Question 1

Borden Corporation uses an activity-based costing system with three activity cost pools.The company has provided the following data concerning its costs and its activity based costing system:  Distribution of resource consumption:  How much cost,in total,would be allocated in the first-stage allocation to the Setting Up activity cost pool?

Accepted Answer

A)  $155,000
B)  $279,000
C)  $206,000
D)  $217,000
E)  $194,000F) B) and C)
G) A) and B)

Question 2

A system of assigning costs to departments and products on the basis of a variety of activities instead of only one allocation base is called:

Accepted Answer

A)  Plantwide overhead costing.
B)  A cost center accounting system.
C)  Controllable costing.
D)  Activity-based costing.
E)  Performance costing.F) A) and C)
G) C) and E)

Question 3

Which of the following is not a limitation of activity-based costing?

Accepted Answer

A)  Maintaining an activity-based costing system is more costly than maintaining a traditional direct labor-based costing system.
B)  Changing from a traditional direct labor-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers.Such changes are often resisted by managers.
C)  In practice,most managers insist on fully allocating all costs to products,customers,and other costing objects in an activity-based costing system.This results in overstated costs.
D)  More accurate product costs may result in increasing the selling prices of some products.
E)  Complex products are assigned a larger portion of overheaD.An activity-based costing system is more costly to maintain than a traditional costing system.Activity-based costing produces numbers,such as product margins,that are at odds with the numbers produced by traditional costing systems.Assigning more overhead to complex products is an advantage because it more accurately reflects use of the cost driver.F) A) and D)
G) A) and B)

Question 4

Activity cost pools are not a necessary part of the allocation of overhead costs using activity-based costing.

Accepted Answer

A) True 
 B)False

Question 5

If a firm uses activity-based costing to allocate costs,it does all but which of the following?

Accepted Answer

A)  Combine homogenous costs in appropriate pools.
B)  Select appropriate cost drivers.
C)  Calculate an appropriate rate for each pool.
D)  Allocate costs based on predetermined rates for cost pools.
E)  Apply a volume-related measure per unit of product.F) A) and E)
G) A) and D)

Question 6

In activity-based costing,all overhead is lumped together and a predetermined overhead rate per unit of an allocation base is computed and used to assign overhead to jobs and processes.

Accepted Answer

A) True 
 B)False

Question 7

After all activity costs are accumulated in an activity cost pool account,overhead rates are computed and costs are allocated to cost objects based on:

Accepted Answer

A)  Direct factors.
B)  Indirect factors.
C)  Cost drivers.
D)  Joint cost principles.
E)  Opportunity cost principles.F) A) and C)
G) A) and E)

Question 8

In activity-based costing,low-volume complex products are usually undercosted and high volume simpler products are overcosted,because the method fails to reflect the different uses of indirect resources.

Accepted Answer

A) True 
 B)False

Question 9

Activity based costing can improve costing activity for:

Accepted Answer

A)  Manufacturing companies only.
B)  Service companies only.
C)  Merchandising companies only.
D)  Any company in any industry.
E)  Government entities only.F) All of the above
G) D) and E)

Question 10

Activity-based costing attempts to better allocate costs to the proper users of overhead by focusing on activities.

Accepted Answer

A) True 
 B)False

Question 11

Kozlov Corporation has provided the following data from its activity-based costing system:  The company makes 430 units of product A21W a year,requiring a total of 690 machine-hours,40 orders,and 10 inspection-hours per year.The product's direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit.According to the activity-based costing system,the average cost of product A21W is closest to:

Accepted Answer

A)  $94.11 per unit
B)  $89.72 per unit
C)  $65.18 per unit
D)  $92.49 per unit
E)  $64.99 per unitF) C) and E)
G) A) and E)

Question 12

Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville,Atlanta,and Louisville.Two of the company's activity cost pools are Administrative Service and Development Service.These costs are allocated to the three branch offices using an activity-based costing system.Information for next year follows:  Estimated branch data for next year is as follows:  How much of the headquarters cost allocation should Atlanta expect to receive next year?

Accepted Answer

A)  $280,000
B)  $409,500
C)  $472,500
D)  $504,000
E)  $560,000F) All of the above
G) B) and C)

Question 13

Activity rates from Hilliard Corporation's activity-based costing system are listed below.The company uses the activity rates to assign overhead costs to products:  Last year,Product XL91 involved 2 customer orders,434 assembly hours,and 20 batches.How much overhead cost would be assigned to Product XL91 using the activity-based costing system?

Accepted Answer

A)  $1,041.80
B)  $2,000.04
C)  $66,908.88
D)  $146.73
E)  $772.52F) A) and E)
G) A) and D)

Question 14

An activity-based cost allocation system:

Accepted Answer

A)  Is one form of a direct or variable costing system.
B)  Does not provide total unit cost data.
C)  Traces costs to products on the basis of activities performed on them.
D)  Does not provide for the allocation of any cost to products that cannot be directly traced to those products.
E)  Does not involve the level of detail and the number of allocations that companies make with traditional allocation methods.F) B) and C)
G) A) and E)

Question 15

Zephyr Corporation has provided the following data from its activity-based costing system:  Data concerning one of the company's products,Product LM41,appear below:  According to the activity-based costing system,the product margin for product LM41 is:

Accepted Answer

A)  $2,891.90
B)  $5,931.30
C)  $11,917.50
D)  $2,236.90
E)  $3,178.20F) B) and C)
G) A) and E)

Question 16

Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:  Data for one of the company's products follow:  The company produced 4,000 units of product during the period.Direct materials cost $7.30 per unit and direct labor cost $5.45 per unit.How much overhead cost would be assigned to Product P59G using the activity-based costing system?

