practiceexam3spr2009 - Accounting 230 Practice Exam 3...

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Accounting 230 Practice Exam 3 – Spring, 2009 THE NEXT 2 QUESTIONS REFER TO THE FOLLOWING INFORMATION: A firm produces and sells two products, Alpha and Zeta. The following information is available relating to setup costs (only a part of factory overhead): Product Alpha Product Zeta Units produced . . . . . . . . . 250 20,000 Batch size (units) . . . . . . . 10 500 Number of setups . . . . . . . . 25 40 Direct labor hours per unit . . 3 3 Total direct labor hours . . . . 750 60,000 Setup cost . . . . . . . . . . . $65,000 1. With traditional allocation of setup overhead costs, using direct labor hours as the allocation base (activity), the setup cost portion of overhead allocated to each unit of product is: Product Alpha Product Zeta a. $ 1.07 $ 1.07 b. $267.49 $21,399.18 c. $ 3.21 $ 3.21 d. $260.00 $ 3.25 e. $ 3.25 $ 3.25 2. Use of activity-based costing would allocate the following amounts of setup cost to each unit: Product Alpha Product Zeta 3. Power to run processing equipment is an example of a: 4. Preparing the annual reports to shareholders is an example of a:
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