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Multiple Choice Quiz
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1
Which of the following statements is correct?
A)Activity-based costing uses a number of activity cost pools, each of which is allocated to products on the basis of direct labor-hours.
B)Activity rates in activity-based costing are computed by dividing costs from the first-stage allocations by the activity measure for each activity cost pool.
C)An activity-based costing system is generally easier to implement and maintain than a traditional costing system.
D)One of the goals of activity-based management is the elimination of waste by allocating costs to products that waste resources.
2
Which of the following would not be considered a product-level activity?
A)Advertising a product
B)Human resource management
C)Parts administration
D)Testing a prototype of a new product
3
Which of the following would not be considered a batch-level activity?
A)Clerical activity associated with processing purchase orders to produce an order for a standard product
B)Purchase order processing
C)Setting up equipment
D)Worker recreational facilities
4
Favreau Company uses activity-based costing to determine the costs of its two products: A and B. The estimated total cost and expected activity for one of the company's three activity cost pools are as follows.
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What is the activity rate for this activity?
A)$4.00
B)$8.59
C)$18.00
D)$20.00
5
Spencer Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs for Activity 3 total $40,000 and expected activity equals 2,500 for this activity cost pool. Actual activity for the current year was 2,490. What is the amount of overhead applied for Activity 3 during the year?
A)$36,300
B)$39,840
C)$40,000
D)$96,190
6
Taylor Company has two products: A and B. The annual production and sales level of Product A is 9,094 units. The annual production and sales level of Product B is 15,826. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools.
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What is the activity rate for Activity 3?
A)$29.32
B)$30.00
C)$33.33
D)$41.53
7
Taylor Company has two products: A and B. The annual production and sales level of Product A is 9,094 units. The annual production and sales level of Product B is 15,826. The company uses activity-based costing and has prepared the following analysis showing the estimated total cost and expected activity for each of its three activity cost pools. (Note that this is the same data that was provided for the previous question.)
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What is the overhead cost per unit of Product A?
A)$1.83
B)$1.98
C)$5.00
D)$10.00
8
Clancy Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools:
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Actual costs and activities for the current year were as follows.
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What is the total amount of overhead applied during the year?
A)$248,508
B)$248,988
C)$250,155
D)$251,334
9
Clancy Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Estimated costs and activities for the current year are presented below for the three activity cost pools. (Note that this is the same data that was provided for the previous question.)
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Actual costs and activities for the current year were as follows.
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What is the total amount of the debits to the Manufacturing Overhead account during the year?
A)$248,508
B)$248,988
C)$251,110
D)$250,334
10
When there are batch-level or product-level costs, in comparison to a traditional cost system, how will an activity-based costing system ordinarily shift costs?
A)From high-volume to low-volume products
B)From low-volume to high-volume products
C)From specialized to standardized products
D)From standardized to specialized products





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