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Question : 41. Aunt Lucy’s Candies sells standard and premium chocolate candies through : 1295582

Economics

 

 

41. Aunt Lucy’s Candies sells standard and premium chocolate candies through its catalog business. Many of the candies are sold in bulk to other companies. Last year, the company incurred $300,000 in overhead costs. After implementing activity-based costing (ABC), the company’s controller identified the following information: 

Activity

Allocation Base

Proportion of Overhead Cost

Purchasing

Number of purchase orders

30%

Processing

Number of units

50%

Sales

Number of sales orders

20%

 

 

 

 

The number of activities for standard and premium candies are as follows: 

 

Standard

Premium

Number of purchase orders

4,000

2,000

Number of units

200,000

100,000

Number of sales orders

3,000

1,000

 

 

 

 

Refer to the Aunt Lucy’s Candies information above. What is the overhead rate for the purchasing activity? A. $15.00 B. $    .07C. $50.00D. $  1.07

 

42. Aunt Lucy’s Candies sells standard and premium chocolate candies through its catalog business. Many of the candies are sold in bulk to other companies. Last year, the company incurred $300,000 in overhead costs. After implementing activity-based costing (ABC), the company’s controller identified the following information: 

Activity

Allocation Base

Proportion of Overhead Cost

Purchasing

Number of purchase orders

30%

Processing

Number of units

50%

Sales

Number of sales orders

20%

 

 

 

 

The number of activities for standard and premium candies are as follows: 

 

Standard

Premium

Number of purchase orders

4,000

2,000

Number of units

200,000

100,000

Number of sales orders

3,000

1,000

 

 

 

 

Refer to the Aunt Lucy’s Candies information above. What is the overhead rate for the sales activity? A. $  7.50B. $    .13C. $37.50D. $  1.50

 

43. Aunt Lucy’s Candies sells standard and premium chocolate candies through its catalog business. Many of the candies are sold in bulk to other companies. Last year, the company incurred $300,000 in overhead costs. After implementing activity-based costing (ABC), the company’s controller identified the following information: 

Activity

Allocation Base

Proportion of Overhead Cost

Purchasing

Number of purchase orders

30%

Processing

Number of units

50%

Sales

Number of sales orders

20%

 

 

 

 

The number of activities for standard and premium candies are as follows: 

 

Standard

Premium

Number of purchase orders

4,000

2,000

Number of units

200,000

100,000

Number of sales orders

3,000

1,000

 

 

 

 

Refer to the Aunt Lucy’s Candies information above. If a single sales order for premium candies requires 2 purchase orders for a total of 500 pieces (units), how much overhead should be assigned to that order? A. $280.00B. $  23.00C. $272.50D. $287.50

 

44. The following overhead cost information is available for Compton Corporation for 2006: 

Activity

Allocation Base

Overhead Cost

Purchasing

Number of purchase orders

$100,000

Receiving

Number of shipments received

    60,000

Machine setups

Number of setups

  150,000

Quality control

Number of inspections

    50,000

 

 

 

During the year, 5,000 purchase orders were issued; 20,000 shipments were received; 3,000 machine setups were performed; and 4,000 inspections were conducted. Refer to the Compton Corporation information above. What is the overhead rate for the purchasing activity? A. $    .05B. $20.00C. $72.00D. $  3.13

 

45. The following overhead cost information is available for Compton Corporation for 2006: 

Activity

Allocation Base

Overhead Cost

Purchasing

Number of purchase orders

$100,000

Receiving

Number of shipments received

    60,000

Machine setups

Number of setups

  150,000

Quality control

Number of inspections

    50,000

 

 

 

During the year, 5,000 purchase orders were issued; 20,000 shipments were received; 3,000 machine setups were performed; and 4,000 inspections were conducted. Refer to the Compton Corporation information above. What is the overhead rate for the receiving activity? A. $1.88B. $6.00C. $3.00D. $  .33

 

