Accounting chapter 4
A company estimates that overhead costs the next year will be $8,320,000 for labor and $155,500 for factory ulitiesThe company uses machine hours as its overhead allocation baseIf 400, 000 machine hours are planned for this year, what the company's plantwide overhead rate? Round your answer to two decimal places.) (8330000+155,500)/400000
21.19 per machine hour
Which of the following companies would be best served by a plant wide overhead rate?
A company that manufactures few products and whose operations are labor intensive
ABC systems
A) highlight the different levels of activities
Which of the following casting systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?
Activity based costing
Which of the following statements is true of activity based costing
An activity cost pool collects costs related to the same activity
Which of the following would not be considered a product cost
Budget accountants salary
Over head costs:
Cannot be traced to units of products in the same way that direct labor can
ABC assumes all costs in a _____can be grouped together because they all impact the activity
Cost pool
Put the following ABC implementation steps in order_____. A use activity overhead rates to assign oh costs to cost objects B compute allocation rates C trace overhead costs to cost pools D identify activities and oh costs they cause
DCBA
____costs support the company as a whole
Factory-level
Which of the following statements is true with regard to the departmental overhead rate method?
It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments
Which of the following is a disadvantage of the departmental overhead rate method
It may fail to accurately assign many overhead costs that are not driven by production volume
Which of the following is a disadvantage of the departmental overhead rate method?
It may fail to accurately assign many overhead costs that are not driven by production volumn.
What are three advantages of activity based costing over traditional column based allocation methods
More accurate product costing more effective cost control and better focus on the relevant factors for decision Making
Which of the following is true?
Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor
A method of assigning overhead costs to a product using a single overhead rate is:
Plant wide overhead rate method
From an ABC perspective what causes costs to be incurred
activities
West Company estimates that overhead costs for the next year will be $5,240,000 for Indirect labor and $550,000 for factory utilities. The company uses machine hours as its overhead allocation base, 150,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?
38.60
Peterson Company estimates that overhead costs for the year will be \$6,520,000 for Indirect labor and $550.000 for factory utilities. The company uses machine hours as its overhead allocation base. If 140, 00 machine hours are planned for this next year, what the company's plantwide overhead rate? (Round your answer to two decimal places.) (6520,000+550,000)/140,000
50.50 per machine hour
What are the main advantages of volume based allocation methods compared to activity based costing
Column based methods are easier to use and less costly to implement and maintain
__________is considered whole choosing a cost allocation base for activity costs in ABC costing.
The availability of reliable data and metrics
Which of the following is a disadvantage of the departmental overhead rate method?
The departmental overhead rate method assigns overhead on the basis of volume-related measures.
Which of the following are advantages of using the plant wide overhead rate method?
The necessary information is readily available
The cost object(s) of the activity-based costing method is(are):
The production activities in the first stage and the unit of product in the second stage.
