Gleim SU 3 - Managerial

Under a costing system that allocates overhead on the basis of direct labor hours, Zeta Company's materials handling costs allocated to one unit of wall mirrors would be

$1,000

If the company uses activity-based costing, how much overhead cost should be assigned to Job 101?

$1,300

On the basis of activity-based costs, the total contribution budgeted for the PC board is

$1,594,000

On the basis of standard costs, the total contribution budgeted for the TV board is

$1,950,000

Atmel's cost driver for engineering costs is the number of production orders per product line. Using activity-based costing, the engineering cost per unit for Product B is

$15.00

The total annual cost of OOA was $7.5 million, and the total annual cost of providing residential space and meals was $7.2 million. Accordingly, the ABC analysis indicates that the daily costing rate for providing residential space, meals, and OOA should be

$182.50 for occupants in the low-usage category.

On the basis of standard costs, the total contribution budgeted for the PC board is

$2,360,000

On the basis of activity-based costing (ABC), the total contribution budgeted for the TV board is

$2,557,100

Factory Company makes two products, X and Z. X is being introduced this period, and Z has been in production for 2 years. For the period about to begin, 1,000 units of each product are to be manufactured. Assume that the only relevant overhead item is the cost of engineering change orders; that X and Z are expected to require eight and two change orders, respectively; that X and Z are expected to require 2 and 3 machine hours, respectively; and that the cost of a change order is $600. If Factory applies engineering change order costs on the basis of machine hours, the cross-subsidy per unit arising from this peanut-butter costing approach is

$2.40

The budgeted cost to manufacture one ultrasound machine using the activity-based costing method is

$264

Using activity-based costing, Atmel's per unit overhead cost allocation of receiving costs for Product A is

$3.75

If the company uses activity-based costing, compute the cost of each unit of Job 102.

$340

Under activity-based costing (ABC), Zeta's materials handling costs allocated to one unit of wall mirrors would be

$500

The monthly quality control cost assigned to makeup using activity-based costing (ABC) is

$525.50 higher than the cost using the traditional system.

If Farragut uses the traditional cost system, the cost per unit for this product for the coming year would be

$6.11

If Farragut employs an activity-based costing system, the cost per unit for the product described for the coming year would be

$6.30

The company prices its products at 140% of cost. If the company uses activity-based costing, the price of each unit of Job 103 would be

$98

Which of the following statements about activity-based costing (ABC) is false?

Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.

Process value analysis is a key component of activity-based management that links product costing and

Continuous improvement.

All of the following are likely to be used as a cost allocation base in activity-based costing except the

Cost of materials used to manufacture the product.

Unlike the traditional full-absorption cost system, activity-based costing (ABC) assigns

Costs to individual projects based on various activities involved.

Activities, their drivers, and their costs may be classified as unit-level, batch-level, product-level, and facility-level. If activity-based costing (ABC) information is prepared for internal purposes, which costs are most likely to be treated as period costs?

Facility-level.

What is the normal effect on the numbers of cost pools and cost assignment bases when an activity-based cost (ABC) system replaces a traditional cost system?

Increase Increase

Which of the following is true about activity-based costing?

It can be used with either process or job costing.

A corporation utilizes an activity-based costing system for applying costs to its two products, P and Q. In the assembly department, material handling costs vary directly with the number of parts inserted into the product. Machinery is recalibrated and oiled each weekend regardless of the number of parts inserted during the previous week. Both material handling and machinery maintenance costs are charged to the product on the basis of the number of parts inserted. Due to reengineering of the production process for Product P, the number of insertion parts per finished unit has been reduced. How will the redesign of the production process for Product P affect the activity-based cost of Product Q?

Material handling cost per Q will remain unchanged, and machinery maintenance cost per Q unit will increase.

In an activity-based costing system, what should be used to assign a department's manufacturing overhead costs to products produced in varying lot sizes?

Multiple cause-and-effect relationships.

In an activity-based costing (ABC) system, cost reduction is accomplished by identifying and eliminating

No Yes

Because of changes that are occurring in the basic operations of many firms, all of the following represent trends in the way indirect costs are allocated except

Preferring plant-wide application rates that are applied to machine hours rather than incurring the cost of detailed allocations.

A basic assumption of activity-based costing (ABC) is that

Products or services require the performance of activities, and activities consume resources.

A primary reason for a company to change from traditional costing to activity-based costing (ABC) is that ABC

Reduces product undercosting or overcosting.

When using activity-based costing techniques, which one of the following departmental activities would be expected to use machine hours as a cost driver to allocate overhead costs to production?

Robotics painting.

Activity-based costing (ABC) has become increasingly more feasible because of technological advances that allow managers to obtain better and more timely information at a relatively low cost. For this reason, a manufacturer is considering using bar-code identification for recording information on parts used by the manufacturer. A reason to use bar codes rather than other means of identification is to ensure that

The movement of parts is easily and quickly recorded.

Using activity-based costing, which one of the following statements is correct?

The muffins are $1,925 more profitable.

Multiple or departmental overhead rates are considered preferable to a single or plantwide overhead rate when

Various products are manufactured that do not pass through the same departments or use the same manufacturing techniques.

Each of the following should be considered in the selection of appropriate cost drivers for an activity-based costing system, except

Volume-based production.

A company would most benefit from using an activity-based costing (ABC) system as opposed to a traditional costing system under which of the following conditions?

When indirect costs are a high percentage of total costs.

Gram Co. develops computer programs to meet customers' special requirements. How should Gram categorize payments to employees who develop these programs?

Yes Yes