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?
