Identify the choice that best completes the statement or answers the question.
____ 1. Which is NOT a characteristic of a functional-based costing system?
a. It uses traditional product costing definitions.
b. It uses unit-based activity drivers to assign overhead to products.
c. It is cheaper than an activity-based costing system.
d. It offers greater product costing accuracy than an activity-based costing system.
____ 2. Unit-based product costing uses which of the following procedures?
a. Overhead costs are traced to departments, then costs are traced to products.
b. Overhead costs are traced to activities, then costs are traced to products.
c. Overhead costs are traced directly to products.
d. All overhead …show more content…
Zipp Company manufactures two products (X and Y). The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
Product Number of Setups Machine Hours Packing Orders
X 10 500 75
Y 10 2,000 175 Cost per pool $9,000 $60,000 $15,000
What is the allocation rate per setup using activity-based costing?
a. $900.
b. $450.
c. $9,000.
d. $2,100.
____ 17. The Xiang plant has two categories of overhead: maintenance and inspection.
Costs expected for these categories for the coming year are as follows:
Maintenance $50,000
Inspection 75,000
The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours. The following data have been assembled for use in developing a bid for a proposed job:
Direct materials $500
Direct labor $2,000
Machine hours 500
Number of inspections 4
Direct labor hours 800
Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
Using activity-based costing and the appropriate activity drivers, the total cost of the potential job would be
a. $1,200.
b. $1,800.
c. $3,700.
d. …show more content…
100,000 direct labor hours are budgeted for next year.
The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 10 percent.
Estimates for the proposed job are as follows:
Direct materials $15,000
Direct labor (8,000 hours) $12,000
Number of material moves 100
Number of inspections 120
Number of setups 24
Number of machine hours 4,000
The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity drivers that would be used are:
Machine hours 60,000
Material moves 20,000
Setups 3,000
Quality inspections 12,000
____ 23. Refer to Figure 4-3. What is the amount of overhead allocated to the proposed job if Winter Manufacturing uses direct labor hours as its only activity driver?
a. $41,200
b. $30,400
c. $30,000
d.