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Borden Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:  Overhead Costs:  Indirect labor $260,000 Depreciation 220,000 Utilities 140,000 Total$620,000\begin{array}{lr}\text { Overhead Costs: }\\\text { Indirect labor } & \$ 260,000 \\\text { Depreciation } & 220,000 \\\text { Utilities } & 140,000 \\\text { Total}& \$ 620,000\end{array} Distribution of resource consumption: Activity Cost Pools  Assembly  Setting up Other  Total  Indirect labor 50%25%25%100% Depreciation 20%30%50%100% Utilities 25%45%30%100%\begin{array} { l r c c c } & \text { Assembly } & \text { Setting up} & \text { Other } & \text { Total } \\\text { Indirect labor } & 50 \% & 25 \% & 25 \% & 100 \% \\\text { Depreciation } & 20 \% & 30 \% & 50 \% & 100 \% \\\text { Utilities } & 25 \% & 45 \% & 30 \% & 100 \%\end{array} How much overhead cost, in total, would be allocated to the Assembly activity cost pool?


A) $209,000
B) $310,000
C) $196,333
D) $200,000
E) $155,000

F) None of the above
G) A) and E)

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Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows:  Activity Cost Pool  Activity Measure  Estimated Cost  Adminstrative service % of time devoted to branch $700,000 Development service  Computer time $140,000\begin{array} { l l l } \text { Activity Cost Pool } & \text { Activity Measure } & \text { Estimated Cost } \\\text { Adminstrative service } & \% \text { of time devoted to branch } & \$ 700,000 \\\text { Development service } & \text { Computer time } & \$ 140,000\end{array} Estimated branch data for next year is as follows:  Time to branch  Computer time  Nashville 60%150,000 minutes  Atlanta 30%200,000 minutes  Louisville 10%50,000 minutes  Total 100%400,000 minutes \begin{array} { l c r } & \text { Time to branch } & \text { Computer time } \\\text { Nashville } & 60 \% & 150,000 \text { minutes } \\\text { Atlanta } & 30 \% & 200,000 \text { minutes } \\\text { Louisville } & 10 \% & 50,000 \text { minutes } \\\text { Total } & 100 \% & 400,000 \text { minutes }\end{array} - How much of the headquarters cost allocation should Nashville expect to receive next year?


A) $280,000
B) $472,500
C) $560,000
D) $504,000
E) $409,500

F) C) and E)
G) A) and D)

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Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:  Activity Cost Pools  Activity Rate  Assembling products $6.56 per assembly hour  Processing customer orders $65.38 per customer order  Setting up batches $82.84 per batch \begin{array}{llr}\text { Activity Cost Pools }&\text { Activity Rate }\\\text { Assembling products } & \$ 6.56 \text { per assembly hour } \\\text { Processing customer orders } & \$ 65.38 \text { per customer order } \\\text { Setting up batches } & \$ 82.84 \text { per batch }\end{array} Data for one of the company's products follow:  Product P59G  Number of assembly hours 240 Number of customer orders 48 Number of batches 64\begin{array} { l l l } & & \text { Product P59G } \\ \text { Number of assembly hours } & 240 & \\ \text { Number of customer orders } & 48 & \\ \text { Number of batches } & 64 \end{array} - The company produced 4,000 units of product during the period. Direct materials cost $7.30 per unit and direct labor cost $5.45 per unit. What is the cost per unit of Product P59G using the Activity-based costing system?


A) $167.53
B) $12.75
C) $9.80
D) $15.25
E) $2.50

F) C) and D)
G) All of the above

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The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is: A) $60 per inspection B) $80 per inspection C) $120 per inspection D) $240 per inspection E) $100 per inspection The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is: A) $60 per inspection B) $80 per inspection C) $120 per inspection D) $240 per inspection E) $100 per inspection - Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:


A) $60 per inspection
B) $80 per inspection
C) $120 per inspection
D) $240 per inspection
E) $100 per inspection

F) B) and E)
G) A) and C)

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A plantwide overhead rate method is adequate when a company produces only one product or has multiple products that use about the same amount of indirect resources.

