Question :
91. Berg Company incurs $320,000 overhead costs each year in : 1311685
91. Berg Company incurs $320,000 overhead costs each year in its three main departments, setup ($20,000), machining ($220,000), and packing ($80,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Berg’s two products is as follows:
Product A1Product B1
Number of setups 20 20
Machining hours 1,000 4,000
Orders packed 150 350
Number of products manufactured 600 400
MC 91.(Cont.)
If machining hours are used as a base, how much overhead is assigned to Product A1 each year?
a.$64,000
b.$160,000
c.$110,000
d.$96,000
92. Berg Company incurs $320,000 overhead costs each year in its three main departments, setup ($20,000), machining ($220,000), and packing ($80,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Berg’s two products is as follows:
Product A1Product B1
Number of setups 20 20
Machining hours 1,000 4,000
Orders packed 150 350
Number of products manufactured 600 400
Using ABC, how much overhead is assigned to Product A1 each year?
a.$160,000
b.$242,000
c.$ 64,000
d.$ 78,000
93. Berg Company incurs $320,000 overhead costs each year in its three main departments, setup ($20,000), machining ($220,000), and packing ($80,000). The setup department performs 40 setups per year, the machining department works 5,000 hours per year, and the packing department packs 500 orders per year. Information about Berg’s two products is as follows:
Product A1Product B1
Number of setups 20 20
Machining hours 1,000 4,000
Orders packed 150 350
Number of products manufactured 600 400
Using ABC, how much overhead is assigned to Product B1 each year?
a.$160,000
b.$128,000
c.$242,000
d.$256,000
94. A company incurs $2,400,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available:
DepartmentExpected Use of Driver Cost
Processing800$1,000,000
Packaging200,0001,000,000
Testing2,000400,000
Production information for the two products is as follows:
Oil Sludge
DepartmentExpected Use of DriverExpected Use of Driver
Processing300500
Packaging120,00080,000
Testing1,600400
The amount of overhead assigned to Oil is
a.$1,200,000.
b.$1,295,000.
c.$1,105,000.
d.$ 920,000.
95. A company incurs $2,400,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available:
DepartmentExpected Use of Driver Cost
Processing800$1,000,000
Packaging200,0001,000,000
Testing2,000400,000
Production information for the two products is as follows:
Oil Sludge
DepartmentExpected Use of DriverExpected Use of Driver
Processing300500
Packaging120,00080,000
Testing1,600400
The amount of overhead assigned to Sludge is
a.$1,200,000.
b.$1,105,000.
c.$1,295,000.
d.$ 920,000.
96. Volcker, Inc. manufactures recliners for the hotel industry. It has two products, the Heater and the Massager, and total overhead is $1,580,000. The company plans to manufacture 400 Heaters and 100 Massagers this year. In manufacturing the recliners, the company must perform 600 material moves for the Heater and 400 for the Massager; it processes 900 purchase orders for the Heater and 700 for the Massager; and the company’s employees work 1,400 direct labor hours on the Heater product and 3,400 on the Massager. Volcker’s total material handling costs are $1,000,000 and its total processing costs are $580,000. Using ABC, how much overhead would be assigned to the Heater product?
a.$ 790,000
b.$ 926,250
c.$ 653,750
d.$1,119,166
97. Which of the following is a limitation of activity-based costing?
a.More cost pools
b.Less control over overhead costs
c.Poorer management decisions
d.Some arbitrary allocations continue
98. Which of the following factors would suggest a switch to activity-based costing?
a.Product lines similar in volume and manufacturing complexity.
b.Overhead costs constitute a significant portion of total costs.
c.The manufacturing process has been stable.
d.Production managers use data provided by the existing system.
99. Which of the following is true of activity-based costing?
a.More cost pools
b.Same base as traditional costing
c.Less costly to use
d.Eliminates arbitrary allocations
100.The primary benefit of ABC is it provides
a.better management decisions.
b.enhanced control over overhead costs.
c.more cost pools.
d.more accurate product costing.
