Question : 21) Which of the following true of Zitriks’ overhead costing? A) : 1212084

 

21) Which of the following is true of Zitriks’ overhead costing?

A) Multiple cost pools are appropriate for Zitriks because of high direct costs.

B) Single cost pool is appropriate for Zitriks because of high direct costs.

C) Multiple cost pools are appropriate for Zitriks because of diverse support costs.

D) Single cost pool is appropriate for Zitriks because of diverse support costs.

22) The inspections activity-cost driver rate is  ________.

A) $5.50

B) $6.00

C) $6.50

D) $5.00

 

23) Which of the following statements is true of implementing an ABC system?

A) Managers should never compromise on the cause-and-effect relationship of cost drivers and costs.

B) The three guidelines for refining costing systems should be ignored while implementing an ABC costing system.

C) The heterogeneous cost pools give managers greater confidence in the activity and product cost numbers from the ABC system.

D) Identifying the cost-allocation bases defines the number of activity pools into which costs must be grouped in an ABC system.

 

Answer the following questions using the information below:

 

Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows:

 

ActivitiesCost driverAllocation Rate

Material handlingNumber of parts$2 per part

AssemblyLabor hours$20 per hour

InspectionTime at inspection station$3 per minute

 

The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour.

 

24) Nichols’ management is considering to implement ABC system because ________.

A) ABC system can be implemented cheaply

B) ABC system provides more accurate direct cost figures

C) ABC system is a highly refined costing system

D) ABC system requires minimal expertise to operate

25) What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 50 remote controls are produced? The batch requires 100 parts, 6 direct manufacturing labor hours, and 2.5 minutes of inspection time.

A) $4.00 per remote control

B) $6.55 per remote control

C) $24.00 per remote control

D) $327.50 per remote control

 

26) What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 450 parts, 8 direct manufacturing labor hours, and 10 minutes of inspection time.

A) $11.00 per remote control

B) $10.90 per remote control

C) $11.05 per remote control

D) $10.95 per remote control

Answer the following questions using the information below:

 

Nile Corp. 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$380,000Direct labor-hours760,000

Machine maintenance$120,000Machine-hours960,000

Facility rent$200,000Square feet of area125,000

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

 

27) If Nile Corp. uses the three activity cost pools to allocate overhead costs, what are the activity-cost driver rates for supervision of direct labor, machine maintenance, and facility rent, respectively?

A) $0.50 per dlh; $0.125 per mh; $1.50 per sq ft

B) $1.25 per dlh; $0.25 per mh; $1.67 per sq ft

C) $0.50 per dlh; $0.125 per mh; $1.60 per sq ft

D) $0.40 per dlh; $0.125 per mh; $1.68 per sq ft

 

28) Using the three cost pools to allocate overhead costs, what is the total amount of overhead costs to be allocated to the Mossman Job?

A) $389.00

B) $380.00

C) $385.50

D) $376.00

Answer the following questions using the information below:

 

Velshi Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2015, manufacturing overhead cost estimates total $840,000 for an annual production capacity of 12 million pages.

 

For 2015 Velshi Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:

 

Cost poolManufacturing overhead costsActivity level

Design changes$ 120,000300 design changes

Setups640,0005,000 setups

Inspections80,0008,000 inspections

Total manufacturing overhead costs$840,000

 

During 2015, two customers, Money Managers and Hospital Systems, are expected to use the following printing services:

 

ActivityMoney ManagersHospital Systems

Pages60,00076,000

Design changes100

Setups2010

Inspections3038

 

29) Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?

A) $400 per change, $128 per setup, $10 per inspection

B) $360 per change, $320 per setup, $6.40 per inspection

C) $168 per change, $538 per setup, $42 per inspection

D) $286 per change, $152 per setup, $20 per inspection

 

30) Using the three cost pools to allocate overhead costs, what is the total manufacturing overhead cost estimate for Money Managers during 2015?

A) $13,700

B) $6,500

C) $6,860

D) $10,192