Question : 61.              To use activity-based costing, it necessary to know the a.cost : 1311682

 

 

61.              To use activity-based costing, it is necessary to know the

a.cost driver for each activity cost pool.

b.expected use of cost drivers per activity.

c.expected use of cost drivers per product.

d.all of the above.

 

 

62.              To assign overhead costs to each product, the company

a.multiplies the activity-based overhead rates per cost driver by the number of cost drivers expected to be used per product.

b.multiplies the overhead rate by the number of direct labor hours used on each product.

c.assigns the cost of each activity cost pool in total to one product line.

d.multiplies the rate of cost drivers per estimated cost for the cost pool by the estimated cost for each cost pool.

 

 

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

a.usually requires less special handling.

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

c.requires relatively more machine setups.

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

 

64.              Assigning overhead using ABC will usually

a.decrease the cost per unit for low volume products as compared to a traditional overhead allocation.

b.increase the cost per unit for low volume products as compared to a traditional overhead allocation.

c.provide less accurate cost per unit for low volume products than will traditional costing.

d.result in the same cost per unit for low volume products as does traditional costing.

 

 

65.              Companies that switch to ABC often find they have

a.been overpricing some products.

b.possibly losing market share to competitors.

c.been sacrificing profitability by underpricing some products.

d.all of the above.

 

 

66.              Comparing the U.S. to Japan,

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

b.U.S. companies show a stronger preference to volume measures such as direct labor hours to assign overhead costs.

c.labor cost reduction is less of a priority in the U.S.

d.developing more accurate product costs is less of a priority in the U.S.

 

 

67.              For its inspecting cost pool, Davidson, Inc. expected overhead cost of $300,000 and 4,000 inspections. The actual overhead cost for that cost pool was $360,000 for 5,000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is

a.$60 per inspection.

b.$72 per inspection.

c.$75 per inspection.

d.$90 per inspection.

 

 

68.              Addison Company manufactures two products, Regular and Supreme. Addison’s overhead costs consist of machining, $2,500,000; and assembling, $1,250,000. Information on the two products is:

RegularSupreme

Direct labor hours10,00015,000

Machine hours10,00030,000

Number of parts90,000160,000

Overhead applied to Regular using traditional costing using direct labor hours is

a.$1,075,000.

b.$1,500,000.

c.$2,250,000.

d.$2,675,000.

 

69.              Addison Company manufactures two products, Regular and Supreme. Addison’s overhead costs consist of machining, $2,500,000; and assembling, $1,250,000. Information on the two products is:

RegularSupreme

Direct labor hours10,00015,000

Machine hours10,00030,000

Number of parts90,000160,000

Overhead applied to Supreme using traditional costing using direct labor hours is

a.$1,075,000.

b.$1,500,000.

c.$2,250,000.

d.$2,675,000.

 

 

70.              Addison Company manufactures two products, Regular and Supreme. Addison’s overhead costs consist of machining, $2,500,000; and assembling, $1,250,000. Information on the two products is:

RegularSupreme

Direct labor hours10,00015,000

Machine hours10,00030,000

Number of parts90,000160,000

Overhead applied to Regular using activity-based costing is

a.$1,075,000.

b.$1,500,000.

c.$2,250,000.

d.$2,675,000.