Question : 31.Valpar Company produces several lines of laundry hampers. The factory : 1257145

 

 

31.Valpar Company produces several lines of laundry hampers. The factory is highly automated and uses an activity-based costing system to allocate overhead costs to its various products. During the upcoming period the company expects to produce 72,000 units. The costs and cost drivers associated with four activity cost pools are given below:  Production of 20,000 units of its popular foldable hamper required 3,000 labor hours, 75 setups, and consumed one-third of the product sustaining activities. What amount of unit-level costs will be allocated to the product?   

A. $2,500

 

B. $7,500

 

C. $5,000

 

D. $6,000

 

 

32.Sanford Tools produces a variety of scissors and other cutting instruments at its Birmingham manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The company expects to produce 24,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below:  Production of 1,000 units of a pipe-cutting tool required 400 labor hours, 10 setups, and consumed 30% of the product sustaining activities and resulted in an overhead allocation of $15,400. What amount of batch-level overhead costs was expected during the period?   

A. $24,000

 

B. $2,400

 

C. $12,500

 

D. None of these answers is correct.

 

 

33.Pro Tool Company expects to produce 24,000 total units during the current period. The costs and cost drivers associated with four activity cost pools are given below:  Production of 1,000 units of an auto towing tool required 800 labor hours, 12 setups, and consumed 30% of the product sustaining activities. How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?   

A. $18,400

 

B. $10,000

 

C. $100,000

 

D. $40,000

 

 

34.When making a long-term cost plus pricing decision, a company should consider:   

A. the upstream research and development cost.

 

B. the allocated portion of facility-level cost.

 

C. the direct manufacturing cost.

 

D. All of these answers are correct.

 

 

35.Which of the following is an upstream cost?   

A. Research and development costs

 

B. Shipping costs to ship completed goods

 

C. Sales commissions

 

D. Sales promotion and advertising costs

 

 

36.All of the following are downstream costs except:   

A. advertising costs.

 

B. distribution costs.

 

C. patent filing legal costs.

 

D. warehousing costs.

 

 

37.The Tangier Company is considering eliminating the following product line:  What amount of cost is avoidable if Tangier outsources production of this product?   

A. $60,000

 

B. $50,000

 

C. $90,000

 

D. $20,000

 

 

38.Identify the obstacle(s) in implementing a successful activity-based costing system.   

A. Gaining the cooperation and support of employees.

 

B. Obtaining accurate cost driver data.

 

C. Condensing a large number of activities down into a manageable number of activity cost pools.

 

D. All of these answers are correct.

 

 

39.Mason Company is planning to introduce an activity-based costing system. Which of the following actions by employees could lower the success of the new system?   

A. Employees may purposely report on their time cards different amounts time than they actually worked.

 

B. Employees may decrease their productivity to demonstrate their dissatisfaction with the new system.

 

C. Employees may resist having to maintain additional records (such as the number of setups).

 

D. All of these answers are correct.

 

 

40.Costs incurred to avoid nonconforming products are:   

A. prevention costs.

 

B. appraisal costs.

 

C. failure costs.

 

D. voluntary costs.

 

 

 

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