cap 4-5-6

Using the following information, calculate the predetermined factory overhead rate per direct labor hour. Actual factory overhead $ 50,000 Estimated factory overhead $ 60,000 Actual cost driver amount 2,000 labor hours Estimated cost driver amount 2,500 labor hours

$24 Reason: $60,000 budgeted overhead ÷ 2,500 budgeted labor hours = $24 per labor hour.

Using the following information, calculate the predetermined factory overhead rate per direct labor hour. Actual factory overhead $ 50,000 Estimated factory overhead $ 60,000 Actual cost driver amount 2,000 labor hours Estimated cost driver amount 2,500 labor hours Multiple choice question. $24 $30 $25 $20

$24 Reason: $60,000 budgeted overhead ÷ 2,500 budgeted labor hours = $24 per labor hour.

Total support staff cost for SST, Inc. is budgeted at $150,000. Budgeted activity is 12,000 hours and practical capacity is 15,000 hours. If the overhead rate is calculated based on practical capacity and 12,000 hours are actually used, the cost of unused capacity equals ______. Multiple choice question. $37,500 $30,000 $7,500 $15,000

$30,000 Reason: 3,000 unused hours × $10 practical capacity overhead rate = $30,000

The journal entry to record salaries and wages of factory supervisors and warehouse clerks includes a debit to ______. Multiple choice question. Accrued Payroll Wages Expense Factory Overhead Work-in-Process Inventory

Factory Overhead

The journal entry to record salaries and wages of factory supervisors and warehouse clerks includes a debit to ______. Multiple choice question. Factory Overhead Accrued Payroll Wages Expense Work-in-Process Inventory

Factory Overhead

True or false: Activity-based costing assigns overhead to products based on resources consumed per unit produced. true false

False Reason: Activity based costing assigns resource costs to cost objects based on activities performed for the cost objects.

When a company has multiple departments, it is always best to use departmental overhead rates instead of a single plantwide rate. True false question.TrueFalse

False Reason: Plantwide rates are appropriate when the production departments are similar in the amount of overhead and usage of cost drivers in each department.

Which of the following is NOT one of the major benefits of activity-based costing identified in the text? Multiple choice question. Process improvement Better decision making Higher firm profitability Improved planning identification of the cost of unused capacity

Higher firm profitability Reason: ABC provides better profitability measures, not higher profitability.

FIT Co. collected the following information: depratamento a departament b total overhead 303000 36900 67200 labor hours 6000 6150 11850 Calculate the overhead rate per labor hour for for Department B. Multiple choice question. $6.00 $5.60 $5.57 $5.05

$6Reason:$36,900÷6,150 = $6 Reason: $36,900÷6,150 = $6

Gargus Co. budgeted cost is $10 per pound of material and $500,000 for 20,000 direct labor hours. The estimated manufacturing overhead of $195,000 for the year is broken down as follows: Overhead cost pool Budgeted overhead Cost driver Budgeted level of cost driver Materials handling $ 100,000 Pounds of material 40,000 pounds Machine setup $12,000 Number of setups 300 setups Machine maintenance $ 15,000 Machine hours 30,000 machine hours Inspections $ 68,000 Number of inspections 1,000 inspections A particular product requires the following: Specific category Details Direct materials 150 pounds Machine setups 3 setups Direct labor hours 100 hours Machine hours 200 hours Inspections 2 inspections If Gargus Co. uses a volume-based overhead rate based upon direct labor hours, the manufacturing overhead for this product is ______. Multiple choice question. $975 $650 $1,950 $1,300

$975 Reason: $195,000÷20,000 = $9.75 per direct labor hour × 100 hours

Gargus Co. budgeted cost is $10 per pound of material and $500,000 for 20,000 direct labor hours. The estimated manufacturing overhead of $195,000 for the year is broken down as follows: Overhead cost pool Budgeted overhead Cost driver Budgeted level of cost driver Materials handling $ 100,000 Pounds of material 40,000 pounds Machine setup $12,000 Number of setups 300 setups Machine maintenance $ 15,000 Machine hours 30,000 machine hours Inspections $ 68,000 Number of inspections 1,000 inspections A particular product requires the following: Direct labor 100 hours Direct materials 150 pounds Machine setups 3 setups Machine hours 200 hours Inspections 2 inspections If Gargus Co. uses a volume-based overhead rate based upon machine hours, the manufacturing overhead for this product is ______.