46. The following overhead cost information is available for Compton Corporation for 2006: 

Activity

Allocation Base

Overhead Cost

Purchasing

Number of purchase orders

$100,000

Receiving

Number of shipments received

    60,000

Machine setups

Number of setups

  150,000

Quality control

Number of inspections

    50,000

 

 

 

During the year, 5,000 purchase orders were issued; 20,000 shipments were received; 3,000 machine setups were performed; and 4,000 inspections were conducted. Refer to the Compton Corporation information above. If Job #229 required 5 purchase orders, 10 shipments, 8 machine setups, and 4 inspections to fill, how much overhead should be assigned to Job #229? A. $    4.06B. $303.75C. $580.00D. $  85.50

 

47. The following overhead cost information is available for Henderson Inc. for 2006: 

Activity

Allocation Base

Overhead Cost

Purchasing

Number of purchase orders

$40,000

Receiving

Number of shipments received

  25,000

Machine setups

Number of setups

  30,000

Quality control

Number of inspections

  20,000

 

 

 

During the year, 2,000 purchase orders were issued; 800 shipments were received; 3,000 machine setups were performed; and 2,500 inspections were conducted.If Job #101 required 3 purchase orders, 4 shipments, 4 machine setups, and 2 inspections to complete, how much overhead should be assigned to Job #101? A. $241.00B. $  69.25C. $180.18D. $  13.86

 

48. Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes. Last year, the company incurred $200,000 in overhead costs. After implementing activity-based costing (ABC), the company’s accountant identified the following related information: 

Activity

Allocation Base

Proportion of Overhead Cost

Material delivery and handling

Number of deliveries

30%

Inspections

Number of inspections

25%

Supervision

Hours of supervisor time

20%

Purchasing

Number of purchase orders

25%

 

 

 

 

The number of activities for standard and custom-made cabinets are as follows: 

 

Standard

Custom-made

Number of deliveries

200

  100

Number of inspections

600

  400

Hours of supervisor time

1,800

2,200

Number of purchase orders

1,000

1,000

 

 

 

 

During the past year, Wake accepted a customer order for a set of custom-made cabinets that would require the following: 

Direct labor cost (25 hours at $15 per hour) ————–

$    375

Direct materials (wood) (900 ft at $3.00 per foot) ——-

$ 2,700

Number of deliveries —————————————–

3

Number of inspections —————————————

5

Hours of supervisor time ————————————

5

Number of purchase orders ———————————

3

 

 

Refer to the Wake Construction information above. How much overhead should be applied to the above customer order? A. $4,050B. $   285C. $3,360D. $   975

 

49. Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes. Last year, the company incurred $200,000 in overhead costs. After implementing activity-based costing (ABC), the company’s accountant identified the following related information: 

Activity

Allocation Base

Proportion of Overhead Cost

Material delivery and handling

Number of deliveries

30%

Inspections

Number of inspections

25%

Supervision

Hours of supervisor time

20%

Purchasing

Number of purchase orders

25%

 

 

 

 

The number of activities for standard and custom-made cabinets are as follows: 

 

Standard

Custom-made

Number of deliveries

200

  100

Number of inspections

600

  400

Hours of supervisor time

1,800

2,200

Number of purchase orders

1,000

1,000

 

 

 

 

During the past year, Wake accepted a customer order for a set of custom-made cabinets that would require the following: 

Direct labor cost (25 hours at $15 per hour) ————–

$    375

Direct materials (wood) (900 ft at $3.00 per foot) ——-

$ 2,700

Number of deliveries —————————————–

3

Number of inspections —————————————

5

Hours of supervisor time ————————————

5

Number of purchase orders ———————————

3

 

 

Refer to the Wake Construction information above. What is the total product (manufacturing) cost for the above customer order? A. $4,050B. $   285C. $3,360D. $   975

 

50. Johnson Manufacturing anticipates incurring $500,000 in overhead costs this year. After implementing activity-based costing (ABC), the company’s controller identified the following related information: 

