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EXAM 6 - EXAM 6 1 Lifsey Wedding Fantasy Company makes very...

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EXAM 6 1. Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system: The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately. Data concerning two recent orders appear below: Suppose that the company decides that the present activity-based costing system is too complex and that all costs (except for the costs of purchased decorations) should be allocated on the basis of the number of guests. In that event, what would you expect to happen to the costs of cakes? A) The cost of cakes for receptions with more than the average number of guests would go down. B) The costs of all cakes would go up. C) The cost of cakes for receptions with fewer than the average number of guests would go down. D) The costs of all cakes would go down. Points Earned: 0.0/1.0 Correct Answer(s): C 2. Viren Corporation has provided the following data from its activity-based costing system:

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The company makes 240 units of product T91H a year, requiring a total of 550 machine- hours, 90 orders, and 40 inspection-hours per year. The product's direct materials cost is \$16.98 per unit and its direct labor cost is \$12.09 per unit. According to the activity-based costing system, the average cost of product T91H is closest to: A) \$79.66 per unit B) \$90.81 per unit C) \$29.07 per unit D) \$75.70 per unit Feedback: Points Earned: 0.0/1.0 Correct Answer(s): B 3. Aujla Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity- based costing system: The activity rate for the batch setup activity cost pool is closest to: A) \$70.40 B) \$29.40 C) \$26.10
Feedback: Points Earned: 0.0/1.0 Correct Answer(s): C 4. Worker recreational facilities is an example of a cost that would ordinarily be considered to be: A) Unit-level. B) Batch-level. C) Product-level. D) Organization-sustaining. Points Earned: 0.0/1.0 Correct Answer(s): D 5. Trauscht Corporation has provided the following data from its activity-based costing system: The company makes 340 units of product P23F a year, requiring a total of 710 machine- hours, 80 orders, and 40 inspection-hours per year. The product's direct materials cost is \$40.05 per unit and its direct labor cost is \$14.35 per unit. The product sells for \$121.90 per unit. According to the activity-based costing system, the product margin for product P23F is:

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EXAM 6 - EXAM 6 1 Lifsey Wedding Fantasy Company makes very...

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