1300

Gargus Co. budgeted cost is $10 per pound of material and $500,000 for 20,000 direct labor hours. Estimated manufacturing overhead for the year is as follows: Overhead cost pool Budgeted overhead Cost driver Budgeted level of cost driver Materials handling $ 100,000 Pounds of material 40,000 pounds Machine setup $12,000 Number of setups 300 setups Machine maintenance $ 15,000 Machine hours 30,000 machine hours Inspections $ 68,000 Number of inspections 1,000 inspections A particular product requires the following: Direct labor 100 hours Direct materials 150 pounds Machine setups 3 setups Machine hours 200 hours Inspections 2 inspections If Gargus Co. uses an activity-based costing system, total manufacturing overhead for this product is ______. Multiple choice question. $731 $1,462.50 $745 $975

731 Reason: Overhead equals: [$100,000÷40,000 = $2.50 per pound of material × 150] $375 + [$12,000÷300 = $40 per set-up × 3] $120 + [$15,000÷30,000 = $.50 per machine hour × 200] $100 + [$68,000÷1,000 = $68 per inspection × 2] $136 = $731

The journal entry to record indirect labor wages debits ______. Multiple choice question. Work-in-Process Inventory Accrued Payroll Wages Expense Factory Overhead

Factory Overhead

The journal entry to record indirect labor wages credit

Accrued Payroll Reason: This is the credit.

ABC

Activity-Based Costing

This is a benefit of more accurate information

Better profitability measures Improved planning Better decision making

Effective management of manufacturing costs requires _________and _________cost information

Blank 1: accurate Blank 2: timely

A specific task, action, or unit of work done is called a(n) _________.

Blank 1: activity

In ABC costing a(n) ________________________can be either a single action or a group of several actions.

Blank 1: activity

The cost or profitability of each job cannot be computed until the end of the period when using ____________ costing.

Blank 1: actual

The process of classifying and assigning material, labor, and overhead costs to cost objects is known as ___________. (Enter only one word per blank.)

Blank 1: costing

The process of classifying and assigning material, labor, and overhead costs to cost objects is known as__________

Blank 1: costing

The appropriate costing method when most costs incurred can be identified with a specific product, client, or project is ___________________costing.

Blank 1: job

When amounts used for estimated overhead or estimated cost drivers are incorrect, the result is a(n) ___________error.

Blank 1: measurement

A hybrid costing approach that uses elements of both job and process costing is known as ________________ costing.

Blank 1: operation or operations

If applied overhead is greater than actual overhead, overhead is ___________ .

Blank 1: overapplied or overstated

Material left over from the manufacture of a product that has little or no value is called_______________.

Blank 1: scrap

Which of the following costs are assigned to cost objects during the costing process? Multiple select question. Direct labor Direct materials Factory overhead General administrative costs

Direct labor Direct materials Factory overhead

Which of the following costs are assigned to cost objects during the costing process? Multiple select question. Direct labor General administrative costs Direct materials Factory overhead

Direct labor Direct materials Factory overhead

The journal entry to record indirect labor wages debits ______. Multiple choice question. Wages Expense Work-in-Process Inventory Factory Overhead Accrued Payroll

Factory Overhead

Which of the following is NOT an expected benefit of an activity-based costing system? Multiple choice question. Better profitability measures Process improvement Improved planning Better decision making Higher priced products and services

Higher priced products and services

Which of the following is NOT identified as part of the three-step sequence for developing an activity-based costing system? Multiple choice question. Assign resource costs to activities. Identify cost objects. Identify resource costs and activities. Assign activity costs to cost objects.

Identify cost objects. Reason: Cost objects (products, services, customers, etc.) already exist. ABC is developed to assign costs to the existing cost objects.

Job XYZ required $1,200 of direct materials. They were requisitioned along with $100 of indirect materials to be used for multiple jobs in the factory. As a result of these transactions ______. Multiple select question. Job XYZ will be charged a total of $1,300 for materials Materials Inventory will be decreased by a total of $1,300 Factory Overhead will be decreased by $100 Work-in-Process Inventory will be increased by $1,200

Materials Inventory will be decreased by a total of $1,300 Work-in-Process Inventory will be increased by $1,200

Which of the following statements is incorrect? Multiple choice question. Resources are spent on or consumed by activities. Most overhead costs relate directly to final products or services. Products and services are a result of activities. Many resources used in an operation can be traced to final products or services.

Most overhead costs relate directly to final products or services.

Which of the following statements are true? Normal costing systems provide a timely estimate of total product cost. Standard costing systems provide a basis for performance evaluation. The only difference between actual and normal costing how direct labor costs are calculated. Normal costs are expected costs the firm should attain.

