Question :
14) How much of the total costs will be assigned : 1212097
14) How much of the total costs will be assigned to Department A?
A) $90,250
B) $90,650
C) $90,350
D) $90,750
Account inquiry costs= ($200,000 ÷ 10,000) × 2,500 = $50,000
Billing costs= ($140,000 ÷ 4,000,000) × 400,000 = $14,000
Account verification costs= ($75,000 ÷ 40,000) × 10,000= $18,750
Correspondence costs= ($25,000 ÷ 4,000)× 1,200= $7,500
$90,250
15) How much of the total costs will be assigned to Department B?
A) $117,350
B) $113,250
C) $113,750
D) $112,350
Account inquiry costs= ($200,000 ÷ 10,000) × 4,000 = $80,000
Billing costs= ($140,000 ÷ 4,000,000) × 250,000 = $ 8,750
Account verification costs= ($75,000 ÷ 40,000) × 8,000= $15,000
Correspondence costs= ($25,000 ÷ 4,000)× 1,600= $10,000
$113,750
16) Dalrymple Company produces a special spray nozzle. The budgeted indirect total cost of inserting the spray nozzle is $80,000. The budgeted number of nozzles to be inserted is 40,000. What is the budgeted indirect cost allocation rate for this activity?
A) $0.50
B) $1.00
C) $1.50
D) $2.00
17) Activity-based costing is most likely to yield benefits for companies ________.
A) with complex product design processes
B) with operations that remain fairly consistent
C) in a monopolistic market
D) having nominal percentage of indirect costs
18) Which of the following statements is true of ABC systems?
A) ABC systems are time-driven cost systems.
B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs.
C) ABC systems provide valuable information to managers beyond accurate product costs.
D) ABC systems assume all costs are variable costs.
Teecorp Company provides the following ABC costing information:
ActivitiesTotal CostsActivity-cost drivers
Labor $320,000 8,000 hours
Gas $36,000 6,000 gallons
Invoices $40,000 2,500 invoices
Total costs $396,000
The above activities used by their three departments are:
Lawn DepartmentBush Department Plowing Department
Labor 2,500 hours 1,200 hours 4,300 hours
Gas 1,700 gallons 800 gallons 3,500 gallons
Invoices 1,600 invoices 400 invoices 500 invoices
19) How much of the labor cost will be assigned to the Bush Department?
A) $42,000
B) $48,000
C) $40,000
D) $50,000
20) If labor hours are used to allocate the non-labor, overhead costs, what is the overhead allocation rate?
A) $49.50 per hour
B) $24 per hour
C) $4.60 per hour
D) $9.50 per hour
21) How much of invoice cost will be assigned to the Bush Department?
A) $6,400
B) $8,000
C) $25,600
D) $40,000
22) How much of the gas cost will be assigned to the Lawn Department?
A) $12,000
B) $10,200
C) $10,020
D) $10,000
23) How much of the total cost will be assigned to the Plowing Department?
A) $396,000
B) $201,000
C) $134,600
D) $172,000
