.
Title: Question 1
QA_Ori: Manufacturing overhead costs cannot be directly traced to units of product
Title: Question 2
QA_Ori: In the first stage, service department costs are assigned to operating
Title: Question 3
QA_Ori: Operating departments are directly involved in manufacturing or selling the
Title: Question 4
QA_Ori: Activity-based costing (ABC) is a method for allocating shared costs
among departments or products. It is especially common for overhead allocation.
Title: Question 5
QA_Ori: Anything to which costs would be assigned is considered a “cost object.”
Title: Question 6
QA_Ori: An activity cost driver is the measure of the activity that causes costs to be
Title: Question 7
QA_Ori: Activity-based costing is typically used when a company produces many
.
Title: Question 8
QA_Ori: Typical activity cost pools include: purchasing, order processing,
.
Title: Question 9
QA_Ori: By using predetermined overhead rates method, In activity-based costing,
.
Title: Question 10
QA_Ori: While ABC may provide more accurate cost assignments, the additional
Title: Question 11
QA_Ori: Activity-based costing may be used in any type of organization. The
premise of ABC is that activities cause costs. Since all organizations engage in
Title: Quick Study C-1
QA_Ori:
1. D
Title: Quick Study C-2
2. Assign overhead costs to Fast and Standard models
QA_Ori:
Fast
Overhead cost 25,000 DLH x $620,000
Title: Quick Study C-3
QA_Ori:
Expected Activity Activity
Activity Cost Driver Rate
Handling material $625,000
100,000
parts $6.25/part
Inspecting product 900,000 1,500 batches $600/batch
QA_Edit:
Expecte
d Activity Activity
Activity Cost Driver Rate
Handling material
$625,00
0 100,000 parts $6.25/part
Title: Quick Study C-4
QA_Ori:
Assign overhead to Fast and Standard models using ABC:
Fast
Handling material $6.25/part 20,000 parts $125,000
Inspecting product $600/batch 250 batches 150,000
Standard
Handling material $6.25/part 30,000 parts $187,500
Inspecting product $600/batch 100 batches 60,000
*Rounded
Title: Quick Study C-5
QA_Ori:
1. Cost of technical support per service call =
10,000
$250,000
= $25
2. Assign technical support costs to each model
Title: Quick Study C-6
QA_Ori:
1. A
2. D
3. DTitle: Quick Study C-7
QA_Ori:
Overhead cost allocation of indirect labor and supplies to Department 1:
Overhead cost allocation of rent and utilities, general office, and depreciation to
Department 1
Total overhead allocated to Department 1
Title: Quick Study C-8
QA_Ori:
Expected Activity Activity
Activit
y Cost
Driver* Rate
1 $70,000 35,000 $2.00
*Computed as the sum of the budgeted cost driver activity of all three products.
Title: Quick Study C-9
QA_Ori:
1.
Expected
Activit Activit
y
y
Activit
y Cost Driver Rate
1 $87,000 5,800 $15.00
10,00
2.
Standard Deluxe
Activity 1
3,000 x $15 $45,000
2,800 x $15 $42,000
Title: Quick Study C-10
QA_Ori:
Overhead cost allocation of indirect labor and supplies to Department 1:
Overhead cost allocation of rent and utilities, general office, and depreciation to
Department 1
Total overhead allocated to Department 1
Title: Exercise C-1
QA_Ori:
1.
hour
6,000 machine hours
Model 145
Model 212
QA_Ori:
2.
Model 145
Materials and labor $250.00
Model 212
Materials and
Labor $180.00
3.
Model 145 Model 212
Price per unit $800.00 $470.00
Using a single plantwide overhead rate, Model 212 appears to be unprofitable.
Management may be inclined to stop producing this product, increase its selling price,
or look for ways to cut the cost of producing Model 212 in order to make it appear
profitable. The plantwide rate may be inappropriate in this case, since machine hours
are only accumulated in the components department, and over 40% of the overhead is
incurred outside of that department.
Title: Exercise C-2
QA_Ori:
1.
Components
Changeover $500,000 / 800 batches $625/batch
Machining
$279,000 / 6,000 machine
hours $46.50/MH
Setups $225,000 / 120 setups $1,875/setup
Model 145 Model 212
Changeover
400 batches x $625/batch $250,000 $250,000
Machining
1,800 MH x $46.50/MH 83,700
4,200 MH x $46.50/MH 195,300
Setups
Space & Utilities
1,500 units x $19.40/unit 29,100
3,500 units x $19.40/unit _________ 67,900
Model 145 Model 212
Materials & labor cost per
unit $250.00 $180.00
Title: Exercise C-3
QA_Ori:
1.
Client consultation $270,000/1,500 contact hours $180/con.hr.
Drawings $115,000/2,000 design hours $57.50/design hr.
Modeling $30,000/40,000 sq. ft. $0.75/sq. ft.