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Exam 4: Activity-Based Costing

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Question 1

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Which of the following statements concerning the unit product cost of Product W7 is true?

A) The unit product cost of Product W7 under traditional costing is greater than its unit product under activity-based costing by $244.36.
B) The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $66.13.
C) The unit product cost of Product W7 under traditional costing is greater than its unit product under activity-based costing by $66.13.
D) The unit product cost of Product W7 under traditional costing is less than its unit product cost under activity-based costing by $244.36.

E) B) and D)
F) None of the above

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D

Question 2

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Which of the following activities would be classified as a batch-level activity?

A) Setting up equipment.
B) Designing a new product.
C) Training employees.
D) Milling a part required for the final product.

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

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Question 3

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If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product G1 would be closest to:

Brizendine, Inc., manufactures and sells two products: Product R0 and Product B6.The production of Product R0 is 900 units and of Product B6 is 700 units.The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product R0 under activity-based costing is closest to:

Spates, Inc., manufactures and sells two products: Product H2 and Product E0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The company's expected total manufacturing overhead is $266,468. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product H2 would be closest to:

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product U4 would be closest to:

Rutty, Inc., manufactures and sells two products: Product U6 and Product K9.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $28.70 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.Determine the unit product cost of each product under the company's traditional costing method. b.Determine the unit product cost of each product under the activity-based costing method.

Greenspan, Inc., manufactures and sells two products: Product O4 and Product L7.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $19.60 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.Compute the activity rates under the activity-based costing system. b.Determine how much overhead would be assigned to each product under the activity-based costing system. c.Determine the unit product cost of each product under the activity-based costing method.

When a company implements activity-based costing, overhead cost often shifts from high-volume products to low-volume products, with a higher unit cost resulting for the low-volume products.

The unit product cost of Product Z9 under activity-based costing is closest to:

The unit product cost of Product Z9 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

The activity rate for the General Factory activity cost pool under activity-based costing is closest to:

The unit product cost of Product F3 under activity-based costing is closest to:

A plantwide predetermined overhead rate based on direct labor-hours results in low overhead costs for products with a high direct labor-hour content and high overhead costs for products with a low direct labor-hour content.

The overhead cost per unit of Product B under the activity-based costing system is closest to:

Production order processing is an example of a:

Strama, Inc., manufactures and sells two products: Product A6 and Product I5.The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The activity rate for the General Factory activity cost pool under activity-based costing is closest to:

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product U1 would be closest to:

Cazier, Inc., manufactures and sells two products: Product F8 and Product M3.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $19.30 per DLH.The direct materials cost per unit is $204.50 for Product F8 and $199.90 for Product M3. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: Determine the unit product cost of each product under the activity-based costing method.

Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's purchasing department?