Question : 141.Activity-based costing used by a.accounting firms. b.law firms. c.consulting firms. d.all of the above. : 1311690

 

 

141.Activity-based costing is used by

a.accounting firms.

b.law firms.

c.consulting firms.

d.all of the above.

 

142.Austin Accounting Services estimates for next year revenues of $2,000,000, direct labor of $400,000, and overhead of $700,000. Under traditional costing, overhead is applied to audit jobs using the rate of

a.35% of revenues.

b.20% of revenues.

c.56% of direct labor.

d.175% of direct labor.

 

 

143.Port Accounting performs two types of services, Audit and Tax. Port’s overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:

Audit                            Tax

Direct labor cost$50,000$100,000

CPU minutes40,00010,000

Legal hours used200800

 

Overhead applied to audit services using traditional costing is

a.$120,000.

b.$144,000.

c.$216,000.

d.$240,000.

 

 

144.Port Accounting performs two types of services, Audit and Tax. Port’s overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:

Audit                            Tax

Direct labor cost$50,000$100,000

CPU minutes40,00010,000

Legal hours used200800

 

Overhead applied to tax services using traditional costing is

a.$120,000.

b.$144,000.

c.$216,000.

d.$240,000.

 

 

145.Port Accounting performs two types of services, Audit and Tax. Port’s overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:

Audit                            Tax

Direct labor cost$50,000$100,000

CPU minutes40,00010,000

Legal hours used200800

MC 145.(Cont.)

 

Overhead applied to audit services using activity-based costing is

a.$120,000.

b.$144,000.

c.$216,000.

d.$240,000.

 

 

146.Port Accounting performs two types of services, Audit and Tax. Port’s overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:

Audit                            Tax

Direct labor cost$50,000$100,000

CPU minutes40,00010,000

Legal hours used200800

 

Overhead applied to tax services using activity-based costing is

a.$120,000.

b.$144,000.

c.$216,000.

d.$240,000.

 

 

147.Port Accounting performs two types of services, Audit and Tax. Port’s overhead costs consist of computer support, $240,000; and legal support, $120,000. Information on the two services is:

Audit                            Tax

Direct labor cost$50,000$100,000

CPU minutes40,00010,000

Legal hours used200800

 

Port Accounting performs tax services for Cathy Kane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Kane job using activity-based costing?

a.$2,880

b.$3,000

c.$4,080

d.$4,200

 

 

148.Activity-based costing has been found to be useful in each of the following service industries except

a.banks.

b.hospitals.

c.telephone companies.

d.ABC has been useful in any of these industries.

 

149.What sometimes makes implementation of activity-based costing difficult in service industries is

a.the labeling of activities as value-added.

b.identifying activities, activity cost plus, and cost drivers.

c.that a larger proportion of overhead costs are company-wide costs.

d.attempting to reduce or eliminate non-value-added activities.

 

 

150.All of the following statements are correct except that

a.activity-based costing has been widely adopted in service industries.

b.the objective of installing ABC in service firms is different than it is in a manufacturing firm.

c.a larger proportion of overhead costs are company-wide costs in service industries.

d.the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company.

 

 

 

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