Normal costing systems provide a timely estimate of total product cost. Standard costing systems provide a basis for performance evaluation.

Which of the following statements are true? Multiple select question. Normal costing systems provide a timely estimate of total product cost. Normal costs are expected costs the firm should attain. Standard costing systems provide a basis for performance evaluation. The only difference between actual and normal costing how direct labor costs are calculated.

Normal costing systems provide a timely estimate of total product cost. Standard costing systems provide a basis for performance evaluation.

More accurate information helps in understanding a process and waste in the process

Process improvement

Gargus Co. budgeted cost is $10 per pound of material and $500,000 for 20,000 direct labor hours. Estimated manufacturing overhead for the year is as follows: Overhead cost pool Budgeted overhead Cost driver Budgeted level of cost driver Materials handling $ 100,000 Pounds of material 40,000 pounds Machine setup $12,000 Number of setups 300 setups Machine maintenance $ 15,000 Machine hours 30,000 machine hours Inspections $ 68,000 Number of inspections 1,000 inspections A particular product requires the following: Direct labor 100 hours Direct materials 150 pounds Machine setups 3 setups Machine hours 200 hours Inspections 2 inspections If Gargus Co. uses an activity-based costing system, how much overhead will be assigned to the product for total machine related overhead costs (setups plus maintenance)? Multiple choice question. $40.50 $121.50 $220 $1,300

Reason: Overhead equals: [$12,000÷300 = $40 per set-up × 3] $120 + [$15,000÷30,000 = $.50 per machine hour × 200] $100 = $220 220

Which government entity was identified in the text as an example of one using ABC/M to better understand its cost structure? Multiple choice question. Federal Bureau of Investigation U.S. Patent and Trademark Office Internal Revenue Service Attorney General's Office

U.S. Patent and Trademark Office

The journal entry to record direct labor wages debits

Work-in-Process Inventory

The journal entry to record direct labor wages debits

Work-in-Process Inventory Reason: This is true for direct labor.

Job XYZ required $1,200 of direct materials. They were requisitioned along with $100 of indirect materials to be used for multiple jobs in the factory. As a result of these transactions ______. Multiple select question. Job XYZ will be charged a total of $1,300 for materials Work-in-Process Inventory will be increased by $1,200 Factory Overhead will be decreased by $100 Materials Inventory will be decreased by a total of $1,300

Work-in-Process Inventory will be increased by $1,200 Materials Inventory will be decreased by a total of $1,300

Potential problems from having an inaccurate costing system include ______. Multiple select question. a difficult time determining which product is most profitable continually losing competitive bids increasing sales with decreasing profits inaccurate net operating income for the company

a difficult time determining which product is most profitable continually losing competitive bids increasing sales with decreasing profits

The journal entry to record direct labor wages credits

accrued payroll

Activity-based costing (ABC) assigns costs to ______. Multiple choice question. cost objects and then to activities activities and then to cost objects

activities and then to cost objects

A two-stage cost assignment procedure assigns resource costs to ______. Multiple choice question. cost objects and then to activity pools activity consumption cost drivers and then to resource cost drivers plant or departmental cost pools and then to products or services activity pools and then to cost objects

activity pools and then to cost objects

An error in allocation that results from using a plantwide rate instead of departmental rates is a(n) ______ error. Multiple choice question. specification selection aggregation measurement

aggregation

A cost object is ______. Multiple select question. an output resulting from the firm's activities the economic element needed to perform an activity an item of interest a specific task or unit of work

an output resulting from the firm's activities an item of interest

The third step in the ABC development process is to ______. Multiple choice question. assign costs of activities to items of interest, generally called cost objects determine which of the resources in each of the accounts is consumed by the identified activities use resource consumption drivers to assign resource costs to activities

assign costs of activities to items of interest, generally called cost objects

The third step in developing an activity-based costing system is ______. Multiple choice question. assigning resource costs to activities identifying resource costs and activities identifying cost objects assigning activity costs to cost objects

assigning activity costs to cost objects

In various service industries, a job is referred is as a ______. Multiple select question. client project process case

client project case

A job cost sheet ______. is prepared after the job is completed contains all three cost elements may include detailed data required by management always records actual overhead costs

contains all three cost elements may include detailed data required by management

A job cost sheet ______. Multiple select question. is prepared after the job is completed always records actual overhead costs contains all three cost elements may include detailed data required by management

contains all three cost elements may include detailed data required by management

Potential problems from having an inaccurate costing system include ______.

continually losing competitive bids a difficult time determining which product is most profitable increasing sales with decreasing profits

