MC5–1
Chapter 5
Activity-Based Costing
Multiple Choice
1. (LO 1— Basic ABC)
2. (LO 2—ABC classification of overhead)
3. (LO 2—ABC classification of overhead)
4. (LO 1, 2, and 3—Basic ABC: Overhead rates)
Solutions to Multiple Choice
MC5–2
5. (LO 1, 2, and 3—Basic ABC: Overhead rates)
Proportion of overhead costs allocated to purchasing:
(30% × $100,000) = $30,000
Calculation of purchasing overhead per purchase order:
$30,000 ÷ 3,000 purchase orders = $10 per purchase order
6. (LO 2—ABC in a JIT environment)
Answer: C
7. (LO 3—Traditional versus ABC)
Answer: B
8. (LO 3—Traditional versus ABC)
9. (LO 3—ABC and cross subsidies)
10. (LO 2—ABC in a nonmanufacturing environment)
11. (LO 4—Benefits of ABC)
12. (LO 4—Benefits of ABC)