2037 - R3
True or false: The plantwide overhead rate method uses multiple rates to allocate overhead costs to products. True false question.
false
A report which focuses on individual customers and shows total profit margin generated by specific customers is known as a ______ profitability report
customer
All of the following are types of activities which cause overhead except: batch-level unit-level facility-level customer-level
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 uses a different overhead rate per production department.
department
The overhead rate method which uses a different overhead rate for each department is the
departmental method
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.
false
The cost object of the cost assignment under the plantwide overhead rate method is the
unit of product
A company uses the departmental overhead rate method. Total overhead costs are $5,000,000. Of this total, the machining department is assigned overhead costs of $4,000,000 and the assembly department is allocated the remainder. The machining department uses machine hours as their allocation base and has 80,000 machine hours. The assembly department uses direct labor hours as their allocation base and has 50,000 direct labor hours. Calculate the overhead rate for the machining department.
$4,000,000/80,000 = $50
A company uses the departmental overhead rate method. Total overhead costs are $6,000,000. Of this total, the machining department is assigned overhead costs of $4,000,000 and the assembly department is allocated the remainder. The machining department uses machine hours as their allocation base and has 80,000 machine hours. The assembly department uses direct labor hours as their allocation base and has 50,000 direct labor hours. Calculate the overhead rate for the assembly department.
$40 per direct labor hour
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?
$5,500
Advantages of the activity-based costing include: Check all that apply. -accurate assignment of costs to products -more effective overhead cost control -better production and pricing decisions -lower costs to implement and maintain -product cost distortion may occur
-More effective overhead cost control -Better production and pricing decisions -accurate assignment of costs to products
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 overhead allocation rate for each department 3. Allocate overhead costs to cost objects
A company has the following activities and costs: machine setup of $5,000 per setup and factory services of $100 per square foot. If product 1 uses 2 setups and has 10,000 square feet, overhead allocated to product 1 is $
1010000
The Factory Services Department incurs costs of $130,000 while maintaining machinery that is operated 1,000,000 machine hours. If Job 276 requires 1,500 machine hours, the amount of costs allocated to the job will be $
195
The Production Department incurs costs of $250,000 while working 12,500 direct labor hours. If Job 421 requires 25 direct labor hours to assemble, the amount of overhead allocated to the job will be $
500 --> (250000/12500) x 25
If a company uses activity-based costing, the most appropriate cost driver for the production department would be the square footage of the department number of employees in the department number of direct labor hours
Number of direct labor hours
True or false: One of the advantages of the departmental overhead rate method over the plantwide overhead rate method is that in the departmental overhead rate method, individual departments can have their own overhead rate and allocation base
True
True or false: The cost object of the plantwide overhead rate method is the unit of product.
True
Activities causing overhead include all of the following: unit-level selling-level facility-level batch-level
Unit level Batch level facility level
In order for a service provider to use activity-based costing, they should classify costs by ______ level
activity
The basic principle of activity-based costing is that a(n) _______ is what causes overhead cost to be incurred
activity
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). Multiple select question. activity-based costing method plantwide overhead rate method departmental overhead rate method division overhead rate method.
activity-based costing method plantwide overhead rate method departmental overhead rate method
The first step in applying activity-based costing is
identifying the activities (cost pools)
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
In activity-based costing, activities in each cost pool should be (similar / dissimilar)
similar
When using activity-based costing, it is very important that the activities in each cost pool are
similar
The departmental overhead rate method allows individual departments to have
their own overhead rate and allocation base
Johnson Company has the following overhead costs: machine setup $25,000; factory services $10,000; design of $15,000; and selling expenses of $5,000. What is the total overhead costs using activity-based costing?
50000