The first step in the ABC development process is to ______. Multiple choice question. assign costs of activities to items of interest, generally called cost objects determine the resources that are consumed by each identified activity use resource consumption drivers to assign resource costs to activities

determine the resources that are consumed by each identified activity

The primary focus of job costing in service industries is on ______. Multiple choice question. direct labor direct materials overhead

direct labor

Volume-based product costing may assign overhead costs based on ______. Multiple select question. direct labor hours per unit units produced resources consumed during various activities

direct labor hours per unit units produced

Operational ABM can be used to ______. Multiple select question. enhance asset utilization select appropriate activities for the operation enhance operational efficiency select the most profitable customers

enhance asset utilization enhance operational efficiency

The formula for the predetermined overhead rate is ______. Multiple choice question. estimated overhead ÷ estimated amount of a cost driver estimated overhead ÷ actual amount of a cost driver actual overhead ÷ actual amount of a cost driver actual overhead ÷ estimated amount of a cost driver

estimated overhead ÷ estimated amount of a cost driver

The predetermined factor overhead rate is calculated using ______ cost driver usage. Multiple choice question. estimated total factory overhead costs and total estimated actual total factory overhead costs and total estimated estimated total factory overhead costs and total actual actual total factory overhead costs and actual total

estimated total factory overhead costs and total estimated

Activity-based costing assigns overhead to products based on resources consumed per unit produced. True false question.TrueFalse

false

True or false: When materials are transferred out of Materials Inventory, they are always transferred into Work-in-Process Inventory.

false

True or false: When materials are transferred out of Materials Inventory, they are always transferred into Work-in-Process Inventory. True false

false Reason: Only direct materials are transferred to Work-in-Process. Indirect materials are transferred into Factory Overhead.

True or false: Beneficial discretionary activities are good candidates for elimination. True false question.TrueFalse

false Reason: Activities for elimination are neither beneficial or organization sustaining.

Relevant factors to consider before determining the action appropriate for each customer include ______. Multiple select question. growth potential of the customer cross-selling potential potential impact on competitors importance of the customer to the firm

growth potential of the customer cross-selling potential importance of the customer to the firm

Product delivery is a(n) ______ activity. Multiple choice question. high value-added non value-added organizational sustaining low value-added

high value-added

Something that significantly increases the value of a product or service to a customer is called a(n) ______ activity. Multiple choice question. low value-added product-level high value-added organizational sustaining

high value-added

step in developing an activity-based costing system

identity resource costs and activities assign resource costs to activities assign activity costs to cost objects

Overhead

is generally added based on a dollar amount per labor hour.

: Overall net operating income

is not impacted by the costing system.

A company that is able to readily identify cost of a specific project or product is likely to use ______ costing. standard process job activity-based

job

Potential drawbacks to using a volume-based costing system include ______. Multiple select question. little incentive is provided for managers to control indirect costs the complexity of the cost assignment process inaccurate product costs disproportionate assignment of indirect costs the diversity of cost driver information needed

little incentive is provided for managers to control indirect costs inaccurate product costs disproportionate assignment of indirect costs

Types of potential errors in overhead application are ______ errors. Multiple select question. selection measurement specification aggregation

measurement Reason: This type of error relates to errors in the estimated overhead or estimated cost driver amounts. specification Reason: This type of error relates to using the wrong cost driver to apply overhead. aggregation Reason: This type of error relates to the use of plantwide rather than more detailed departmental overhead rates.

Because most companies need to know the cost and profitability of each job as it is completed, ______ costing is usually chosen over ______ costing. Multiple choice question. standard, normal normal, actual actual, standard actual, normal

normal, actual

Overhead is added to the job cost sheet ______. Multiple choice question. on completion of production as the product goes thorough the production process at the start of production

on completion of production

A hybrid costing approach that uses elements of both job and process costing is known as ______ costing. Multiple choice question. operation standard normal activity-based

operation

The amount by which applied factory overhead exceeds actual factory overhead is ______ overhead. Multiple choice question. overapplied allocated predetermined underapplied

overapplied

In a volume-based allocation procedure factory overhead costs are first as to ______. Multiple signedchoice question. specific cost objects individual products and services activity cost pools plant or departmental cost pools

plant or departmental cost pools first step ==================================== individual products and services Reason: This is the second step.

