CH. 4

When using activity-based costing, it is very important that the activities in each cost pool are

Similar

All of the following are types of activities which cause overhead except:

customer level

A report which focuses on providing gross profit margin per customer, is referred to as a

customer profitability report

The overhead rate method which uses a different overhead rate for each department is the

departmental method

Landen Company uses a single plantwide overhead rate of $100 per direct labor hour (DLH). Landen has two products as follows: basic chairs which used 20 DLH and deluxe chairs which used 35 DLH. What is the total amount allocated to these products?

$5500 (100x20)=2000 (35x100)=3500 3500+2000=5500

The departmental overhead rate method uses a three-step process to allocate costs objects. List these steps in the correct order

1) Assign overhead costs to departmental cost pools 2) Select an allocation base and compute allocation rate for each department 3) Allocate overhead costs to cost objects

The _________overhead rate method uses a different overhead rate per production department.

Departmental

True or false: The departmental overhead rate method uses a three-step process where costs are assigned to cost pools in the first step and overhead rates are computed in the last step.

F

True or false: The plantwide overhead rate method uses multiple rates to allocate overhead costs to products.

F The plantwide method uses a single rate to allocate overhead.

(Identifying, Assigning,Tracing) activities is the first step in applying activity-based costing.

Identifying

One of the characteristics of activity-based costing is that it allows______(more, less) effective control over costs.

More

Each of the following are types of __________allocation methods: plantwide rate method, departmental overhead rate method and activity-based costing method.

Overhead

The cost object of the cost assignment under the plantwide overhead rate method is the

Unit of product

Activities causing overhead include all of the following:

Unit, batch, product, facility

The basis of the activity-based costing method is a(n)

activity

ABC can be used by service providers who usually classify costs by

activity level

Which of the following are a type of overhead allocation method? (Check all that apply).

activity-based costing method plantwide overhead rate method departmental overhead rate method

The first step in applying activity-based costing is

identifying the activities.

Advantages of the activity-based costing include: Check all that apply.

more effective overhead cost control better production and pricing decisions accurate assignment of costs to products