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Exam 4: Activity-Based Costing

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Question 101

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Howden, Inc., manufactures and sells two products: Product P5 and Product S9.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $25.70 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Which of the following statements concerning the unit product cost of Product S9 is true?

A) The unit product cost of Product S9 under traditional costing is less than its unit product cost under activity-based costing by $70.34.
B) The unit product cost of Product S9 under traditional costing is less than its unit product cost under activity-based costing by $700.00.
C) The unit product cost of Product S9 under traditional costing is greater than its unit product under activity-based costing by $70.34.
D) The unit product cost of Product S9 under traditional costing is greater than its unit product under activity-based costing by $700.00.

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Question 102

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The unit product cost of Product T6 under activity-based costing is closest to:

A) $2,075.92 per unit
B) $1,551.27 per unit
C) $1,703.82 per unit
D) $1,507.51 per unit

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Question 103

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The unit product cost of Product V8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Direct labor is an appropriate allocation base for overhead when overhead costs and direct labor are not highly correlated.

Porche, Inc., manufactures and sells two products: Product D4 and Product N0.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:

In activity-based costing, the total activity in an activity cost pool can be computed by:

In general, activities and costs on different levels in the cost hierarchy-such as unit-level and batch-level costs and activities--should be combined in an activity-based costing system if doing so simplifies the costing system.

Batch-level activities are performed each time a batch of goods is processed.The cost of a batch-level activity does not depend on the number of units in the batch.

Belsky Corporation has provided the following data from its activity-based costing system: The company makes 490 units of product Q19S a year, requiring a total of 1,080 machine-hours, 60 orders, and 20 inspection-hours per year.The product's direct materials cost is $46.42 per unit and its direct labor cost is $20.22 per unit. According to the activity-based costing system, the unit product cost of product Q19S is closest to:

Fineberg, Inc., manufactures and sells two products: Product U9 and Product S3.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $29.40 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.Compute the activity rates under the activity-based costing system. b.Determine how much overhead would be assigned to each product under the activity-based costing system. c.Determine the unit product cost of each product under the activity-based costing method.

The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Eberling, Inc., manufactures and sells two products: Product Q9 and Product Z8.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $27.70 per DLH.The direct materials cost per unit is $122.40 for Product Q9 and $103.20 for Product Z8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: Determine the unit product cost of each product under the activity-based costing method.

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:

The unit product cost of Product F0 under activity-based costing is closest to:

An activity-based costing system is generally more difficult to set up and run than a traditional cost system.

An activity rated is computed for each product.

Kerin, Inc., manufactures and sells two products: Product E6 and Product B6.Data concerning the expected production of each product and the expected total direct labor-hours (DLHs)required to produce that output appear below: The direct labor rate is $21.50 per DLH.The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a.The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours.Compute the company's predetermined overhead rate under this costing method. b.How much overhead would be applied to each product under the company's traditional costing method? c.Determine the unit product cost of each product under the company's traditional costing method. d.Compute the activity rates under the activity-based costing system. e.Determine how much overhead would be assigned to each product under the activity-based costing system. f.Determine the unit product cost of each product under the activity-based costing method.

If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to:

The activity rate for the General Factory activity cost pool under activity-based costing is closest to:

Soehl, Inc., manufactures and sells two products: Product T4 and Product F9.The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The total overhead applied to Product T4 under activity-based costing is closest to: