Accounting test 1 part 1
True or false: The best reason to implement an ABC system is to obtain more accurate information about the cost of products and services.
False
Which of the following is NOT a volume-based cost driver? Direct labor dollars Machine setups Sales revenue Direct material costs
Machine set ups
A company assigns overhead based on direct labor costs. The predetermined overhead rate is $3.00 per direct labor dollar. A job that used a total of 20 direct labor hours ($400 in total direct labor costs) would be assigned $_______ in total overhead
1200
Indirect costs
are not easily traced to products or services
The final step in activity-based costing is ______.
assigning indirect costs to products or services
At a minimum, an ABC system should have ______.
at least one non-unit-level activity cost pool
Activity-based costing systems typically include ______ cost drivers
both volume- and non-volume-based
The formula to compute activity proportion is ______.
cost driver for product / cost driver for all products
Sales price per unit - manufacturing cost per unit = ______ per unit.
gross profit per unit
To calculate manufacturing overhead cost per unit using ABC, divide the total ______.
manufacturing overhead cost by the number of units produced
Once Stage 2 allocation has been completed it is possible to compute total ______.
manufacturing overhead per product
Indirect costs are also referred to as______costs.
overhead
Total manufacturing overhead under activity-based costing consists of all ______.
overhead assigned during Stage 2 allocations
The activity proportion method uses_____ to assign overhead costs to products.
percentages
Implementing an ABC system ______.
provides information for cost management
Direct labor hours and machine hours are both examples of_____-based cost drivers.
volume
Widgets, Inc., plans to produce 8,000 widgets during the upcoming year. Each widget requires four direct labor hours at $25 per hour and $110 in direct material costs. Manufacturing overhead is assigned based on direct labor hours and is estimated to be $625,000 for the upcoming year. Compute the predetermined overhead rate per direct labor hour.
$19.53
Adele's Attic assigns overhead to products based on direct labor hours. For the upcoming year the business plans to use a total of 25,000 machine hours and 5,000 direct labor hours. Total overhead cost is expected to be $35,000. How much overhead would be assigned to a job that used 180 machine hours and 40 direct labor hours?
$280
SPL Enterprises assigns overhead based on number of machine hours. For the upcoming year, they plan to use a total of 250,000 machine hours and 50,000 direct labor hours. Total overhead cost is expected to be $500,000. The predetermined overhead rate per machine hour is $______
2
Anders Inc. assigns overhead using activity proportions and has a machine setup cost pool. Last year there were 27,500 setups at a total cost of $550,000. Product R3D used a total of 8,250 of those setups and should be assigned _____% of the total setup cost.
30
Plaster Company expects to have a total cost of $400,000 in its activity cost pool. The total expected activity is 800 machine setups. The activity rate is $____ per setup.
500
A company's activity rate for the general factory is $2.00 per machine hour. Product A used 3,000 machine hours and 1,000 labor hours. General factory overhead assigned to Product A is ______.
6000
A predetermined overhead rate in an activity-based costing system is called ______.
An activity rate
True or false: When computing unit costs, the direct materials and direct labor costs are the same, regardless of whether ABC or a volume-based costing system is used.
True
The formula to apply overhead to products is ______.
activity rate times activity
A method that attempts to assign overhead costs based on what is required to produce products is ______ costing.
activity-based
Non-volume-based cost drivers ______. allow more indirect costs to be allocated to products are related to the number of units produced or customers served are used in ABC systems are used in traditional costing systems
allow more indirect costs to be allocated to products are used in ABC systems
Indirect costs can be assigned to products or services using ______. the activity rate method target costing total quality management the activity proportion method activity-based management
the activity rate method the activity proportion method
Larson Productions LLC has an activity cost pool called product design and redevelopment. The cost driver for this pool is design hours. A total of 1,000 design hours were used, 620 for Model XLT and 380 for Model TXT. The total cost assigned to the cost pool was $118,000. Using the activity proportion method, determine how much cost should be allocated to each product.
$73,160 to Model XLT and $44,840 to Model TXT
A company's total expected overhead for the year is $500,000. Two activity cost pools have been identified: Customer Service with a total cost of $200,000 and a total activity of 25,000 customer service calls; and Product Development with a total cost of $300,000 and total activity of 20,000 development hours. The activity rates are ______.
$8 per customer call and $15 per development hour
A technique that attempts to assign overhead costs to products based on the actions they require is called
activity based costing
A group of similar activities that have been combined together is called an activity______ _______.
cost pool
Gross profit margin calculates gross margin as a percentage of_____
sales