Question : 91. Activity based costing for selling and administrative expenses can also : 1233950

 

91. Activity based costing for selling and administrative expenses can also be beneficial in allocating expenses to various products. Which of the following can be used as a base in allocating help desk costs? A. Number of callsB. Square footage of the help desk officeC. Number of products soldD. Number of field failures

92. A bank may decide to use activity-based costing to determine all of the following except: A. the amounts charged to customers for services providedB. service qualityC. profitability by services providedD. all are correct

93. The It’s All About Hair Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: 

Activity

Activity Rate

Hair Washing

$2.50

Conditioning

$3.00

Chemical Treatment

$25.00

Styling

$10.00

 

 

 

 

Hair Washing

Conditioning

Chemical Treatment

Styling

Hair Cut

1

1

0

0

Complete Style

1

1

0

1

Perms

2

3

1

1

Hi-Lights

3

4

2

1

 

 

 

 

 

Determine the cost of services for a hair cut? A. $2.00B. $5.50C. $3.00D. $10.00

94. The It’s All About Hair Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: 

Activity

Activity Rate

Hair Washing

$2.50

Conditioning

$3.00

Chemical Treatment

$25.00

Styling

$10.00

 

 

 

 

Hair Washing

Conditioning

Chemical Treatment

Styling

Hair Cut

1

1

0

0

Complete Style

1

1

0

1

Perms

2

3

1

1

Hi-Lights

3

4

2

1

 

 

 

 

 

Determine the cost of services for a perm? A. $49.00B. $5.50C. $54.00D. $29.00

95. An airline can allocate overhead costs to each flight by using activity based costing by first identifying activity drivers, then allocating costs to the different flights. All but one of the following could be a viable activity drivers. A. Baggage handlersB. PilotsC. No. of tickets soldD. Number of inspections

96. The total factory overhead for Nite Lite Company is budgeted for the year at $800,000. Nite Lite manufactures two different products – night lights and desk lamps. Night lights is budgeted for 30,000 units, each unit requiring two hours of direct labor per unit. Desk lamps, on the other hand, is budgeted for 40,000 units, each unit requiring two and a half hours of direct labor per unit. Determine (a) the total number of budgeted direct labor hours for year, (b) the single plantwide factory overhead rate using direct labor hours as the allocation base, and (c) the factory overhead allocated per unit for each product using the single plantwide factory overhead rate using direct labor hours as the allocation base. 

97. Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products. 

98. The Camp Gear Factory produces two products – canopies and tents. It has two separate departments – cutting and sewing. The budget for the cutting department is $350,000 and $400,000 for the sewing department. Each canopy will require 2 hours of cutting and 1 hour of sewing. Each tent will require 1 hour of cutting and 6 hours of sewing. The budget estimates that 20,000 canopies and 10,000 tents will need to be manufactured for the year. Determine (a) the total number of budgeted direct labor hours for the year in each department, (b) the departmental factory overhead rates for both departments and (c) the factory overhead allocated per unit each product using the department factory overhead allocation rates using direct labor hours as the base. 

99. The Nite Lite Company manufactures small lamps and desk lamps. The following shows the activities per product: 

 

Set-ups

Inspections

Assembly (DLH)

Small Lamps – 8,000 units

8,000

32,000

8,000

Desk Lamps – 16,000 units

32,000

16,000

48,000

 

 

 

 

 

 

 

 

Using the following information prepared by the Nite Lite Company, determine (a) the activity rates for each activity and (b) the activity based factory overhead per unit for each product.

Activity Pool

Activity Base

Budgeted Amount

Set-ups

40,000

$160,000

Inspections

48,000

$192,000

Assembly (DLH)

56,000

$336,000

 

 

 

 

100. Southwest China Company sells glasses, fine china, and everyday dinnerware. They use activity-based costing to determine the cost of the shipping and handling activity. The shipping and handling activity has an activity rate of $7 per pound. A box of glasses weigh 2 lbs, the box of china weighs 4 lbs, and a box of everyday dinnerware weighs 6 lbs. (a) Determine the shipping and handling activity for each product and (b) determine the total shipping and receiving costs for the china if 3,500 boxes are shipped.