Activity

Allocation Base

Proportion of Overhead Cost

Purchasing

Number of purchase orders

20%

Machine setups

Number of setups

15%

Production

Number of machine hours

65%

 

 

 

The number of activities expected are as follows: 

Total number of purchase orders ———-

4,000

Total number of setups ———————-

2,000

Total number of machine hours ———–

10,000

 

 

Refer to the Johnson Manufacturing information above. How much total overhead will be allocated to the production activity? A. $500,000B. $325,000C. $  10,000D. $312,500

 

 

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41. A department that incurs costs without directly generating revenues is a:A.  Service centerB.  Production centerC.  Profit centerD.  Cost centerE.  Performance center

 

 

42. Regardless of the system used in departmental cost analysis:A.  Direct costs are allocated, indirect costs are not.B.  Indirect costs are allocated, direct costs are not.C.  Both direct and indirect costs are allocated.D.  Neither direct nor indirect costs are allocated.E.  Total departmental costs will always be the same.

 

 

43. An expense that does not require allocation between departments is a(n):A.  Common expense.B.  Indirect expense.C.  Direct expense.D.  Administrative expense.E.  Overhead expense.

 

 

 

 

 

 

44. Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:A.  Direct expensesB.  Indirect expensesC.  Controllable expensesD.  Uncontrollable expensesE.  Fixed expenses

 

 

 

45. Expenses that are not easily associated with a specific department, and which are incurred for the benefit of more than one department, are:A.  Fixed expensesB.  Indirect expensesC.  Direct expensesD.  Uncontrollable expenses

E.  Variable expenses

 

 

46. The salaries of employees who spend all their time working in one department are:A.  Variable expensesB.  Indirect expensesC.  Direct expensesD.  Responsibility expensesE.  Unavoidable expenses

 

 

 

 

47. A difficult problem in calculating the total costs and expenses of a department is:A.  Determining the gross profit ratio.B.  Assigning direct costs to the department.C.  Assigning indirect expenses to the department.D.  Determining the amount of sales of the department.E.  Determining the direct expenses of the department.

 

 

48. A company has two departments, Aa and Bb, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. Aa had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. Bb. The analysis also indicates that 60% of regular delivery requests originate in Dept. Aa and 40% in Dept. Bb. The delivery expenses that should be charged to Dept. Aa and Dept. Bb, respectively, are: 

 

Aa

Bb

A.

$4,500

$4,500

B.

$5,800

$3,200

C.

$5,500

$3,500

D.

$5,500

$4,500

E.

$5,400

$3,600

 

 

 

 

 

 

49. The allocation bases for assigning indirect costs include:A.  Only physical bases.B.  Only cost bases.C.  Only value bases.D.  Only unit bases.E.  Any appropriate and reasonable bases.

 

 

50. The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:A.  Floor space of each department.B.  Relative number of items each department had on sale.C.  Number of customers to enter each department.D.  An equal amount of cost for each department.E.  Total sales of each department.

 

 

 

 

default image
July 1, 2023
    

 

 

41. A department that incurs costs without directly generating revenues is a:A.  Service centerB.  Production centerC.  Profit centerD.  Cost centerE.  Performance center

 

 

42. Regardless of the system used in departmental cost analysis:A.  Direct costs are allocated, indirect costs are not.B.  Indirect costs are allocated, direct costs are not.C.  Both direct and indirect costs are allocated.D.  Neither direct nor indirect costs are allocated.E.  Total departmental costs will always be the same.

 

 

43. An expense that does not require allocation between departments is a(n):A.  Common expense.B.  Indirect expense.C.  Direct expense.D.  Administrative expense.E.  Overhead expense.

