Accounting Ch. 26, 18, 19

All of the following are common allocation bases used with the single plantwide factory overhead rate method except A. direct labor hours. B. direct labor dollars. C. machine hours. D. indirect labor hours.

D. indirect labor hours

Assume that Valdez Company, which manufactures snow shovels and snow blowers in a single factory, has total budgeted factory overhead costs of $2,750,000 for the year, and 25,000 total budgeted direct labor hours. Revenue is estimated to be $10,000,000. Using the single plantwide rate method, what would be the factory overhead rate to apply? A. $110 B. $400 C. $290 D. None of these choices are correct.

A. $110

Jacobsville Hospital has budgeted costs of $850,000 in diagnostic imaging. The total estimated activity-based usage is 2,500 images. Total costs for the entire hospital are estimated to be $3,000,000. The activity rate per image is A. $340. B. $1,200. C. $860. D. None of these choices are correct.

A. $340

The __________ method uses different rates for each production department to allocate factory overhead costs to products. A. multiple production department factory overhead rate B. average rate C. cost D. None of these choices are correct.

A. multiple production department factory overhead rate

Generally accepted accounting principles (GAAP) require that selling and administrative expenses be reported as __________ expenses on the income statement. A. period B. product C. nonoperating D. None of these choices are correct.

A. period

Which of the following activities would most likely be identified with a healthcare business? A. Fabrication B. Diagnostic imaging C. Assembly D. Mixing

B. Diagnostic imaging

The factory overhead rates used to assign costs to products with the ABC method are known as __________ rates. A. cost B. activity C. expense D. None of these choices are correct.

B. activity

To minimize product cost distortion, a company with departments that differ significantly in their processes should use a(n) __________ rate. A. single plantwide B. multiple production department C. average D. None of these choices are correct.

B. multiple production department

A disadvantage with allocating selling and administrative expenses to products based on sales volume is that A. sales volume cannot be predicted. B. products may consume activities in ways that are unrelated to their sales volumes. C. sales volume will never properly allocate selling and administrative expenses. D. None of these choices are correct.

B. products may consume activities in ways that are unrelated to their sales volumes.

The __________ method provides an alternative approach for allocating factory overhead that uses multiple factory overhead rates based on different activities. A. single plantwide rate B. multiple production department rate C. activity-based costing (ABC) D.None of these choices are correct.

C. activity-based costing (ABC)

Product costs consist of A. direct materials. B. direct labor. C. factory overhead. D. All of these choices are correct.

D. All of these are correct

All of these are examples of an activity using ABC except A. setup. B. assembly. C. fabrication. D. Department A combined activities.

D. Department A combined activities.

All of the following are common methods of allocating factory overhead to products except the __________ method. A. single plantwide rate B. multiple production department rate C. activity-based costing D. straight division

D. Straight Division