activity based costing and service department cost allocation

service department

Although a necessary part of the operations of a business, this does not produce any product or service that can earn external revenue for the business: indirect labor indirect materials service department all of the above

$1.83 [($4,100 × 8) + ($600 × 56) + ($1 × 80,000)] ÷ 80,000

Fuderen Company uses ABC costing and applies overhead using the following bases: $4,100 for each production setup; $600 for each part used by the product; and $1 for each unit of the product produced. The production of 80,000 units of Product 1 required 8 setups, and it used 56 parts. The production of 50,000 units of Product 2 required 12 setups and 24 parts. How much overhead per unit should have been allocated to Product 1? $1.42 [($4,100 × 12) + ($600 × 24) + ($1 × 50,000)] ÷ 80,000 $1.83 [($4,100 × 8) + ($600 × 56) + ($1 × 80,000)] ÷ 80,000 $2.27 [($4,100 × 12) + ($600 × 24) + ($1 × 50,000)] ÷ 50,000 $2.93 [($4,100 × 8) + ($600 × 56) + ($1 × 80,000)] ÷ 50,000

both

The activity used to estimate the amount of work that went into a job is called a(n) activity base cost driver both of these are the same neither of these are correct

allocate them to productive departments.

The correct accounting treatment for service department costs is to: add them to factory overhead. add them to general and administrative expenses. allocate them to productive departments. expense them as period costs.

direct costs of the service department + costs allocated to the service department

The reciprocal method for allocating service department costs uses this equation to estimate total service department costs: direct costs of the service department + costs allocated to the service department direct materials of the service department + direct labor of the service department equivalent units + units started and completed variable costs of the service department + fixed costs of the service department

direct costing

The textbook and the lecture compare activity based costing to traditional costing. What is the most commonly used traditional costing method? actual costing direct costing indirect costing normal costing

peanut butter costing

Uniformly assigning the costs of resources to cost objects when those resources are actually used in a non-uniform way is called: consistent cost indexing. menu-based costing. peanut butter costing. variable product cost allocation.

product cross-subsidization

Whether it's done deliberately or by a deficient cost accounting system, overcharging for one product or service allows a company to undercharge on a different one. This is called: cost allocation margin of safety peanut butter costing product cross-subsidization

human resources

Which of the following departments would be a service department for a large bakery? baking human resources mixing packaging

It requires more recordkeeping than other methods and identifying the activities that cause overhead can be difficult.

Which of the following is a disadvantage or problem of activity-based costing? It isn't allowed under international financial reporting standards. It requires more recordkeeping than other methods and identifying the activities that cause overhead can be difficult. Products that use different resources are treated the same. Using multiple cost drivers confuses and confounds managers' ability to understand indirect costs.

machine hours

Which of the following is most likely to be an appropriate activity base for a capital-intensive manufacturing company? direct labor costs direct labor hours Correct Answer machine hours sales in units

Allocate overhead to products by using a single plant-wide cost driver rate.

Which of the following is not one of the steps for using activity-based costing as described in the textbook and in your lecture? [They are listed in alphabetical order]. Allocate overhead to products by using a single plant-wide cost driver rate. Assign costs to products by multiplying the cost driver rate by the volume of cost driver units consumed by the product. Compute a cost rate per cost driver unit or transaction. Identify the activities that consume resources and assign costs to them. Identify the cost driver(s) associated with each activity.

variable method

Which of the following is not one of three methods discussed in the textbook and in your lecture for allocating service department costs? direct method reciprocal method step method variable method

Activity-based costing uses multiple activity bases to allocate indirect costs

Which of the following statements is true? Activity-based costing uses a single indirect cost pool to cost jobs or services. Activity-based costing uses a single activity base to allocate indirect costs. Activity-based costing uses multiple activity bases to allocate indirect costs. Normal costing uses multiple indirect cost pools to cost jobs or services. Normal costing uses multiple activity bases to allocate indirect costs.

Allocations Incurred

Which one of the following accounts is not used in an activity-based costing (ABC) system? Allocations Incurred Applied Overhead [or Overhead Applied] Finished Goods Inventory Materials Control Work-in-Process Inventory

activity-based costing

Wikipedia's defined this as: "A costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each", allowing more costs to be recorded as direct costs (as opposed to indirect costs) than traditional costing models. activity-based costing job order costing normal costing peanut butter costing