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ch17 Student: ___________________________________________________________________________ 59 . A method of assigning overhead costs to a product using a single overhead rate is: A.Plantwide overhead rate method. B.Cost pool overhead rate method. C. Departmental overhead rate method. D.Activity-based costing. E.Overhead cost allocation method. 60 . Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period? A.Plantwide overhead rate method and departmental overhead rate method. B.Cost pool overhead rate method and plantwide overhead rate method. C. Departmental overhead rate method and activity-based costing. D.Activity-based costing and plantwide overhead rate method. E.Departmental overhead rate method and cost pool overhead rate method.

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ch17Student: ___________________________________________________________________________

 

59.

A method of assigning overhead costs to a product using a single overhead rate is:  

A. Plantwide overhead rate method.

B. Cost pool overhead rate method.

C. Departmental overhead rate method.

D. Activity-based costing.

E. Overhead cost allocation method.

 

60.

Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?  

A. Plantwide overhead rate method and departmental overhead rate method.

B. Cost pool overhead rate method and plantwide overhead rate method.

C. Departmental overhead rate method and activity-based costing.

D. Activity-based costing and plantwide overhead rate method.

E. Departmental overhead rate method and cost pool overhead rate method.

 

61.

Which of the following would not be considered a product cost?  

A. Direct labor costs.

B. Factory supervisor's salary.

C. Factory line worker's salary.

D. Cost accountant's salary.

E. Manufacturing overhead costs.

 

62.

Overhead costs:  

A. Are directly related to production.

B. Can be traced to units of product in the same way that direct materials can.

C. Cannot be traced to units of product in the same way that direct labor can.

D. Are period costs.

E. Include only fixed costs.

 

63.

The cost object of the plantwide overhead rate method is:  

A. The unit of product.

B. The production departments of the company.

C. The production activities of the company.

D. Manufacturing cost pools.

E. The time period.

 

64.

Which of the following statements is true with regard to the plantwide overhead rate method?  

A. The rate is determined using volume-related measures.

B. It is logical to use this method when overhead costs are not closely tied to volume-related measures.

C. This method uses multiple overhead rates.

D. The rate is determined using measures that are not closely related to volume.

E. The method provides the most accurate means of allocating overhead costs.

 

65.

The cost object(s) of the departmental overhead rate method is:  

A. The unit of product.

B. The production departments of the company.

C. The production departments in the first stage and the unit of product in the second stage.

D. The unit of product in the first stage and the production departments in the second stage.

E. The production activities of the company.

 

66.

Which of the following statements is true with regard to the departmental overhead rate method?  

A. It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments.

B. It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

C. Each department has the same rate for the same activity pool.

D. It requires one overhead cost pool and one rate.

E. It is synonymous with activity-based costing.

 

67.

The cost object(s) of the activity-based costing method is(are):  

A. The unit of product.

B. The production departments of the company.

C. The production activities of the company.

D. The production activities in the first stage and the unit of product in the second stage.

E. The unit of product in the first stage and the production activities in the second stage.

 

68.

From an ABC perspective, what causes costs to be incurred?  

A. Financial transactions.

B. The volume of units produced.

C. Debits and credits.

D. Management decisions.

E. Activities.

 

69.

Which of the following statements is true with regard to activity-based costing rates?  

A. The premise of ABC is that activities are what cause costs to be incurred.

B. ABC is another way to refer to a multiple departmental rate situation.

C. There one basic stage to ABC.

D. ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs.

E. All cost drivers used to determine the rates will be unit-level drivers.

  

71.

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

A. The use of cost pools is considerably more accurate than other overhead allocations.

B. The necessary information is readily available.

C. It is more accurate than traditional overhead allocations.

D. Each department has its own overhead rate and its own allocation base.

E. It takes into account that when products differ in batch size and complexity, they usually consume different amounts of overhead resources.

 

72.

Which of the following companies would be best served by a plantwide overhead rate?  

A. A company that manufactures many different products and whose operations are an equal mix of labor and mechanized work.

