Managerial Accounting Chapter 17

Phillip Company uses activity-based costing. Phillip Company produces two types of lamps, floor lamps and table lamps. The floor lamp requires 15 setup activities at $60 per setup and 5 design modification activities at $50 per design. If Phillip Company produces 1,200 floor lamps, what is the total overhead cost per floor lamp? Round your answer to two decimal places.

$0.96 explanation (15*$60) + (5*$50)=$1,150/ 1,200= 0.9583

Spring Company uses activity-based costing to allocate their overhead costs. Setup costs of $100,000 are based on number of batches. Plant service costs of $65,000 are based on square footage. Spring Company has identified 500 batches and has 10,000 square feet in their factory. What is the activity rate for the setup activity cost pool.

$200.00 explanation $100,000/500 batches

Mobile Company uses activity-based costing. One of their products, a phone, requires 20 setup activities at $50 per setup and 15 design modification activities at $1,000 per design. If Mobile Company produces 2,000 phones, what is the total overhead cost per unit?

$8.00 explanation (20*$50)+(15*$1,000)= 16,000/2,000 =$8.00

Jackson Company uses activity-based costing to allocate their overhead costs. Setup costs of $850,000 are based on number of batches. Design modification costs of $155,000 are based on number of design changes. Jackson Company has identified 40,000 batches and has 5,000 design changes in their factory. What is the activity rate for setup.

21.25 explanation 850,000/40,000

A company has the following activities and costs: machine setup of $500,000; machine repair of $100,000; and heating and lighting of $250,000. Using this information, factory utilities are $__________

250,000

Mason Company uses activity-based costing and has the following costs: machine setup $25,000; machine repair $10,000; selling expenses $5,000 and factory maintenance of $2,500. Total cost allocated to the setup activity pool is

35,000 explanation 25,000 + 10,000

Johnson Company has the following overhead costs: machine setup $25,000; factory maintenance $10,000; heating and lighting $15,000; and selling expenses of $5,000. What is the total overhead costs using activity-based costing?

50,000 explanation 25,000 + 10,000 + 15,000

A company using activity-based costing has the following overhead activities and costs: factory maintenance $50,000; machine setup $100,000; heating and lighting $25,000; and machine repair $10,000. Total costs in the plant services activity are $_________

75000 explanation 50,000+25,000

A collection of costs related to a similar activity is a(n) _______ cost pool

activity

A ________(unit, batch, product, facility) level activity are those that are performed on each group of units.

batch

A _________ (unit, batch, product, facility) level activity are those that are performed on each group of units

batch

Activities causing overhead include all of the following

batch-level unit-level facility-level

An activity cost pool is a

collection of costs that are related to an activity

In order for a service provider to use activity-based costing, they must have demand for reliable cost information and existence of __________

cost

Costs resulting from manufacturing defective products or providing services that do not meet customer expectations are referred to as

costs of quality

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

customer level

ABC can be used by service providers if they have costs and

demand and reliable cost information

_______(Facility, Product, Batch) level activities are focused on the whole facility.

facility

________ (Product, facility, batch) level activities are focused on the whole facility and are not caused by units.

facility

An activity which is related to the facility capacity as a whole is a

facility level activity

__________(Lean, Customer, Profitability) manufacturing focuses on eliminating waste and satisfying the customer.

lean

Manufacturing which focuses on eliminating waste and satisfying customers is known as

lean manufacturing

A batch level activity will vary with the

number of batches

An activity which focuses on product lines and are not affected by number of units is a

product level activity

_______ (Unit, Batch, Product) activities are performed on each product unit.

unit

________(Unit, Batch, Product) activities are performed on each product unit.

unit

Activities which are focused at the unit level are called

unit level activities

All of the following are types of quality costs

~external failure costs ~internal failure costs ~prevention costs ~appraisal costs