Question :
15) Dalrymple Company produces a special spray nozzle. The budgeted : 1217208
15) 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
16) Activity-based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT:
A) numerous products that consume different amounts of resources
B) operations that remain fairly consistent
C) a highly competitive environment, where cost control is critical
D) accessible accounting and information systems expertise to maintain the system
17) Each of the following statements is true EXCEPT:
A) traditional product costing systems seek to assign all manufacturing costs to products
B) ABC product costing systems seek to assign all manufacturing costs to products
C) traditional product costing systems are more refined than an ABC system
D) cost distortions occur when a mismatch (incorrect association) occurs between the way indirect costs are incurred and the basis for their assignment to individual products
Answer the following questions using the information below:
Happy Valley Land and Snow Company provides the following ABC costing information:
ActivitiesTotal CostsActivity-cost drivers
Labor hours $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 hours 2,500 hours 1,200 hours4,300 hours
Gas 1,500 gallons 800 gallons3,700 gallons
Invoices 1,600 invoices 400 invoices 500 invoices
18) How much of the labor cost will be assigned to the Lawn Department?
A) $100,000
B) $25,600
C) $40,000
D) None of these answers are correct.
19) How much of the gas cost will be assigned to the Plowing Department?
A) $50,000
B) $22,200
C) $30,000
D) None of these answers are correct.
20) How much of invoice cost will be assigned to the Bush Department?
A) $6,400
B) $8,000
C) $25,600
D) $40,000
21) How much of the gas cost will be assigned to the Lawn Department?
A) $4,800
B) $20,000
C) $9,000
D) $22,200
22) How much of the total cost will be assigned to the Plowing Department?
A) $396,000
B) $202.200
C) $134,600
D) $172,000
23) How much of the total costs will be assigned to the Lawn Department?
A) $100,000
B) $49,200
C) $200,000
D) $134,600
Answer the following questions using the information below:
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:
Cost PoolOverhead CostsCost driverActivity level
Supervision of direct labor$320,000Direct labor-hours800,000
Machine maintenance$120,000Machine-hours960,000
Facility rent$200,000Square feet of area100,000
Total overhead costs$640,000
The accounting records show the Mossman Job consumed the following resources:
Cost driverActual level
Direct labor-hours200
Machine-hours1,600
Square feet of area50
24) If direct labor-hours are considered the only overhead cost driver, what is the single cost driver rate for Gregory Enterprises?
A) $0.50 per direct labor-hour
B) $0.80 per direct labor-hour
C) $0.40 per direct labor-hour
D) $1.20 per direct labor-hour
25) Using direct labor-hours as the only overhead cost driver, what is the amount of overhead costs allocated to the Mossman Job?
A) $160
B) $120
C) $240
D) $125
