AC 505 4.1 Mastery test - ..___. E hflpgh‘d

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Unformatted text preview: ..___. E hflpgh‘d msdevlyHMdWWebPaga/flashlcontenflstudentfmasteryTst.aspx?courseID:53¢245?8t|5er10=3920228¢dsslfl=13381roietype=STUD :‘ efi Welcome, Stephni Robinson Date Submitted: |'\-1:r! Aug 1 231 1 Eli??? l??? i‘i is??? '53:. i??? it? i??? '19:? W _. $79130? The information below is from the records ofa manufacturing companvthat applies factory overhead based on direct labor cost. Estimated overhead costs $500,000 Estimated laborcost $2.000.000 Estimated laborhours 200.000 Overhead application rate = $ Actual overhead cost 0515.000 ' Actual laborhours 210.000 Actual laborcost $2.400.000 Using the above data, what is the overhead application rate? Overhead Application Rate Estimated Overhead Costs Estimated Direct labor Costs $500,000 $2,000,000 = $0.25 :Iuv rn answer ’ . y Explanation 0w the correct answer 0 Internet | Protected Mode: On {a V Q1003; V I El httpsflfdmsdewytdufd msJWebPa g afflashfco ntenflstudentl'rnasteryTesta spxkour:eI[,'|:53£124'15]II Stu serID: 392022 Bed 5le :133 Stroletyp e: STUD set a Q ' Welcome. Stephni Robinson Cate 9-:fi'ittea: MC." Ac; ‘. 231‘. ' _ ' OuestionE 'x 20.? 3W1 ‘3 5t”? 5:: =9" 837 9Q}; 1%? 118/" :' points A lawnmower engine manufacturing company built 2.000 BigEon engines cluring the past'rear. incurring the following direct costs: Directlaoor $100000 Direct material $ 00.000 Assumethatthe company: U _t t $ ni cos : ‘1} allocates overhead on the basis of Direct Labor costs: and 2}the o'u'erheacl application rate is $0.5! direct labor clollar. "."."hat is the unit cost of a EligEloy engine? I Unit Cost for Engines Direct materials + Direct Labor + Allocated Overhead units manufactured = 60 000 + ‘100 000 + 100 000 * .50 2,000 units = $210,000 1,000 units = $105 per engine 'W my JHSL‘JEV Fl the correct answer Done 9 Internet | Protected Mode: On {in V 6110096 V ‘.".'hich oTthe following costs would not be included in an overhead costpool'? Direct material is a direct cost of production, not an indirect [overhead] cost. Handling Inspection Direct material Depreciation Welcome. Stephni Robinson Date 9-:1'ittea: MC." Ac; ‘. 2311 Question 3 :' mints 'iy ZII'ISL‘JEI' w—mnpw me correct an swer a Internet | Protected Mode“. On T. g] httpsfifdrnsdewytdufd mWebPa g afflashfco ntenflstudentl'rnasteryTesta spx?cou 5602534245? Stu serID: 392022 Bed 5le :133 Stroletyp e: STUD set a Q n 7 Welcome. Stephni Robinson Cate E‘-:':'itte :f-.!:r' Ac; ‘: 231‘. _ Question 4 '8 2v 3v“ i; 56’ 5! Q" 8257 9w” my “c7” 5 r inte Product-cost cross-subsidization is more likelyto occurwhen: _ multiple cost pools are used every efiort is made to trace cost to cost objects a peanut butter approach is usedto allocate eyerhead multiple actiyity drivers are used none of the above 1Nhen a one—size fits all approach is usedto product costing, hithdolume products are chargedtoo much for overhead as comparedto louwolume products. AEl-C costing attempts to correctthis problem by identifying multiple cost pools, defining multiple activity drivers, andtracing costs to cost objects. ny answer '__—__,he correct answer Done 9 Internet | Protected Mode: On {‘5 V @{100'36 V T. g] httpsfifdrnsdewytdufd mWebPa g afflashfco ntenflstudentl'rnasteryTesta spxkou 5602534245? Stu serID: 392022 Bed 5le :133 Stroletyp e: STUD set a Q ' Welcome. Steohni Robinson Cate 9-:e'ittea: Me." A.:.; ‘: 231‘. Questions '3: 2V 3v ‘x 5:: ‘1; Se? 9w” “iv it»; grams { Product-costcross-subsidization can resultin: _ _ _ _ _ _ _ decisrons inconsistent With the goals ofthe organization incorrect pricing decisions overcosting of some products undercosting ofsome products all ofthe above I Due to the overreliance on a unit—level allocation base, product—cost cross—subsidization can result in over— i costing high— volume products and under—costing lowvolume products leading to incorrect pricing | decisions and decisions inconsistent with the goals ofthe organization. hCI'IN my answer -__.—_—.—vJ-hcjb\' the COI'I'eCt QHE'HFJF Done 9 Internet | Protected Mode: On {‘5 V @{100'36 V \7 \ 1x 2v 3v ‘x 5v jfi V 3v 9w “a ‘le/ The Good Sounds Corp. is attempting to get a better estimate ofthe cost oftheir products. As a first step. the'y are attempting to allocate overhead b'y defining three activity cost pools and three corresponding cost drivers. They' believe thatthe cost drivers of each ofthese pools correlate with the costs ofthat activity pool. The estimated overhead costs and activity levels for each activity are given as follows: Estimated Estimated Activity Cost Driver OH costs Activity level Supervision Direct Labor$ $60,000 $150,000 Inspection #Inspections $40,000 2000 Machine use Machine hours $400,000 10,000 Activity data forthe two products manufactured by the company are as follows: Radios Direct labor $ $120,000 Step1 # Inspections 500 - - Machine hours Slum Calculate the Overhead Application Rate What amount of overhead will be appli Welcome. Stephni Robinson r, Question E |:-:= intE Amount of overhead to be applied Estimated number of inspections $0,000 $2,000 = $20 per inspection E Clo-.u: Done Step 2 Overhead to be applied to the CD Players 9 Internet | Protected Mode: On '3 = Estimated Overhead Costs for Inspections (LNG 'v’h harm—1 DI V J F l.