Accounting man chp 4
A method that attempts to assign overhead costs based on what is required to produce products is ______ costing.
activity-based
Non-volume-based cost drivers ______.
are used in ABC systems allow more indirect costs to be allocated to products
The final step in activity-based costing is ______.
assigning indirect costs to products or services
At a minimum, an ABC system should have ______.
at least one non-unit-level activity cost pool
Activity-based costing systems typically include ______ cost drivers.
both volume- and non-volume-based
The formula to compute activity proportion is ______.
cost driver for product / cost driver for all products
Activity-based management focuses on ______.
improving operations increasing efficiency
A system that pulls materials and products through the manufacturing system based on customer demand is called ______.
just-in-time
To calculate manufacturing overhead cost per unit using ABC, divide the total ______.
manufacturing overhead cost by the number of units produced
The activity proportion method uses__________to assign overhead costs to products.
percentages, %, or proportions
Implementing an ABC system ______.
provides information for cost management
Widgets, Inc., plans to produce 8,000 widgets during the upcoming year. Each widget requires four direct labor hours at $25 per hour and $110 in direct material costs. Manufacturing overhead is assigned based on direct labor hours and is estimated to be $625,000 for the upcoming year. Compute the predetermined overhead rate per direct labor hour.
$19.53 Rationale: $625,000/(8,000 × 4) = $19.53
Larson Productions LLC has an activity cost pool called product design and redevelopment. The cost driver for this pool is design hours. A total of 1,000 design hours were used, 620 for Model XLT and 380 for Model TXT. The total cost assigned to the cost pool was $118,000. Using the activity proportion method, determine how much cost should be allocated to each product.
$73,160 to Model XLT and $44,840 to Model TXT Rationale: 620/1000 = 62% to Model XLT and 380/1000 = 38% to TXT
A company's total expected overhead for the year is $500,000. Two activity cost pools have been identified: Customer Service with a total cost of $200,000 and a total activity of 25,000 customer service calls; and Product Development with a total cost of $300,000 and total activity of 20,000 development hours. The activity rates are ______.
$8 per customer call and $15 per development hour Rationale: $200,000/25,000 = $8 per customer call and $300,000/20,000 = $15 per development hour.
SPL Enterprises assigns overhead based on number of machine hours. For the upcoming year, they plan to use a total of 250,000 machine hours and 50,000 direct labor hours. Total overhead cost is expected to be $500,000. The predetermined overhead rate per machine hour is $
2
A group of similar activities that have been combined together is called an activity____________-___________
COst pool
What types of activities are carried out regardless of which products are produced, how many batches are run, or how many units are produced?
Facility-level
Which of the following are facility-level activities?
Human resource hiring fairs Paying factory insurance
Which of the following is NOT a volume-based cost driver?
Machine setups
The formula to apply overhead to products is ______.
activity rate times activity
A proactive approach managers use to determine what costs should be is called ______.
target costing
Indirect costs can be assigned to products or services using ______.
the activity rate method the activity proportion method
A management system that focuses on continually improving production processes is called ______.
total quality management
The concept of the_____________----_______________begins with the customer and works backward to ensure that activities deliver what matters to customers.
value Chain
Direct labor hours and machine hours are both examples of _______-based cost drivers.
volume