A) True
B) False

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Melbourne Resources provides the following data to enable you to calculate overhead rates: Machining Department Overhead is $15,000, which is to be allocated on estimated machine hours of 25,000. The rate per Machine Hour would be ________. If Machining cost is to be allocated to three jobs which consumed A = 3,000 hours, B = 4,000 hours, and C = 1,000 hours respectively; then Job A should be charged $ ________ Job B should be charged $ ________; and Job C $ ________.

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$15,000/25,000 MH = $0.60/mach...

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The following is taken from Jeffers Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of overhead allocated to Dept. 2 using activity-based costing.  Direct Labor  Machine Use Hours  Operating Dept. 1 $11,8002,300 Operating Dept. 2 25,600‾1,500‾ Totals $37,4003,800‾ Factory overhead costs  Rent and utilities $12,900 Indirect labor 11,220 Depreciation - Equipment 18,000 Total factory overhead $42,120\begin{array} { | l | r | r | } \hline & \text { Direct Labor } & \text { Machine Use Hours } \\\hline \text { Operating Dept. 1 } & \$ 11,800 & 2,300 \\\hline \text { Operating Dept. 2 } & \underline { 25,600 } & \underline { 1,500 } \\\hline \text { Totals } & \$ 37,400 & \underline { 3,800 } \\\hline & & \\\hline \text { Factory overhead costs } & & \\\hline \text { Rent and utilities } & & \$ 12,900 \\ \hline \text { Indirect labor } & & 11,220\\\hline \text { Depreciation - Equipment } & &18,000 \\\hline \text { Total factory overhead } & & \$ 42,120 \\\hline\end{array}


A) $73,600.
B) $28,830.
C) $16,392.
D) $22,243.
E) $19,877.

F) C) and D)
G) A) and E)

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Quantum Corporation has provided the following data from its activity-based costing system:  Activity Cost Pool  Overhead Cost  Total Activity  Assembly $1,114,92057,000 machine hours  Processing orders $47,0161,800 orders  Inspection $107,3281,560 inspection hours \begin{array}{lcrl}\text { Activity Cost Pool }&&\text { Overhead Cost }&\text { Total Activity }\\\text { Assembly } & \$ & 1,114,920 & 57,000 \text { machine hours } \\\text { Processing orders } & \$ & 47,016 & 1,800 \text { orders } \\\text { Inspection } & \$ & 107,328 & 1,560 \text { inspection hours }\end{array} The company makes 430 units of product R32E a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. - According to the activity-based costing system, the total overhead cost for producing the 340 units of the J71B product is:


A) $17,957.92
B) $30,972.72
C) $15,504.00
D) $21,622.72
E) $37,126.72

F) B) and C)
G) A) and D)

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Activity-based costing can improve costing activity for:


A) Service companies only.
B) Merchandising companies only.
C) Any company in any industry.
D) Manufacturing companies only.
E) Government entities only.

F) None of the above
G) A) and B)

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With activity-based costing, complex products are assigned a larger portion of overhead.

A) True
B) False

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An activity-based costing system usually involves a fewer number of allocation bases compared with a traditional cost allocation system.

A) True
B) False

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A factor that causes the cost of an activity to go up or down is a(n) :


A) Contribution factor.
B) Cost driver.
C) Direct factor.
D) Indirect factor.
E) Product cost.

F) A) and C)
G) B) and C)

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Arial Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows: Arial Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows: The activity rate under the activity-based costing system for Activity 3 is closest to: A) $28.87 B) $19.47 C) $58.40 D) $32.55 E) $70.45 The activity rate under the activity-based costing system for Activity 3 is closest to:


A) $28.87
B) $19.47
C) $58.40
D) $32.55
E) $70.45

F) A) and B)
G) A) and C)

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Quantum Corporation has provided the following data from its activity-based costing system:  Activity Cost Pool  Overhead Cost  Total Activity  Assembly $1,114,92057,000 machine hours  Processing orders $47,0161,800 orders  Inspection $107,3281,560 inspection hours \begin{array}{lcrl}\text { Activity Cost Pool }&&\text { Overhead Cost }&\text { Total Activity }\\\text { Assembly } & \$ & 1,114,920 & 57,000 \text { machine hours } \\\text { Processing orders } & \$ & 47,016 & 1,800 \text { orders } \\\text { Inspection } & \$ & 107,328 & 1,560 \text { inspection hours }\end{array} The company makes 430 units of product R32E a year, requiring a total of 1,120 machine-hours, 40 orders, and 30 inspection-hours per year. The product's direct materials cost is $49.81 per unit and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit. -According to the Activity-based costing system, the total overhead cost allocated to product R32E is:


