MANG ACC CH4
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
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
$41
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)
$8 per customer call and $15 per development hour
TRUE
- Technology has made more complex costing systems less expensive to develop and maintain. - On an economy wide basis, direct labor and overhead costs have been moving in opposite directions for a long time.
Using direct labor-hours or another volume-based cost driver to assign overhead
- may result in selling products at a loss - ignores other significant causes of overhead - may result in overcharging customers for products
When cost systems were developed in the 1800's, most companies ________
- produced a small number of similar products - focused on simplicity
Which of the following are facility-level activities?
- property taxes on plant - paying factory insurance
FALSE
Activity-cost rates may either be computed per product or per activity
FALSE
Departmental overhead rates correctly assign overhead costs in situations where a company has a range of products and complex overhead costs.
TRUE
When using activity rates, overhead is assigned the same way as when using plantwide or departmental rates.
In ABC, any event that causes consumption of overhead resources is a(n)
activity
Setting up machines, billing customers, and performing tests at a lab are all examples of a(n) ________
activity
A "bucket" in which costs are accumulated that relate to a single activity measure in the ABC system is a(n) ______.
activity cost pool
When a company has extensive product diversity and complex overhead, it is best to assign overhead using ________
activity-based costing
When a company has extensive product diversity and complex overhead, it is best to assign overhead using _________
activity-based costing
An activity measure in activity-based costing is used as a(n) ________ base for applying overhead costs to products and services
allocation
Two variables that move together
are highly correlated.
Processing purchase orders is considered to be a(n) ______-level activity.
batch
Costs at the batch level depend on the number of
batches processed
A systematic approach to identifying the activities that need the most improvement is called
benchmarking
Activity-based costing
computes product costs in the same way as traditional costing
Organization-sustaining activities is another term for
facility level activities
The basis of benchmarking is comparing
performance within the same industry
A plantwide overhead rate based on direct labor hours is _________ appropriate.
sometimes
Activity-based management is focused on
-reducing defects -eliminating waste
Total estimated manufacturing overhead is $900,000 and total estimated activity is 30,000 machine-hours. The plantwide overhead rate is $____ per machine hour.
30
If the activity rate is $65 per order with a total of 120 orders for a product, the overhead cost assigned to the product is $
7,800
The activity rate for the Customer Orders activity pool is $20 per order. If there are 400 customer orders for a product, the total overhead cost assigned to this product for customer orders is $
8,000
A cost bucket in which costs related to a particular activity measure are accumulated is called a(n) k_____.
activity cost pool
How much of an activity is carried out is expressed by a(n) ______, which is used as the allocation base for applying overhead costs to products and services.
activity measure
A predetermined overhead rate in an activity-based costing system is called a(n) __________ __________
activity rate
In activity-based costing, what is calculated by dividing the total cost of each activity by its total cost driver?
activity rate
Total cost of each activity divided by the total activity is the computation of
activity rate
Usually, traditional costing Blank______ high-volume products and Blank______ low-volume products.
overcosts; undercosts
Usually, traditional costing ______ high-volume products and ______ low-volume products.
overcosts; undercosts
Designing and advertising a good are both ________-level activities.
product
Activities related to specific products and that typically must be carried out regardless of how many batches or units are manufactured are called _________ __________ activities
product level
An activity that must be done for each item produced is a(n) ______ level activity.
unit
An activity that must be done for each item produced is a(n)
unit level activity
