Question :
25.Which of the following not a limitation of activity-based costing? : 1236278
25.Which of the following is not a limitation of activity-based costing?
A.Maintaining an activity-based costing system is more costly than maintaining a traditional direct labor-based costing system.
B.Changing from a traditional direct labor-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers.
C.In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs.
D.More accurate product costs may result in increasing the selling prices of some products.
E.Complex products are assigned a larger portion of overhead.
26.Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:
Costs:
Wages and salaries$260,000
Depreciation220,000
Utilities140,000
Total$620,000
Distribution of resource consumption:
Activity Cost Pools
AssemblySetting upOtherTotal
Wages and salaries50%25%25%100%
Depreciation20%30%50%100%
Utilities25%45%30%100%
How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?
A.$196,333
B.$209,000
C.$310,000
D.$155,000
E.$200,000
27.Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:
Costs:
Wages and salaries$260,000
Depreciation220,000
Utilities140,000
Total$620,000
Distribution of resource consumption:
Activity Cost Pools
AssemblySetting upOtherTotal
Wages and salaries50%25%25%100%
Depreciation20%30%50%100%
Utilities25%45%30%100%
How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity cost pool?
A.$155,000
B.$279,000
C.$206,000
D.$217,000
E.$194,000
28.Quantum Corporation has provided the following data from its activity-based costing system:
Activity Cost PoolTotal CostTotal Activity
Assembly$1,114,92057,000 machine hours
Processing orders$47,0161,800 orders
Inspection$107,3281,560 inspection hours
The company makes 430 units of product R32E a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product’s direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. According to the activity-based costing system, the product margin for product R32E is: A.$4,116.50
B.$29,132.50
C.$6,180.50
D.$5,161.30
E.$4,981.00
29.Quantum Corporation has provided the following data from its activity-based costing system:
Activity Cost PoolTotal CostTotal Activity
Assembly$1,114,92057,000 machine hours
Processing orders$47,0161,800 orders
Inspection$107,3281,560 inspection hours
The company makes 340 units of product J71B a year, requiring a total of 980 machine-hours, 36 orders, and 22 inspection-hours per year. The product’s direct materials cost is $27.50 per unit and its direct labor cost is $18.10 per unit. According to the activity-based costing system, the total overhead cost for producing the 340 units of the J71B product is:
A.$15,504.00
B.$30,972.72
C.$37,126.72
D.$21,622.72
E.$17,957.92
30.Quantum Corporation has provided the following data from its activity-based costing system:
Activity Cost PoolTotal CostTotal Activity
Assembly$1,114,92057,000 machine hours
Processing orders$47,0161,800 orders
Inspection$107,3281,560 inspection hours
The company makes 340 units of product J71B a year, requiring a total of 980 machine-hours, 36 orders, and 22 inspection-hours per year. The product’s direct materials cost is $27.50 per unit and its direct labor cost is $18.10 per unit. According to the activity-based costing system, the total cost for producing the 340 units of the J71B product is:
A.$15,504.00
B.$30,972.72
C.$37,126.72
D.$21,622.72
E.$17,957.92
31.Zephyr Corporation has provided the following data from its activity-based costing system:
Activity Cost PoolTotal CostTotal Activity
Assembly$383,18023,000 machine hours
Processing orders$50,7981,100 orders
Inspection.$106,1101,620 inspection hours
Data concerning one of the company’s products, Product LM41, appear below:
Selling price per unit$124.60
Direct materials cost per unit$22.08
Direct labor cost per unit$45.77
Annual unit production and sales210
Annual machine orders320
Annual inspection hours10
According to the activity-based costing system, the product margin for product LM41 is: A.$2,891.90
B.$5,931.30
C.$11,917.50
D.$2,236.90
E.$3,178.20
32.Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company’s activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows:
Activity Cost PoolActivity MeasureEstimated Cost
Administrative service% of time devoted to branch$700,000
Development serviceComputer time$140,000
Estimated branch data for next year is as follows:
% of timeComputer time
Nashville60%150,000 minutes
Atlanta30%200,000 minutes
Louisville10%50,000 minutes
Total100%400,000 minutes
How much of the headquarters cost allocation should Nashville expect to receive next year? A.$280,000
B.$409,500
C.$472,500
D.$504,000
E.$560,000
33.Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company’s activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows:
Activity Cost PoolActivity MeasureEstimated Cost
Administrative service% of time devoted to branch$700,000
Development serviceComputer time$140,000
Estimated branch data for next year is as follows:
% of timeComputer time
Nashville60%150,000 minutes
Atlanta30%200,000 minutes
Louisville10%50,000 minutes
Total100%400,000 minutes
How much of the headquarters cost allocation should Atlanta expect to receive next year?
A.$280,000
B.$409,500
C.$472,500
D.$504,000
E.$560,000
34.Kozlov Corporation has provided the following data from its activity-based costing system:
Activity Cost PoolTotal CostTotal Activity
Assembly$942,48066,000 machine hours
Processing orders$85,0501,800 orders
Inspection$126,8541,820 inspection hours
The company makes 430 units of product A21W a year, requiring a total of 690 machine-hours, 40 orders, and 10 inspection-hours per year. The product’s direct materials cost is $35.72 per unit and its direct labor cost is $29.46 per unit. According to the activity-based costing system, the average cost of product A21W is closest to:
A.$94.11 per unit
B.$89.72 per unit
C.$65.18 per unit
D.$92.49 per unit
E.$64.99 per unit