A) $5,161.30
B) $1,044.80
C) $2,064.00
D) $25,016.00
E) $21,907.20

F) C) and D)
G) A) and B)

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The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product B is: A) $78.85 per unit B) $12.75 per unit C) $75.60 per unit D) $13.40 per unit E) $14.60 per unit The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product B is: A) $78.85 per unit B) $12.75 per unit C) $75.60 per unit D) $13.40 per unit E) $14.60 per unit - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product B is:


A) $78.85 per unit
B) $12.75 per unit
C) $75.60 per unit
D) $13.40 per unit
E) $14.60 per unit

F) A) and E)
G) A) and D)

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The following is taken from Jeffers Company's internal records of its factory with two operating departments. The cost driver for indirect labor is direct labor costs, and the cost driver for the remaining items is number of hours of machine use. Compute the total amount of overhead allocated to Dept. 1 using activity-based costing.  Direct Labor  Machine Use Hours  Operating Dept. 1 $11,8002,300 Operating Dept. 2 25,600‾1,500‾ Totals $37,4003,800‾ Factory overhead costs  Rent and utilities $12,900 Indirect labor 11,220 Depreciation - Equipment 18,000 Total factory overhead $42,120\begin{array} { | l | r | r | } \hline & \text { Direct Labor } & \text { Machine Use Hours } \\\hline \text { Operating Dept. 1 } & \$ 11,800 & 2,300 \\\hline \text { Operating Dept. 2 } & \underline { 25,600 } & \underline { 1,500 } \\\hline \text { Totals } & \$ 37,400 & \underline { 3,800 } \\\hline & & \\\hline \text { Factory overhead costs } & & \\\hline \text { Rent and utilities } & & \$ 12,900 \\ \hline \text { Indirect labor } & & 11,220\\\hline \text { Depreciation - Equipment } & &18,000 \\\hline \text { Total factory overhead } & & \$ 42,120 \\\hline\end{array}


A) $22,069.
B) $22,243.
C) $47,512.
D) $19,877.
E) $18,703.

F) A) and E)
G) B) and E)

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A ________ is a factor that causes the cost of an activity to go up and down.

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Mirkle Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products:  Activity Cost Pools  Activity Rate  Assembling products $6.56 per assembly hour  Processing customer orders $65.38 per customer order  Setting up batches $82.84 per batch \begin{array}{llr}\text { Activity Cost Pools }&\text { Activity Rate }\\\text { Assembling products } & \$ 6.56 \text { per assembly hour } \\\text { Processing customer orders } & \$ 65.38 \text { per customer order } \\\text { Setting up batches } & \$ 82.84 \text { per batch }\end{array} Data for one of the company's products follow:  Product P59G  Number of assembly hours 240 Number of customer orders 48 Number of batches 64\begin{array} { l l l } & & \text { Product P59G } \\ \text { Number of assembly hours } & 240 & \\ \text { Number of customer orders } & 48 & \\ \text { Number of batches } & 64 \end{array} -How much overhead cost would be assigned to Product P59G using the activity-based costing system?


A) $54,482.56
B) $5,301.76
C) $10,014.40
D) $3,138.24
E) $154.78

F) None of the above
G) B) and C)

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The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product A is: A) $78.85 per unit B) $14.60 per unit C) $13.40 per unit D) $12.75 per unit E) $75.60 per unit The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period. - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product A is: A) $78.85 per unit B) $14.60 per unit C) $13.40 per unit D) $12.75 per unit E) $75.60 per unit - Using activity-based costing for assigning overhead costs, the total product cost per unit for Product A is:


A) $78.85 per unit
B) $14.60 per unit
C) $13.40 per unit
D) $12.75 per unit
E) $75.60 per unit

F) B) and E)
G) A) and C)

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In activity-based costing, costs are traced to individual activities and then allocated to cost objects.

A) True
B) False

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