B. A company that manufactures few products and whose operations are labor intensive.

C. A company that manufactures many different products and whose operations are highly mechanized.

D. A company whose products use overhead resources in very different ways.

E. A company whose products differ in batch size and complexity and consume different amounts of overhead resources.

 

73.

Which of the following is true?  

A. Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

B. The departmental overhead rate is not usually based on measures closely related to production volume.

C. The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume.

D. Allocated overhead costs will be the same no matter which allocation method is used.

E. When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.

   

78.

K Company estimates that overhead costs for the next year will be $2,900,000 for indirect labor and $800,000 for factory utilities. The company uses direct labor hours as its overhead allocation base. If 80,000 direct labor hours are planned for this next year, what is the company's plantwide overhead rate?  

A. $.02 per direct labor hour.

B. $46.25 per direct labor hour.

C. $36.25 per direct labor hour.

D. $10 per direct labor hour.

E. $.10 per direct labor hour.

 

79.

Ridley Company estimates that overhead costs for the next year will be $6,870,000 for indirect labor and $450,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 160,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?  

A. $.02186 per machine hour.

B. $42.9375 per machine hour.

C. $45.75 per machine hour.

D. $2.8125 per machine hour.

E. $.3555 per machine hour.

 

80.

A company estimates that overhead costs for the next year will be $9,234,000 for indirect labor and $156,800 for factory utilities. The company uses machine hours as its overhead allocation base. If 500,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round to two decimal places)  

A. $0.05 per machine hour.

B. $18.47 per machine hour.

C. $18.78 per machine hour.

D. $0.31 per machine hour.

E. $3.19 per machine hour.

 

81.

The following data relates to Lead 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)  

A. $3.43 per direct labor hour.

B. $2.14 per direct labor hour.

C. $4.36 per direct labor hour.

D. $.29 per direct labor hour.

E. $.47 per direct labor hour.

 

82.

The following data relates to All-Out Company's estimated amounts for next year.

   

What is the company's plantwide overhead rate if machine hours are the allocation base?(Round to two decimal places.)  

A. $200.00 per MH

B. $150.00 per MH

C. $100.00 per MH

D. $4.29 per MH

E. $5.00 per MH

 

83.

The following data relates to Tier One 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.)  

A. $3.89 per DLH

B. $3.00 per DLH

C. $0.33 per DLH

D. $0.26 per DLH

E. $0.20 per DLH

 

84.

Lake Prairie Company uses a plantwide overhead rate with machine hours as the allocation base. Next year, 500,000 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?

     

A. $12.34 per unit

B. $7.77 per unit

C. $9.25 per unit

D. $15.20 per unit

E. $10.36 per unit

 

85.

Rain Maker Company uses a plantwide overhead rate with direct labor hours as the allocation base. Next year, 350,000 units are expected to be produced taking .80 direct-labor hours each. How much overhead will be assigned to each unit produced given the following estimated amounts?

     

A. $13.00 per unit

B. $10.40 per unit

C. $16.25 per unit

D. $6.50 per unit

E. $8.13 per unit

 

86.

Case Company allocates $5.00 overhead to each unit produced. The company uses a plantwide overhead rate with machine hours as the allocation base. Given the amounts below, how many machine hours does the company expect in department 2?

     

A. 25,000 MH

B. 137,500 MH

C. 82,500 MH

D. 88,000 MH

E. 33,000 MH

 

87.

A company allocates $7.50 overhead to each unit produced. The company uses a plantwide overhead rate with direct labor hours as the allocation base. Given the amounts below, how many direct labor hours does the company expect in department 2?

     

A. 9,914 DLH

B. 6,612 DLH

C. 3,109 DLH

D. 7,454 DLH

E. 16,254 DLH

 

88.

Orange Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product Q.

     

A. 35 MH per unit of Q.

B. .50 MH per unit of Q.

C. 70 MH per unit of Q.

D. 17.5 MH per unit of Q.

E. 30 MH per unit of Q.

 

89.

Yellow Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product RST.

     

A. 40 MH per unit of RST.

B. 2 MH per unit of RST.

C. 20 MH per unit of RST.

D. 37.5 MH per unit of RST.

E. 80 MH per unit of RST.

 

90.

