Question :
41. Ordering materials, setting up machines, assembling products, and inspecting : 1311680
41. Ordering materials, setting up machines, assembling products, and inspecting products are examples of
a.cost drivers.
b.overhead cost pools.
c.direct labor costs.
d.nonmanufacturing activities.
42. An “Ordering and Receiving Materials” cost pool would most likely have as a cost driver:
a.machine hours.
b.number of setups.
c.number of purchase orders.
d.number of inspection tests.
43. Daffodil Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20,000 units annually. Planter is a low-volume item totaling only 6,000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000). Expected annual manufacturing overhead costs are $800,000. Daffodil uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of
a.$25.00.
b.$30.77.
c.$50.00.
d.need more information to compute.
44. Sitwell Corporation manufactures titanium and aluminum tennis racquets. Sitwell’s total overhead costs consist of assembly costs and inspection costs. The following information is available:
Cost Titanium Aluminum Total Cost
Assembly 500 mach. hours 500 mach. hours $45,000
Inspections 350150$75,000
2,100 labor hours1,900 labor hours
Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing.
Total overhead costs assigned to titanium racquets, using a single overhead rate, are
a.$60,000.
b.$63,000.
c.$75,000.
d.$84,000.
45. Sitwell Corporation manufactures titanium and aluminum tennis racquets. Sitwell’s total overhead costs consist of assembly costs and inspection costs. The following information is available:
Cost Titanium Aluminum Total Cost
Assembly 500 mach. hours 500 mach. hours $45,000
Inspections 350150$75,000
2,100 labor hours1,900 labor hours
Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much assembly cost is assigned to titanium racquets?
a.$15,750.
b.$22,500.
c.$23,625.
d.$31,500.
46. Sitwell Corporation manufactures titanium and aluminum tennis racquets. Sitwell’s total overhead costs consist of assembly costs and inspection costs. The following information is available:
Cost Titanium Aluminum Total Cost
Assembly 500 mach. hours 500 mach. hours $45,000
Inspections 350150$75,000
2,100 labor hours1,900 labor hours
Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much inspections cost is assigned to titanium racquets?
a.$22,500.
b.$35,625.
c.$37,500.
d.$52,500.
47. Sanborn Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.
Activity Cost PoolCost DriverEst. OverheadCost Driver Activity
Ordering and ReceivingOrders$ 120,000500 orders
Machine SetupSetups297,000450 setups
MachiningMachine hours1,500,000125,000 MH
AssemblyParts1,200,0001,000,000 parts
InspectionInspections300,000500 inspections
If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is
a.$9.60.
b.$12.00.
c.$15.00.
d.$34.17.
48. Sanborn Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.
Activity Cost PoolCost DriverEst. OverheadCost Driver Activity
Ordering and ReceivingOrders$ 120,000500 orders
Machine SetupSetups297,000450 setups
MachiningMachine hours1,500,000125,000 MH
AssemblyParts1,200,0001,000,000 parts
InspectionInspections300,000500 inspections
If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is
a.$1.20 per direct labor hour.
b.$240 per order.
c.$0.12 per part.
d.$6,834 per order.
49. The last step in activity-based costing is to
a.assign overhead costs to products, using overhead rates determined for each cost pool.
b.compute the activity-based overhead rate per cost driver.
c.identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
d.identify the cost driver that has a strong correlation to the activity cost pool.
50. The first step in activity-based costing is to
a.assign overhead costs to products, using overhead rates determined for each cost pool.
b.compute the activity-based overhead rate per cost driver.
c.identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
d.identify the cost driver that has a strong correlation to the activity cost pool.
