Acct Ch 4

For each unit of a product, the direct material cost is $10, the direct labor cost is $15, and the manufacturing overhead is $16. The total unit product cost using activity-based costing is ______.

$10+$15+$16=$41

Total cost of each activity divided by the total activity is the computation of _____

activity rates

focusing on activities to eliminate waste, decrease processing time, and reduce defects is known as __________-____________ management.

activity-based

When a company has extensive product diversity and complex overhead, it is best to assign overhead using a. departmental oh rates b. a single plantwide oh rate c. abc

c. abc

benefits of abc include Select all that apply: a. more accurate product costs b. helping managers understand the nature of overhead costs c. helping target areas for process improvement d. reducing the total overhead costs of a company

a, b, c

implementing abc _____. select all that apply: a. should be done by a cross functional team b. requires substantial resources c. should be done using existing, historical data that can be verified d. requires taking employees away from other tasks

a, b, d

abc improves the accuracy of product costs by _____ select all that apply: a. using cost pools that are more homogeneous than departmental cost pools b. highlighting the activities that could benefit the most from improvement initiatives c. increasing the number of cost pools used to accumulate overhead cost d. using a variety of activity measures to assign overhead costs to products

a, c, d

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. Using activity-based costing, calculate the appropriate activity rate(s). a. $8 per customer call and $15 per development hour b. $11.11 per customer call or per development hour c. $20 per customer call and $25 per development hour

a. $8 per customer call and $15 per development hour $200,000/25,000 = $8 per customer call $300,000/20,000 = $15 per development hour

activity-based management is focused on ________ Select all that apply: a. eliminating waste b. reducing defects c. pricing decisions d. increasing processing time

a. eliminating waste b. reducing defects

A plantwide OH rate based on DL hours is _____ appropriate a. sometimes b. never c. always

a. sometimes

An activity that must be done for each item produced is a(n) )________ level activity. a. unit b. facility c. product d. batch

a. unit

In ABC, any event that causes consumption of overhead resources is a(n)

activity

For each unit of a product, the direct material cost is $10, the direct labor cost is $15, and the manufacturing overhead is $16. The total unit product cost using activity-based costing is a. $25 b. $41 c. $9 d. $30

b. $41

setting up machines, billing customers, and performing tests at a lab are all examples of a(n) a. DL b. activity c. cost pool d. activity measure

b. activity

Setting up machines, billing customers, and performing tests at a lab are all examples of a(n) a. activity measure b. DL c. activity d. cost pool

c. activity

the cost of implementing and maintaining an activity-based costing system __________ the benefits received. a. will always be less than b. will always be higher than c. may outweigh

c. may outweigh

abc _______ a. always leads to higher product costs than traditional costing b. only considers manufacturing overhead when computing product costs. c. excludes DL from product costs d. Computes product costs in the same way as traditional costing

d. Computes product costs in the same way as traditional costing

t or f: traditional cost systems tend to undercost standard products and overcost specialty products

false

An activity that must be done for each item produced is a(n) ____-______ activity

unit-level

Total estimated man oh is $900,000 and total estimated activity is 30,00 machine hours. The plant wide oh rate is ___ per hour

$30

A company assigns overhead using a plantwide rate. If total estimated manufacturing overhead is $900,000 and the total estimated activity is 30,000 machine-hours, the overhead cost assigned to a product using 12,000 machine-hours is ______.

$360,000 ($900,000/30,000)= 30 30x12,000

A company incurred the following: Total manufacturing costs of $500,000, total production department costs of $300,000, and total production order costs of $275,000. It used a total of 50,000 direct labor hours, 100,000 machine hours, and 2,750 production orders were placed. Use activity-based costing to calculate the activity rate for production orders.

($275,000/2,750) = $100

T/F When using activity rates, overhead is assigned the same way as when using plantwide or departmental rates

True

usually, traditional costing _______ high-volume products and __________ low-volume products. a. undercosts; overcosts b. overcosts; undercosts

b