Greene Company uses a plantwide overhead rate with direct labor hours as the allocation base. Use the following information to solve for the amount of direct labor hours estimated per unit of product G2.

     

A. 1.5 DLH per unit of G2.

B. 6.2 DLH per unit of G2.

C. 9.3 DLH per unit of G2.

D. .66 DLH per unit of G2.

E. 14.09 DLH per unit of G2.

 

91.

Kamper Company sells two products Big Z and Little Z. 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 $475,000. The direct labor and direct materials costs are estimated to be consistent with the current year. Direct labor costs $20 per hour and the company expects to manufacture 32,000 units of Big Z and 9,000 units of Little Z next year.

   

What are total estimated direct labor hours for this next year?  

A. 30,800 total DLH.

B. 616,000 total DLH.

C. 300,000 total DLH.

D. 1,025,000 total DLH.

E. 916,000 total DLH.

  

93.

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below.

   

Compute Aztec's departmental overhead rate for the mixing department based on direct labor hours.  

A. $1.50 per DLH.

B. $5.00 per DLH.

C. $0.75 per DLH.

D. $0.50 per DLH.

E. $2.08 per DLH.

 

94.

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below.

   

Compute Aztec's departmental overhead rate for the mixing department based on machine hours.  

A. $1.50 per MH.

B. $5.00 per MH.

C. $0.75 per MH.

D. $0.50 per MH.

E. $2.08 per MH.

 

95.

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below.

   

Compute Aztec's departmental overhead rate for the baking department based on direct labor hours.  

A. $1.50 per DLH

B. $5.00 per DLH

C. $0.75 per DLH

D. $0.50 per DLH

E. $2.08 per DLH

 

96.

Aztec Industries produces bread which goes through two operations, mixing and baking, before it is ready to be packaged. Next year's expected costs and activities are shown below.

   

Compute Aztec's departmental overhead rate for the baking department based on machine hours.  

A. $1.50 per MH

B. $5.00 per MH

C. $0.75 per MH

D. $0.50 per MH

E. $2.08 per MH

 

97.

Heritage Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:

   

Heritage Industries uses departmental overhead rates and is planning on a $3 per direct labor hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.  

A. $487,500

B. $195,000

C. $292,500

D. $243,750

E. $692,500

 

99.

Heritage Industries produces miniature models of farm equipment. These collectibles are in great demand. It takes two operations, molding and finishing, to complete the miniatures. Next year's expected activities are shown in the following table:

   

Heritage Industries uses departmental overhead rates and is planning on a $2 per machine hour overhead rate for the molding department. Compute the estimated manufacturing overhead cost for the molding department given the information shown in the table.  

A. $195,000

B. $162,500

C. $130,000

D. $325,000

E. $357,500

 

100. 

101.

Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the best-selling of all the many types of paneling produced. Information related to the 40,000 units of oak paneling produced annually is shown in the following table:

   

Wall Nuts' total expected overhead costs and related overhead data are shown below.

   

Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine hours in Department A and machine hours in Department B.  

A. $4.50 per MH in Dept A; $4.50 per MH in Dept B.

B. $7.50 per MH in Dept A; $7.50 per MH in Dept. B.

C. $4.50 per MH in Dept A; $7.50 per MH in Dept B.

D. $2.70 per MH in Dept A; $6.00 per MH in Dept B.

E. $0.60 per MH in Dept A; $0.80 per MH in Dept B.

  

104.

Aurora Corporation produces outdoor security lighting products. All products go through three processes before completion. Use the expected overhead costs and related data shown below to compute departmental overhead rates based on machine hours in Department A1A; based on direct labor hours in Department B2B; and machine hours in Department C3C.

     

A. Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH.

B. Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH.

C. Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.

D. Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.

E. Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.

 

105.

Consider the following activities that take place in a veterinary clinic.

(a.) Cleaning cages.(b.) Heating and air conditioning the clinic.(c.) Sending blood work to a lab.(d.) Dispensing medicine.

Which of the following statements is true?  

A. Service entities cannot use ABC for overhead allocation.

B. Cleaning cages is a facility level activity.

C. Dispensing medicine is a facility level activity.

D. Heating and air conditioning the clinic is a facility level activity.

E. Sending blood work to a lab is a facility level activity.

 

106.

