Question : 81.              Which would be an appropriate cost driver for the : 1311684

 

 

81.              Which would be an appropriate cost driver for the ordering and receiving activity cost pool?

a.Machine setups

b.Purchase orders

c.Machine hours

d.Inspections

 

 

82.              As compared to a high-volume product, a low-volume product

a.usually requires less special handling.

b.is usually responsible for more overhead costs per unit.

c.requires relatively fewer machine setups.

d.requires use of direct labor hours as the primary cost driver to ensure proper allocation of overhead.

 

 

83.              In Japan,

a.activity-based costing is used more than in the U.S.

b.companies prefer volume measures such as direct labor hours to assign overhead costs.

c.labor cost reduction is less of a priority.

d.developing more accurate product costs is more of a priority.

 

 

84.              Johnstone Company manufactures two products, Board 12 and Case 165. Johnstone’s overhead costs consist of setting up machines, $1,600,000; machining, $3,600,000; and inspecting, $1,200,000.  Information on the two products is:

Board 12Case 165

Direct labor hours15,00025,000

Machine setups600400

Machine hours24,00026,000

Inspections800700

 

Overhead applied to Board 12 using traditional costing using direct labor hours is

a.$2,400,000.

b.$3,072,000.

c.$3,340,000.

d.$3,840,000.

 

 

85.              Johnstone Company manufactures two products, Board 12 and Case 165. Johnstone’s overhead costs consist of setting up machines, $1,600,000; machining, $3,600,000; and inspecting, $1,200,000.  Information on the two products is:

Board 12Case 165

Direct labor hours15,00025,000

Machine setups600400

Machine hours24,00026,000

Inspections800700

MC 85.(Cont.)

 

Overhead applied to Case 165 using traditional costing using direct labor hours is

a.$2,560,000.

b.$3,072,000.

c.$3,340,000.

d.$4,000,000.

 

 

86.              Johnstone Company manufactures two products, Board 12 and Case 165. Johnstone’s overhead costs consist of setting up machines, $1,600,000; machining, $3,600,000; and inspecting, $1,200,000.  Information on the two products is:

Board 12Case 165

Direct labor hours15,00025,000

Machine setups600400

Machine hours24,00026,000

Inspections800700

 

Overhead applied to Board 12 using activity-based costing is

a.$2,400,000.

b.$3,072,000.

c.$3,328,000.

d.$3,840,000.

 

 

87.              Johnstone Company manufactures two products, Board 12 and Case 165. Johnstone’s overhead costs consist of setting up machines, $1,600,000; machining, $3,600,000; and inspecting, $1,200,000.  Information on the two products is:

Board 12Case 165

Direct labor hours15,00025,000

Machine setups600400

Machine hours24,00026,000

Inspections800700

 

Overhead applied to Case 165 using activity-based costing is

a.$2,560,000.

b.$3,072,000.

c.$3,328,000.

d.$4,000,000.

 

88.              Wallace Computer Company produces three products: Earth, Wind, and Fire. Earth requires 80 machine setups, Wind requires 60 setups, and Fire requires 180 setups. Wallace has identified an activity cost pool with allocated overhead of $720,000 for which the cost driver is machine setups. How much overhead is assigned to each product?

Earth        Wind          Fire

a.              $240,000              $240,000              $240,000

b.              $150,000              $112,500              $337,500

c.              $180,000              $135,000              $405,000

d.              $135,000              $240,000              $345,000

 

 

89.              Sofa Company manufactures two models of its couch, the Mini and the Maxi. The Mini model requires 10,000 direct labor hours and the Maxi model requires 40,000 direct labor hours. The company produces 4,000 units of the Mini model and 1,000 units of the Maxi model each year. The company produces the Mini model in batch sizes of 200, while it produces the Maxi model in batch sizes of 100. The company expects to incur $240,000 of total setup costs this year. How much of the setup costs are allocated to the Mini model using ABC costing?

a.$160,000

b.$120,000

c.$48,000

d.$200,000

 

 

90.              Mask Company manufactures two products, pillows and comforters. The company has estimated its overhead in the order-processing department to be $480,000. The company produces 50,000 pillows and 80,000 comforters each year. Pillow production requires 25,000 machine hours, comforter production requires 50,000 machine hours. The company places raw materials orders 10 times per month, 2 times for raw materials for pillows and the remainder for raw materials for comforters. How much of the order processing overhead should be allocated to comforters?

a.$240,000

b.$320,000

c.$295,386

d.$384,000

 

 

 

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