A limitation of a volume-based costing system is the ______. Multiple choice question. detailed operational data required to assign overhead incentive for managers to increase production unnecessarily potential for products to be charged too much or too little overhead use of multiple cost driver rates increases the complexity of costing

potential for products to be charged too much or too little overhead

A limitation of a volume-based costing system is the ______. Multiple choice question. potential for products to be charged too much or too little overhead use of multiple cost driver rates increases the complexity of costing detailed operational data required to assign overhead incentive for managers to increase production unnecessarily

potential for products to be charged too much or too little overhead

The capacity available with the current resources of people, equipment, policies, and facilities is called ______ capacity. Multiple choice question. theoretical historical practical budgeted

practical

The assignment of estimated overhead to a job uses a(n) ______ overhead rate. Multiple choice question. actual directly traceable predetermined normal

predetermined

An activity-based costing system is likely to help a company develop and execute strategy by providing accurate information about the cost of ______. Multiple select question. products and services organizational capital dealing with suppliers serving customers

products and services dealing with suppliers serving customers

Sustaining activities for an organization include ______. Multiple select question. regulatory compliance providing free beverages holiday gifts to employees building security

regulatory compliance building security

Ideally, a firm should choose __________ consumption cost drivers based upon cause-and-effect relationships.

resource

Developing a costing system requires understanding relationships among __________________ , activities and products or services. (Enter only one word per blank.) Need help

resources Blank 1: resources

The salary of the general sales manager is a ______ cost. Multiple choice question. customer unit-level sales-sustaining customer batch-level customer-sustaining dsistribution-channel

sales-sustaining

Strategic ABM can be used to ______. Multiple select question. enhance asset utilization select the most profitable customers enhance operational efficiency select appropriate activities for the operation

select the most profitable customers select appropriate activities for the operation

An activity-based costing system is likely to help a company develop and execute strategy by providing accurate information about the cost of ______. Multiple select question. serving customers dealing with suppliers products and services organizational capital

serving customers dealing with suppliers products and services -------------------- y tambien cost of supporting business processes within company

Customer profitability analysis allows managers to ______. Multiple select question. shift customers' purchases mix choose types of after-sales services to provide eliminate production process costs introduce profitable new products and services manage customers' costs-to-serve

shift customers' purchases mix choose types of after-sales services to provide introduce profitable new products and services manage customers' costs-to-serve ============== -manage each customer's costs-to-serve- introduce profitable new products and services- discontinue unprofitable products, services, or customers- shift a customer's purchase mix toward higher-margin products and service lines.- offer discounts to gain more volume with low costs-to-serve customers.- choose types of after-sale services to provide.

An error in allocation that results from the selection of an inappropriate cost driver is a(n) ______ error.

specification

Unacceptable units that are discarded or sold for disposal value are called ______. Multiple choice question. rework spoilage junk scrap

spoilage

Costs in a job or process costing system can be measured using ______ costing. standard activity-based normal actual

standard normal actual

Volume-based costing systems can be a good strategic choice for firms ______. Multiple select question. that produces a fairly homogeneous set of products that offer professional services to clients with a diverse set of product offerings with a relatively small level of common costs

that produces a fairly homogeneous set of products that offer professional services to clients with a relatively small level of common costs

Volume-based costing is likely to provide inaccurate cost information when ______. Multiple select question. the firm produces a diverse mix of products support activity usage is not proportional to units produced or hours used production support activities are relatively homogeneous across production lines common costs are relatively small

the firm produces a diverse mix of products support activity usage is not proportional to units produced or hours used

Effective management of manufacturing costs requires that the cost information be ______. Multiple select question. timely aggregated consistent accurate

timely accurate

The second step in the ABC development process is to ______. Multiple choice question. determine which of the resources in each of the accounts is consumed by the identified activities assign costs of activities to items of interest, generally called cost objects use resource consumption drivers to assign resource costs to activities

use resource consumption drivers to assign resource costs to activities

A volume-based cost driver may not provide accurate overhead allocation because ______. direct labor hours is the best cost driver, not units produced only nonvolume-based based cost drivers accurately reflect overhead costs varying resources are consumed at various rates during various activities each product generally uses the same amount of overhead

varying resources are consumed at various rates during various activities

A volume-based cost driver may not provide accurate overhead allocation because ______. Multiple choice question. each product generally uses the same amount of overhead varying resources are consumed at various rates during various activities direct labor hours is the best cost driver, not units produced only nonvolume-based based cost drivers accurately reflect overhead costs

varying resources are consumed at various rates during various activities

Typical questions ABC project team members typically ask when gathering activity data include ______. Multiple select question. What resources are required to perform the activity? How many customers purchase the product or service that uses this activity? How much time is spent performing an activity? What value does the activity have for the product or cost object?

what work or activities do you do? What resources are required to perform the activity? How much time is spent performing an activity? What value does the activity have for the product or cost object?