Business & Finance
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Question description

(TCO 8) Unit-based product costing uses which procedure? (Points : 3)  All overhead costs are expensed as incurred.
 Overhead costs are traced to departments, then costs are traced to products.
 Overhead costs are traced directly to products.
 Overhead costs are traced to activities, then costs are traced to products.

2. (TCO 8) All of the following are unit-based activity drivers EXCEPT (Points : 3)
 number of setups.
 machine hours.
 number of units.
 direct labor hours.

3. (TCO 8) A department that is capital intensive most likely would use a predetermined departmental overhead rate based on which activity base? (Points : 3)
 Units of direct material used
 Direct labor hours
 Direct labor cost
 Machine hours

4. (TCO 8) Star Inc. uses a job-order costing system to account for product costs.
The following information was provided for the current year.
Materials placed in production    $120,000
Indirect labor  $25,000
Direct labor (10,000 hours)  $145,000
Depreciation of factory building    $55,000
Other factory overhead     $85,000
Increase in work-in-process inventory     $25,000
Factory overhead rate per direct labor hour  $15
Which is the amount of under- or overapplied overhead for Star Inc.? (Points : 3)
 $25,000 overapplied
 $15,000 overapplied
 $25,000 underapplied
 $15,000 underapplied

5. (TCO 8) Acme Company manufactures two products (anvils and barrels).
Overhead costs ($84,000) have been divided into three cost pools, which use the following activity drivers. 


# of Setups

Machine Hours

Packing Orders









Cost per Pool




What is the allocation rate for barrels per machine hours using activity-based costing? (Points : 3)

6. (TCO 8) Which is NOT a limitation of a plantwide overhead rate? (Points : 3)
 Product diversity may consume overhead activities under differing consumption ratios.
 Overhead usage is not strictly linked to the units produced because some products are more complex and diverse than others.
 Predetermined rates using budgeted overhead are usually the best estimate of the amount of overhead.
 Overhead costs tend to be underallocated to highly complex products.

7. (TCO 8) The effort expended to identify those factors that are the root causes of activity costs is called (Points : 3)
 driver analysis.
 activity outputs.
 activity inputs.
 value-added activities.

8. (TCO 8) Which is part of the cost and process dimensions of the activity-based management model? (Points : 3)
 Driver analysis
 Cost objects

9. (TCO 8) Which is an example of a non-value-added manufacturing activity? (Points : 3)
 All of the above

10. (TCO 8) The process that decreases the time and resources required by different activities is called (Points : 3)
 activity sharing.
 activity elimination.
 activity reduction.
 activity selection.

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