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Exam 4: Activity Based Costing and Analysis

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Question 111

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Which of the following is a disadvantage of the departmental overhead rate method?

A) The departmental overhead rate method assigns overhead on the basis of volume-related measures.
B) The departmental overhead rate method is more refined than the plantwide overhead rate method.
C) The departmental overhead rate method does not assign overhead on the basis of volume-related measures.
D) The departmental overhead rate method is simpler and less costly to implement than the plantwide rate method.
E) There are no disadvantages of the departmental overhead rate method.

F) D) and E)
G) A) and C)

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Question 112

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Because departmental overhead costs are allocated based on measures closely related to production volume, they accurately assign overhead, such as utility costs.

A) True
B) False

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Question 113

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Batch-level costs do not vary with the number of units produced.

________ costs support the company as a whole.

A company's total expected overhead costs and related overhead data are shown below. a. Compute estimated manufacturing overhead costs for Department A. b. Compute estimated manufacturing overhead costs for Department B.

Over recent decades, overhead costs have steadily increased while direct labor costs have decreased as a percentage of total manufacturing costs.

Lake Erie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 600,000 units are expected to be produced taking .75 machine hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed below. Next year the company wishes to use a plantwide overhead rate with direct labor hours as its allocation base. Next year's overhead is estimated to be $338,250. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year. Compute the plantwide overhead rate for next year.

A company identified the following partial list of activities, costs, and activity drivers expected for the next year: How much overhead in total will be assigned to the Product A line using activity-based costing?

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The activity rates and activity levels for each of the company's three activity cost pools are shown below. Compute the company's budgeted cost for each of the three activities under activity-based costing.

Unit-level costs vary with the number of units produced.

The following data relates to Patterson Company's estimated amounts for next year. What is the company's plantwide overhead rate if direct labor hours are the allocation base? (Round to two decimal places.)

Departments are the cost objects when the plantwide overhead rate method is used.

Product costs consist of direct labor, direct materials, and ________.

Bark Mode, Incorporated produces and distributes two types of security systems, Standard and Deluxe. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 120,000 standard units and 80,000 deluxe units. a. Compute the approximate overhead cost per unit of standard under activity-based costing. b. Compute the approximate overhead cost per unit of deluxe under activity-based costing.

Which of the following statements is true of activity-based costing?

Which of the following are advantages of using the plantwide overhead rate method?

A company produces garden benches that go through two operations, operation 1A1 and operation 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.

Product design costs are an example of a unit level activity.

Would the following activities at a manufacturer of shampoo be best classified as unit-level, batch-level, product-level, or facility level activities?