20 Jul WHAT AMOUNT OF THE COST FOR ACTIVITY 2 WILL BE ALLOCATED TO PRODUCT A UNDER THE ACTIVITY-BASED COSTING SYSTEM?
1.
Addison Company produces two products: A and B. Annualproduction and sales is 1,000 units of Product A and 500 units ofProduct B. The company uses activity- based costing to determine product costs. The estimated overhead costs andexpected activity for each of the company’s three overhead activitycenters are as follows:
Expected Cost Driver Activity
Activity Center Estimated Overhead Costs Total Product A ProductB
Activity 1 $20,272 800 500 300
Activity 2 29,380 1,300 800 500
General Factory 21,634 380 200 180
Total $71,286
What amount of the cost for Activity 2 will be allocated to Product A under the activity-based costing system?
(Points : 5)
$14,690
$15,669
$19,587
$18,080
2. Excelsior Corporation recently used $90,000 of direct materialsand $1,500 of indirect materials in production activities. Torecord these transactions Excelsior would: (Points : 5)
increase ManufacturingOverhead for $1,500.
decrease ManufacturingOverhead for $1,500.
increase Work-in-ProcessInventory for $91,500.
increase ManufacturingOverhead for $91,500.
3. Anaheim Corporation operates a highly automated plant thatproduces various components used in commercial aircraft. If thefirm uses activity-based costing, freight charges on goods sent tocustomers would best be charged to various product-lines on thebasis of: (Points : 5)
direct labor hours.
machine hours.
number of units produced.
number of orders shipped.
4. The salaries of a manufacturing plant’s management are anexample of a: (Points : 5)
facility-level activity.
product-sustaining levelactivity.
batch-level activity.
unit-level activity.
5. An accountant recently increased Work-in-Process Inventory anddecreased Manufacturing Overhead. The accountant was: (Points :5)
applying a predeterminedoverhead amount to production.
recording a year-endadjustment for an insignificant amount of underappliedoverhead.
recognizing actual overheadincurred during the period.
recognizing the completion ofproduction.
6. Elliott Company uses a predetermined overhead rate based onmachine hours to apply manufacturing overhead to jobs. The companymanufactures tools to customer specifications. The following datapertain to Job 1501:
Direct materials used $4,200
Direct labor hours worked 300
Direct labor rate per hour $ 8.00
Machine hours used. 200
Predetermined overhead rate per machine hour $15.00
What is the total manufacturing cost recorded on Job 1501? (Points: 5)
$ 8,800.
$ 9,600.
$10,300.
$11,100.
7. Which of the following is the proper sequence of events in anactivity-based costing system? (Points : 5)
Assignment of cost toproducts, identification of cost pools, identification of costdrivers, calculation of cost application rates.
Identification of cost pools,identification of cost drivers, calculation of cost applicationrates, assignment of cost to products.
Identification of costdrivers, identification of cost pools, calculation of costapplication rates, assignment of cost to products.
Calculation of costapplication rates, identification of cost drivers, identificationof cost pools, assignment of cost to products.
8. Which of the following types of companies would most likely useprocess costing? (Points : 5)
Textile manufacturers.
Aircraft manufacturers.
Custom-machining firms.
Shipbuilders.
9. The labor time required to assemble a part is an example of a:(Points : 5)
facility-level activity.
product-sustaining levelactivity.
batch-level activity.
unit-level activity.
10. Which of the following types of companies would most likely usejob-order costing? (Points : 5)
House builders.
Gasoline refiners.
Chemical manufacturers.
Microchip processors.
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