and coaching to individuals or small groups using the local fitness facility and pool.Gina rents the group training room at the local fitness facility or the pool for scheduled classes.For one-on-one training,she meets clients at the fitness facility where she is a member.Gina is currently learning Zumba and plans to offer a Zumba class in the group training room on Wednesday mornings starting next month.The first scheduled Zumba class is considered a ________ activity for Garfield.

Which of the following is the correct formula to compute an activity rate?

Yallow,Inc.manufactures teddy bears and dolls.Currently,Yallow makes 2,000 teddy bears each month.Each teddy bear uses $2.00 in direct materials and $0.50 in direct labor.Yallow uses two activities in manufacturing the teddy bears: Sewing and Processing.The cost associated with Sewing is $15,000 a month,allocated on the basis of direct labor hours.The cost associated with Processing is $10,000 a month,allocated on the basis of batches.The activity drivers are used as follows: What is the total manufacturing cost for one teddy bear?

The gross margin does not take into account:

Lincoln,Inc. ,which uses a volume-based cost system,produces cat condos that sell for $90 each.Direct materials cost $15 per unit,and direct labor costs $10 per unit.Manufacturing overhead is applied at a rate of 200% of direct labor cost.Nonmanufacturing costs are $27 per unit.What is the gross profit margin for the cat condos?

Activity Based Costing divides activities into two categories: unit-level activities and facility level activities.