 

 

 

 

 

 

44. Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:A.  Direct expensesB.  Indirect expensesC.  Controllable expensesD.  Uncontrollable expensesE.  Fixed expenses

 

 

 

45. Expenses that are not easily associated with a specific department, and which are incurred for the benefit of more than one department, are:A.  Fixed expensesB.  Indirect expensesC.  Direct expensesD.  Uncontrollable expenses

E.  Variable expenses

 

 

46. The salaries of employees who spend all their time working in one department are:A.  Variable expensesB.  Indirect expensesC.  Direct expensesD.  Responsibility expensesE.  Unavoidable expenses

 

 

 

 

47. A difficult problem in calculating the total costs and expenses of a department is:A.  Determining the gross profit ratio.B.  Assigning direct costs to the department.C.  Assigning indirect expenses to the department.D.  Determining the amount of sales of the department.E.  Determining the direct expenses of the department.

 

 

48. A company has two departments, Aa and Bb, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. Aa had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. Bb. The analysis also indicates that 60% of regular delivery requests originate in Dept. Aa and 40% in Dept. Bb. The delivery expenses that should be charged to Dept. Aa and Dept. Bb, respectively, are: 

 

Aa

Bb

A.

$4,500

$4,500

B.

$5,800

$3,200

C.

$5,500

$3,500

D.

$5,500

$4,500

E.

$5,400

$3,600

 

 

 

 

 

 

49. The allocation bases for assigning indirect costs include:A.  Only physical bases.B.  Only cost bases.C.  Only value bases.D.  Only unit bases.E.  Any appropriate and reasonable bases.

 

 

50. The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:A.  Floor space of each department.B.  Relative number of items each department had on sale.C.  Number of customers to enter each department.D.  An equal amount of cost for each department.E.  Total sales of each department.

 

 

 

 

default image
July 1, 2023
    

 

 

41. A department that incurs costs without directly generating revenues is a:A.  Service centerB.  Production centerC.  Profit centerD.  Cost centerE.  Performance center

 

 

42. Regardless of the system used in departmental cost analysis:A.  Direct costs are allocated, indirect costs are not.B.  Indirect costs are allocated, direct costs are not.C.  Both direct and indirect costs are allocated.D.  Neither direct nor indirect costs are allocated.E.  Total departmental costs will always be the same.

 

 

43. An expense that does not require allocation between departments is a(n):A.  Common expense.B.  Indirect expense.C.  Direct expense.D.  Administrative expense.E.  Overhead expense.

 

 

 

 

 

 

44. Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:A.  Direct expensesB.  Indirect expensesC.  Controllable expensesD.  Uncontrollable expensesE.  Fixed expenses

 

 

 

45. Expenses that are not easily associated with a specific department, and which are incurred for the benefit of more than one department, are:A.  Fixed expensesB.  Indirect expensesC.  Direct expensesD.  Uncontrollable expenses

E.  Variable expenses

 

 

46. The salaries of employees who spend all their time working in one department are:A.  Variable expensesB.  Indirect expensesC.  Direct expensesD.  Responsibility expensesE.  Unavoidable expenses

 

 

 

 

47. A difficult problem in calculating the total costs and expenses of a department is:A.  Determining the gross profit ratio.B.  Assigning direct costs to the department.C.  Assigning indirect expenses to the department.D.  Determining the amount of sales of the department.E.  Determining the direct expenses of the department.

 

 

48. A company has two departments, Aa and Bb, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. Aa had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. Bb. The analysis also indicates that 60% of regular delivery requests originate in Dept. Aa and 40% in Dept. Bb. The delivery expenses that should be charged to Dept. Aa and Dept. Bb, respectively, are: 

 

Aa

Bb

A.

$4,500

$4,500

B.

$5,800

$3,200

C.

$5,500

$3,500

D.

$5,500

$4,500

E.

$5,400

$3,600

 

 

 

 

 

 

49. The allocation bases for assigning indirect costs include:A.  Only physical bases.B.  Only cost bases.C.  Only value bases.D.  Only unit bases.E.  Any appropriate and reasonable bases.

 

 

50. The most useful allocation basis for the departmental costs of an advertising campaign for a storewide sale is likely to be:A.  Floor space of each department.B.  Relative number of items each department had on sale.C.  Number of customers to enter each department.D.  An equal amount of cost for each department.E.  Total sales of each department.

 

 

 

 

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