7. In an activity-based cost system, an overhead cost system…
7. In an activity-based...
7. In an activity-based cost system, an overhead cost system would first be allocated to __________, and then allocated to __________.Submitted: 10 years ago.Category: Homework
a. a product; an activity pool
b. a product only
c. an activity pool; a product
d. an activity pool only
8. Fast Delivery Company delivers packages and business documents for local businesses located in the Houston metropolitan area. If the company decided to adopt an ABC costing system to accumulate costs for its service, what would be an appropriate cost driver to use for the cost of the original pick-up order?
a. Number of miles to be driven in the delivery
b. Number of drivers on the truck
c. Number of packages
d. Number of orders
9. Dolan Company manufactures product A that sells for $9.85 each. Forecasted sales for the coming year are 500,000 units that require 2 inspections per unit. They manufacture a second product, B that has an expected run of 300,000 units, and requires 4 inspections per unit. The two products required the same amount of time on the factory floor during manufacture. Dolan Company has projected the following costs to support the expected sales for Product A:
Direct materials for A $1,625,000
Direct labor for A 750,000
Unit level for A 675,000
Total Product level, to be allocated on number of inspections needed 825,000
Total Facility level, to be allocated on % of time on factory floor 400,000
What is Dolan's expected unit cost for Product A?
e. None of the above
10. Imagine two companies that use the same basic manufacturing process to produce the same number of products each year. Why would they have very different overhead costs?
a. Because they use different allocation methods
b. Because one is a corporation and the other is a partnership
c. Because their product lines have different levels of complexity
d. Because they are in different tax brackets
11. All of the following are assumptions made in cost-volume-profit analysis except
a. the cost of materials can change at different levels of volume.
b. fixed costs are constant over the volume of production being considered.
c. mixed costs can be separated into their variable and fixed components.
d. the various components of unit variable cost remain constant during the period of analysis.
12. A company's current sales are $400,000 at a volume of 10,000 units. Fixed costs are $120,000 and variable costs are $30 per unit. What is the company's breakeven sales volume in units?
13. If fixed costs for a company are $65,000 and variable costs are 20% of sales, what do total sales need to be to achieve a target net income of $35,000?
14. If a company is currently operating at its breakeven point, which of the following statements is true? (Income tax considerations are ignored.)
a. If fixed costs increase, net income will decrease by the contribution margin ratio times the amount of the increase in fixed costs.
b. If sales increase by 20%, net income will also increase by 20%, assuming that fixed costs are not equal to zero.
c. If variable costs double, net income will decrease by 50%.
d. Net income will decrease by the decrease in number of units sold times the contribution margin per unit.
15. Which of the following situations would most likely violate cost-volume-profit assumptions about fixed costs?
a. When production volume increases beyond the capacity of the plant, a second shift will be added instead of building a new plant.
b. As volume decreases, per unit fixed manufacturing overhead remains constant.
c. The company's raw material supplier typically allows volume discounts when larger amounts of the raw material are purchased.
d. Fixed costs per unit decrease as volume increases.
16. A collection of related budgets is known as a
a. pro forma financial statement.
b. flexible budget.
c. static budget.
d. master budget.
17. The first step in the master budgeting process is to prepare
a. the sales budget.
b. the production budget.
c. a cash budget.
d. a pro forma balance sheet.
18. The Sutcliff Manufacturing Company manufactures a product called Zyklon. Each unit of Zyklon requires two pounds of Zinses. The budget calls for production of 8,000 units of Zyklon during the third quarter. The ending inventory of Zinses is forecasted at 3,000 pounds for the second quarter and 2,000 pounds for the third quarter. How many pounds of Zinses must be purchased during the third quarter?
a. 8,000 pounds
b. 13,000 pounds
c. 15,000 pounds
d. 16,000 pounds
19. The production of each TV set requires 1.5 direct labor hours. The average cost of each direct labor hour is $10.50. If scheduled production for May is 2,000 TVs, what will be the total budgeted cost of direct labor?
d. None of the above are correct.
20. Production records indicate that actual quantity of raw materials used for the prior month was 45,000 pounds at $4 per pound to produce 10,000 units of finished product. Engineering standards required five pounds of raw material at $5 per pound for each unit of finished product. What is the materials price variance?
a. $45,000 favorable
b. $45,000 unfavorable
c. $50,000 favorable
d. $50,000 unfavorable
21. Which of the following are used to calculate the labor efficiency variance?
Planned Units Actual Rate
of Production per Hour
a. Yes Yes
b. Yes No
c. No Yes
d. No No
22. If a purchasing manager attempts to reduce the company's total manufacturing costs by purchasing less expensive and lower quality raw materials, which of the following variances is most likely to occur?
a. Unfavorable labor efficiency variance
b. Unfavorable materials price variance
c. Favorable labor rate variance
d. Favorable materials quantity variance
23. Service organizations such as CPA firms, law firms, hospitals and telecommunications companies face performance issues similar to those found in manufacturing organizations. In a service environment, all of the statements below are true except
a. statistical process control charts are commonly used in service organizations to determine if a service process is "in control."
b. quality cost systems that attempt to measure the cost of external failure are used by many service organizations.
c. service organizations incur costs which could be properly categorized as prevention costs, appraisal costs, and failure costs.
d. since service organizations do not produce a tangible product, they are not able to make use of any calculation of variations from a standard cost.
24. The Balanced Scorecard comprises four perspectives: financial, customer, internal business, and learning and growth. Within each perspective, how should managers select specific performance measures?
a. Based on their potential to increase short-term profits
b. Based on their fit with strategic goals
c. Based on the principles of Total Quality Management
d. All of the above
25. The Balanced Scorecard can be applied to
a. manufacturing organizations only.
b. service organizations only.
c. governmental organizations only.
d. manufacturing, service, and governmental organizations.
FOR PROBLEMS 26-28
Adel Department Store incurred $8,000 of indirect advertising costs for its operations. The following 2005 data have been collected for its three departments:
Shoe Clothing Automotive
Direct advertising costs $7,000 $10,000 $3,000
Newspaper ad space 62% 20% 18%
Sales $160,000 $120,000 $120,000
26. How much of the indirect advertising costs will be allocated to the Shoe Department if newspaper ad space is the allocation base?
27. How much of the indirect advertising costs of Adel (above) will be allocated to the Clothing Department if direct advertising costs is the allocation base?
28. How much of the indirect advertising costs of Adel (above) will be allocated to the Automotive if sales is the allocation base?
29. Service departments often provide service to
a. revenue-producing departments only.
b. other service departments only.
c. both revenue-producing and service departments.
30. In a hospital which views its patients as its "product," which of the following costs would be considered a direct cost?
a. The hourly wages for the admitting department personnel
b. The salaries for the insurance department personnel
c. Electricity used to operate the lighting in the hospital building
d. The salaries of the nurses