Accepted Answer

A)  $54,482.56
B)  $3,138.24
C)  $10,014.40
D)  $154.78
E)  $5,301.76F) C) and D)
G) A) and B)

Question 17

Naples Corporation has provided the following data from its activity-based costing accounting system:  Distribution of resource consumption across activity cost pools:  The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs that are not assigned to products.How much indirect factory wages and factory equipment depreciation cost would be assigned to the Product Processing activity cost pool?

Accepted Answer

A)  $260,000
B)  $429,000
C)  $169,000
D)  $780,000
E)  $351,000F) C) and E)
G) B) and E)

Question 18

A factor that causes the cost of an activity to go up or down is a(n) :

Accepted Answer

A)  Direct factor.
B)  Indirect factor.
C)  Cost driver.
D)  Product cost.
E)  Contribution factor.F) B) and C)
G) A) and B)

Question 19

Quantum Corporation has provided the following data from its activity-based costing system:  The company makes 430 units of product R32E a year,requiring a total of 1,120 machine-hours,40 orders,and 30 inspection-hours per year.The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit.The product sells for $129.90 per unit.According to the activity-based costing system,the product margin for product R32E is:

Accepted Answer

A)  $4,116.50
B)  $29,132.50
C)  $6,180.50
D)  $5,161.30
E)  $4,981.00F) A) and E)
G) C) and D)

Question 20

A plantwide overhead rate method is adequate when a company produces only one product or has multiple products that use about the same amount of indirect resources.

Accepted Answer

A) True 
 B)False

Exam 27: Appendix C: Activity-Based Costing

If a firm uses activity-based costing to allocate costs,it does all but which of the following?

Correct Answer
verified

After all activity costs are accumulated in an activity cost pool account,overhead rates are computed and costs are allocated to cost objects based on:

Correct Answer
verified

In activity-based costing,low-volume complex products are usually undercosted and high volume simpler products are overcosted,because the method fails to reflect the different uses of indirect resources.

Correct Answer
verified

In activity-based costing,all overhead is lumped together and a predetermined overhead rate per unit of an allocation base is computed and used to assign overhead to jobs and processes.

Correct Answer
verified

A plantwide overhead rate method is adequate when a company produces only one product or has multiple products that use about the same amount of indirect resources.

Correct Answer
verified

Correct Answer
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Activity cost pools are not a necessary part of the allocation of overhead costs using activity-based costing.

Correct Answer
verified

Correct Answer
verified

Activity-based costing attempts to better allocate costs to the proper users of overhead by focusing on activities.

Correct Answer
verified

Activity based costing can improve costing activity for:

Correct Answer
verified

A system of assigning costs to departments and products on the basis of a variety of activities instead of only one allocation base is called:

Correct Answer
verified

Correct Answer
verified

An activity-based cost allocation system:

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is not a limitation of activity-based costing?

Correct Answer
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A factor that causes the cost of an activity to go up or down is a(n) :

Correct Answer
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Correct Answer
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Zephyr Corporation has provided the following data from its activity-based costing system: Data concerning one of the company's products,Product LM41,appear below: According to the activity-based costing system,the product margin for product LM41 is:

Correct Answer
verified

Correct Answer
verified

Exam 27: Appendix C: Activity-Based Costing

If a firm uses activity-based costing to allocate costs,it does all but which of the following?

Correct AnswerverifiedShow Answer

After all activity costs are accumulated in an activity cost pool account,overhead rates are computed and costs are allocated to cost objects based on:

Correct AnswerverifiedShow Answer

In activity-based costing,low-volume complex products are usually undercosted and high volume simpler products are overcosted,because the method fails to reflect the different uses of indirect resources.

Correct AnswerverifiedShow Answer

In activity-based costing,all overhead is lumped together and a predetermined overhead rate per unit of an allocation base is computed and used to assign overhead to jobs and processes.

Correct AnswerverifiedShow Answer

A plantwide overhead rate method is adequate when a company produces only one product or has multiple products that use about the same amount of indirect resources.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Activity cost pools are not a necessary part of the allocation of overhead costs using activity-based costing.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Activity-based costing attempts to better allocate costs to the proper users of overhead by focusing on activities.

Correct AnswerverifiedShow Answer

Activity based costing can improve costing activity for:

Correct AnswerverifiedShow Answer

A system of assigning costs to departments and products on the basis of a variety of activities instead of only one allocation base is called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An activity-based cost allocation system:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a limitation of activity-based costing?

Correct AnswerverifiedShow Answer

A factor that causes the cost of an activity to go up or down is a(n) :

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Zephyr Corporation has provided the following data from its activity-based costing system: Data concerning one of the company's products,Product LM41,appear below: According to the activity-based costing system,the product margin for product LM41 is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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