Chapter 19 Question 1 Moonrays Inc. manufactures both normal and premium tube lights. The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base. Estimated overhead costs for the year are $110,000. Additional information is given below. Calculate the predetermined overhead allocation rate. A. $2 per machine hour Predetermined overhead allocation rate = $110,000 (Total estimated overhead costs) ÷ 55,000 (Total estimated quantity of the overhead allocation base) = $2 per machine hour Question 2 Which of the following statements is true of costing systems? A. Many traditional costing systems can distort product costs and profitability. Question 3 Traditional costing provides more detailed information on costs of activities and the drivers of these costs than activity-based costing. A. False Question 4 An activity-based costing system is developed in four steps. a. Compute the allocation rate for each activity. b. Identify activities and estimate their total costs. c. Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base. d. Allocate the indirect costs to the cost object. Which of the following is the correct order of performing these steps? A. b, c, a, d Question 5
For a pharmaceutical company, the most suitable base for allocating research and development costs to the finished products would be the ________. A. number of new patents filed Question 6 Which of the following is the most appropriate cost driver for allocating the cost of warranty services? A. number of service calls Question 7 Which of the following statements is true of an activity-based costing system? A. It uses separate indirect cost allocation rates for each activity. Question 8 Activity-based management uses activity-based costs to make decisions that increase profits while meeting customer needs. A. True Question 9 Which of the following decisions will most likely involve the use of activity-based management? A. decisions related to the pricing of a product Question 10 A company is most likely to use value engineering ________. A. to reduce costs in order to achieve target costs Question 11 Which of the following statements is true of target pricing? A. It starts with the price that customers are willing to pay. Question 12
________ is the maximum cost to develop, produce, and deliver a product or service and earn the desired profit. A. Target cost Question 13 Which of the following is a nonmanufacturing cost? A. administrative expenses Question 14 Just-in-time management systems typically help reduce direct labor costs of a company. A. True Question 15 Just-in-time costing does not track the cost of products from Raw Materials Inventory to Work-in-Process Inventory to Finished Goods Inventory.
- Spring '16
- food products, department manager