CHAPTER 4 MULTIPLE CHOICE Flashcards
Treasurers, Inc., a manufacturer of gift articles, uses a single plantwide rate to allocate indirect costs with machine hours as the allocation base. Estimated overhead costs for the year are $6,000,000. Estimated machine hours are 29,000. During the year, the actual machine hours used were 50,000. Calculate the predetermined overhead allocation rate. (Round your answer to the nearest dollar.)
$207
The costs most easily traced to each product manufactured are ________.
direct materials and direct labor
Stealth, Inc. produces two types of drones, rotary and fixed wing. Stealth estimated $1,210,000 of manufacturing overhead, and 55,000 machine hours for the year. The allocation base for overhead costs is machine hours. The rotary model actually consumed 26,000 machine hours, and the fixed wing type consumed 29,000 machine hours. How much overhead is allocated to the rotary model?
$572,000
An activity-based costing system is developed in four steps:
a. Compute the predetermined overhead allocation rate for each activity.
b. Identify activities and estimate their total indirect costs.
c. Identify the allocation base for each activity and estimate the total quantity of each allocation base.
d. Allocate indirect costs to the cost object.
b, c, a, d
Which of the following would most likely be treated as an activity in an activity-based costing system?
A) direct labor cost
B) machine processing
C) direct materials cost
D) sales revenues
machine processing
For a pharmaceutical company, the most suitable base for allocating research and development costs to the finished products would be the ________.
A) direct labor hours
B) cost of raw materials purchased
C) number of new patents filed
D) number of set ups
C. number of new patents filed
Which of the following is the most appropriate cost driver for allocating the cost of warranty services?
A) number of employees
B) number of materials purchased
C) number of machine hours
D) number of service calls
D. number of service calls
Which of the following statements is true of costing systems?
A) Many traditional costing systems can distort product costs and profitability.
B) Traditional costing systems tend to be more costly than activity-based costing systems.
C) Activity-based costing systems tend to combine various costs into a single cost pool.
D) Activity-based costing systems tend to use fewer cost pools than does a traditional costing system.
A
Nguyen, Inc. has received a bid for 15,000 units. The costing estimates show that the average cost per unit for this bid will be $500. The company uses cost-based pricing and adds 20% markup to total costs. What total price will Nguyen ask for the entire order?
$9,000,000
Mendburg, Inc. is a consulting firm that offers optimal legal solutions. It allocates indirect costs using a single predetermined overhead allocation rate with direct labor hours as the allocation base. The estimated indirect costs for this year amount to $100,000. The company is expected to work 5000 direct labor hours during the year. The direct labor rate is $250 per hour. Clients are billed at 130% of direct labor cost. Last month, Mendburg’s consultants spent 175 hours on Curelli, Inc. Calculate the operating income from Curelli.
$9625
