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1
A company using the traditional volume-based overhead assignment (allocation) method will tend to:
A)overstate the cost of low volume products.
B)understate the cost of high volume products.
C)understate the cost of low volume products.
D)understate the cost of all products.
E)Both a and b are correct.
2
Harry Company has established the following overhead cost pools and cost drivers for the month of July:

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Expected direct labor costs for July is 20,000 hours at $10 per hour.

Product X100 consumed 800 kilowatt hours, 5 orders, 10 setups, 90 machine hours, and 1,800 direct labor hours. Additionally it required $25,000 of materials.

What is the overhead rate assuming that the firm is using a volume-based procedure and that direct labor hours will be its cost driver?
A)$4.50 per DLH
B)$22.65 per DLH
C)$18.30 per DLH
D)$3.00 per DLH.
3
Harry Company has established the following overhead cost pools and cost drivers for the month of July:

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025532/966298/ch5_q2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (25.0K)</a>

Expected direct labor costs for July is 20,000 hours at $10 per hour.

Product X100 consumed 800 kilowatt hours, 5 orders, 10 setups, 90 machine hours, and 1,800 direct labor hours. Additionally it required $25,000 of materials.

What is the overhead rate per purchase order using activity-based costing?
A)$1,830
B)$1,500
C)$1,800
D)$4.50
E)$22.65
4
Harry Company has established the following overhead cost pools and cost drivers for the month of July:

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025532/966298/ch5_q2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (25.0K)</a>

Expected direct labor costs for July is 20,000 hours at $10 per hour.

Product X100 consumed 800 kilowatt hours, 5 orders, 10 setups, 90 machine hours, and 1,800 direct labor hours. Additionally it required $25,000 of materials.

What is the amount of total costs assigned to product X100 assuming that the firm is using a volume-based procedure?
A)$83,770
B)$40,770
C)$496,000
D)$85,870
5
Harry Company has established the following overhead cost pools and cost drivers for the month of July:

<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078025532/966298/ch5_q2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (25.0K)</a>

Expected direct labor costs for July is 20,000 hours at $10 per hour.

Product X100 consumed 800 kilowatt hours, 5 orders, 10 setups, 90 machine hours, and 1,800 direct labor hours. Additionally it required $25,000 of materials.

What is the amount of total costs assigned to product X100 assuming that the firm is using activity-based costing?
A)$83,770
B)$42,870
C)$496,000
D)$85,870
6
Franklin Company has identified the following cost drivers for its expected overhead costs for the year:

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If the activity-based cost drivers are used to allocate overhead cost, the total overhead cost of Product Y will be:
A)$1,500
B)$1,600
C)$2,200
D)$2,800
E)$3,800
7
Franklin Company has identified the following cost drivers for its expected overhead costs for the year:

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If the activity-based cost drivers are used to allocate overhead cost, the total cost of Product Y will be:
A)$3,700
B)$3,900
C)$2,200
D)$3,800
8
Time-driven activity-based costing is an adaption of ABC costing that:
A)assigns resource costs directly to cost objects, rather than first assigning costs to activities.
B)assigns resource costs to certain activities which in turn are assigned to other activities.
C)increases the number of resource cost centers, which allows more direct tracing of resource costs to products and services.
D)All of the above is correct.
9
What ABC/M tool is used to answer the following critical question?

What do we do to sustain the organization and meet the specification of the products and service we provide to customers?

A)Activity analysis
B)Activity-based costing
C)Performance Measurement
D)Total Quality Management
10
Which of the following is a true statement?
A)ABC/M applications are not commonly used by manufacturing firms.
B)ABC/M applications are only used by manufacturing firms.
C)ABC/M applications are not commonly used by governmental units.
D)ABC/M are commonly used in most industries.
11
__________ identifies customer service activities, cost drivers, and the profitability of individual customers or groups of customers.
A)Customer revenue analysis
B)Customer cost analysis
C)Customer value assessment
D)Customer profitability analysis
12
Which of the following is a customer batch-level cost category?
A)Order processing is $1 per item.
B)Monthly billing is $5 per statement.
C)Salaries and fringe benefits are $100,000 per month.
D)Restocking is $5 per item.
E)Order taking is $30 per order.
13
Customer costs can be classified into all of the following categories, except:
A)Customer batch-level costs.
B)Distribution-channel profits.
C)Sales-sustaining costs.
D)Customer-sustaining costs.
14
Customer lifetime value (CLV) is:
A)The net future value of all estimated future profits from the customer.
B)The estimated future profits from the customer.
C)The net present value of all estimated future profits from the customer.
D)The net present value of all estimated profits over the past 10 years.
15
Successful ABC/M implementation requires close cooperation among the management accountant and:
A)engineers.
B)manufacturing managers.
C)operating managers.
D)All of the above is correct.
E)None of the above is correct.
16
Resource consumption accounting (RCA) is an adaption of ABC costing that:
A)assigns resource costs directly to cost objects, rather than first assigning costs to activities.
B)assigns resource costs to certain activities which in turn are assigned to other activities.
C)increases the number of resource cost centers, which allows more direct tracing of resource costs to products and services.
D)All of the above is correct.
17
Multi-stage ABC is an adaption of ABC costing that:
A)assigns resource costs directly to cost objects, rather than first assigning costs to activities.
B)assigns resource costs to certain activities which in turn are assigned to other activities.
C)increases the number of resource cost centers, which allows more direct tracing of resource costs to products and services.
D)All of the above is correct.





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