Consider the following activities that take place in a medical clinic.

(a.) Cleaning exam rooms.(b.) Heating and air conditioning the clinic.(c.) Sending blood work to a lab.(d.) Dispensing medicine.

Which of the following statements is true?  

A. Cleaning rooms and heating the clinic are both unit level activities.

B. Sending blood work to the lab is a batch level activity.

C. Sending blood work and dispensing medicine are both batch level activities.

D. Cleaning rooms and dispensing medication are both product or service level activities.

E. Heating the clinic and dispensing medication are both batch level activities.

 

107.

All of the following are examples of facility sustaining costs except:  

A. Costs of cleaning the workplace.

B. Costs of custodial work.

C. Costs of personnel support.

D. Costs of sampling product quality.

E. Costs of employee recreational facilities.

 

108. 

109.

A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

   

What are the activity rates for the three activities under activity based costing?  

A. (1) $2.00; (2) $3.00; (3) $3.50.

B. (1) $3.50; (2) $1.50; (3) $32,80.

C. (1) $3.50; (2) $3.00; (3) $16.00.

D. (1) $2.00; (2) $1.50; (3) $16.00.

E. (1) $2.00; (2) $1.50; (3) $32.80.

 

110.

A company uses activity-based costing to determine the costs of its three products: A, B and C. The budgeted cost and activity for each of the company's three activity cost pools are shown in the following table:

   

How much overhead will be assigned to Product B using activity-based costing?  

A. $56,500

B. $78,000

C. $62,500

D. $197,000

E. $70,000

  

112.

A company has two products: A and B. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

   

Annual production and sales level of Product A is 34,300 units, and the annual production and sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of Product A under activity-based costing?  

A. $3.00

B. $2.00

C. $10.28

D. $15.00

E. $2.33

 

113.

A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

   

Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units. What is the approximate overhead cost per unit of Product A1 under activity-based costing?  

A. $8.00

B. $9.00

C. $10.00

D. $12.00

E. $4.00

 

114.

A company has two products: A1 and B2. It uses activity-based costing and has prepared the following analysis showing budgeted cost and activity for each of its three activity cost pools:

   

Annual production and sales level of Product A1 is 8,480 units, and the annual production and sales level of Product B2 is 22,310 units. What is the approximate overhead cost per unit of Product B2 under activity-based costing?  

A. $8.00

B. $9.00

C. $10.00

D. $12.00

E. $4.00

  

118.

Assume that the Oregon Ice Cream Company is considering the costs of two of their product lines—ice cream sandwiches and dessert bars. The company identified the following partial list of activities, costs, and activity drivers expected for the next year.

   

   

Refer to the data in the preceding tables. How much overhead cost will be assigned to the ice cream sandwich product line using activity-based costing (ABC)?  

A. $340,000

B. $368,000

C. $28,000

D. $850.08

E. $433,682

 

119.

Assume that the Oregon Ice Cream Company is considering the costs of two of their product lines—ice cream sandwiches and dessert bars. The company identified the following partial list of activities, costs, and activity drivers expected for the next year.

   

   

Refer to the data above. How much overhead cost will be assigned to the dessert bar product line using activity-based costing (ABC)?  

A. 340,750

B. $247,818

C. $16,000

D. $297,500

E. $313,500

 

120.

A company identified the following partial list of activities, costs, and activity drivers expected for the next year:

   

   

Calculate activity rates for each of the three activities using activity-based costing (ABC).  

A. Extrusion: $304 per batch; handling: $32 per unit; packaging: $.03 per unit.

B. Extrusion: $88 per batch; handling: $32 per order; packaging: $.03 per unit.

C. Extrusion: $88 per order; handling: $32 per unit; packaging: $.03 per batch.

D. Extrusion: $418 per batch; handling: $117.33 per order; packaging: $.054 per unit.

E. Extrusion: $118.13 per batch; handling: $44 per order; packaging: $.0675 per unit.

 

121.

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. $42,500.

B. $132,900.

C. $90,400.

D. $66,000.

E. $66,450.