Chapter 4 Questions
Applied overhead consists of which of the following
Actual activity times predetermined overhead rate
Predetermined overhead rates are computed based on
Estimated overhead costs and estimated level of activity
The measure of production that considers historical and estimated future product levels an cyclical fluctuations is referred to as
Normal capacity
Which of the following is not a reason to use predetermined overhead rates?
To overcome to the problems of assigning overhead to diverse types of products
In a normal cost system, which of the following is used
Actual direct materials and labor; no actual overhead
If a company uses two overhead accounts (actual and applied), the one that would receive the most debits would be
Actual overhead
Relative to tradition product costing, activity-based costing differs in the way costs are
Allocated
Which is not a task typically associated with ABC systems?
Applying a single cost rate
An actual cost system differs from a normal cost system in that an actual csot system
Assigns overhead at the end of the manufacturing process
Set up time is
Batch, value-added cost; not a production cost
On reason annual overhead application rates are used is
Because of season variability of overhead costs
Cost allocation bases in the activity-based costing should be
Cost drivers
If underapplied overhead is considered to be immaterial, it is closed to which of the following accounts?
Cost of goods sold
In ABC costing, which is the correct formula for computing the overhead rate?
Estimated overhead for the activity/ estiated use of the cost driver for the activity
A short-run measure of activity that represents a firm's anticipated activity level for an upcoming period based upon expected demand is referred to as
Expected capacity
Traditional overhead allocations result in which of the following situations
High-volume products are assigned too much overhead, and low-volume products are assigned too little overhead.
The first step in designing an activity based costing system is to
Identify major activities
What is the proper order of tasks in an ABC system?
Identify the cost pools, identify the cost drivers, calculate the overhead application rate for each cost pool, assign the costs to the products
Cost allocation is the assignment of ___________ to one ore more products using a reasonable bases
Indirect
When a manufacturing company has a highly automated manufacturing plant producing many different products , which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process
Machine hours
Which of the following is typically regarded as a cost driver in the traditional accounting practices?
Number of direct labor hours worked
If actual overhead is less than applied overhead, which of the following will be true? Upon closing
Overapplied; cost of goos will be credited
Overapplied overhead will result if
Overhead costs incurred were less than overhead costs charge to production
The measure of activity that allows for routine variation
Practical capacity
In activity based costs, final cost allocation assign costs to
Products
In activity-based costing, preliminary cost allocations assign costs to
Products
The estimated maximum potential activity for a specific time is
Theoritical
Since overhead costs are indirect costs
They require some process of allocation
Actual overhead exceeds applied overhead and the amount is immaterial. Which of the following will be true upon closing
Underapplied; cost of goods will increase
Which of the following statements is not correct
When there is a single product, ABC is preferred over tradition costing systems
Which is not a step in activity-based costing?
compute a cost rate per production
ABC should be used in which of the following situations
multiple-product firms with multiple processing steps