|aste|'_. Teett-::t3| paintg 3 = flmrhfilfd Annlirntinn Data *Tntnl inennrti V II ea QIUUEE data E‘-:'rilla:: I-.l:" .'—"...; 1 :311 v ‘ 7' Welcome. Stephni Robinson Cate 9-:1'ittec: MC" #2.; 1 2311 Question B 1x 2v 3v ‘x 5v j; £22 av 9v “is; “a; :- points The Good Sounds Corp. is attempting to get a better estimate ofthe cost oftheir products. As a first step. the'y are attempting to allocate overhead b'y defining three activity cost pools and three corresponding cost drivers. They' believe thatthe cost drivers of each ofthese pools correlate with the costs ofthat activity pool. The estimated overhead costs and activity levels for each activity are given as follows: Estimated Estimated Amountofoverheadto be applied = $ Activity Cost Driver OH costs Activity level Supervision Direct Labor$ $60,000 $150,000 Inspection #lnspections $40,000 2000 Machine use Machine hours $400,000 10,000 Activity data forthe two products manufactured by the company are as follows: Radios m — LULIIIIQLCU wciiicau numb IUI iiiapeLLiuiiu bl # lnspections 'ggg Estimated number of inspections Machine hours 5000 = $0 000 What amount of overhead will be appli $52,000 = $20 per inspection Step 2 Overhead to be applied to the CD Players = Overhead Application Rate " Total inspections for CD Play-e = $20 * $1,500 |.laster_. Testtctalpcints 1 = $30300 I? J 4 "II > 9 Internet | Protected Mode: On 'v’h V QIUU'X. V E Clo-.u: Done Welcome. Stephni Robinson Date 9-:1'ittea: t-.!:r' AL; ‘. 2311 Question F :' points The Good Sounds Corp. is attempting to get a better estimate oithe cost oftheir products. As a first step. they are a empting to allocate overhead by defining three activity cost pools and three corresponding cost drivers. Thev believe that the cost drivers of each of these pools correlate with the costs ofthat activity pool. Activi rate : Activity Cost Driver Estimated OH Costs Estimated Activity Level w $ Supervision Direct Labor $ $ 50000 $150000 Inspection #lnspections $ 40.000 2.000 l'ulachine use Machine hours Sci-00.000 10.000 Giventhe above ' Inspewon 351MB" Unit Cost For Engines Estimated Overhead Costs for Inspections Estimated number of inspections £0,000 2,000 = $20 per inspection ‘W'wl .gv,---:m—-cun1.--;.-z-m1—.—n-Er a Internet | Protected Mode“. On g] httpsvfdmsdevlytdufd msJWebPa g ew'flashfc o ntenflstudentl'masteryTesta spxkou rseID: 534245? Stu serID: 392022 Std ssID:133 Stroletyp e: STUD I T. The following are steps used in AEIC: C. El. A. D A. Assign overhead costs to products or cost objects El. Calculate Activity Rates A. El. C. D C. Assign overhead costs to activity pools . . . .. BA, D, C D. Identify major activities The correct order ofthese steps is: D- C- B- A D. El. (1A Activity—based costing (ABC) starts with correctly identifying the activities that cause costs to be incurred usually by interviewing individuals who work in the department or by conducting a brainstorming session. After identifying the activities, overhead costs are assignedto the activity pools and an activity rate is calculated. The fourth step is to assign costs to products or cost objects. WC} _\. . .._.. a Internet | Protected Mode: On ' answer .e- correct an swer- set a E Welcome. Stephni Robinson r, :5 E‘-:':'itte::f.!:".i.;.;1213!? Question 8 iI'ItE. I gr httpsflfdmsdewytdufd msJWebPa g afflashfco ntenflstudentl'rnasteryTesta spx?cour:eI[,'|:53£124'15]II Stu serID: 392022 Bed 5le :133 Stroletyp e: STUD set a Q ' Welcome. Stephni Robinson Cate 9-:e'ittea: MC." Ac; ‘. 231‘. ' _ OuesLiUnQ 18 any 3w“ ‘8 5e”? 52 =9" 837 96b 1%? 118/1 :' coir-its "."."hich otthe following is not a benefit ofimplementing ABC: _ more accurate cost assignments better cost control cheaperto implement more efi'icient operations all ofthe above I Although Activity—based costing (ABC) requires substantial resources to implement, the more accurate cost assignments to cost objects result in better cost control and more efficient operations. E C ly JHSL‘JEV I-.—__,.....fle COI'I'eCt answer .w. Done 9 Internet | Protected Mode: On {a V 6110096 V 1x 2v 3v The Good Sounds Corp. is attemptingto geta betterestimate ofthe cost oftheirproducts. As a first step. they are attempting to allocate overhead by defining three activity cost pools andthree corresponding cost drivers. They believe tn at the cost drivers of each ofthese pools correlate with the costs of that activity pool. The estimated overhead costs and activity levels for each activity are given as follows: TV/ 88/ 98/ 1°“ 118/ Ecclnts Welcome. Stephni Robinson Cale E‘-:'rille:: l-.l:" .'—"...; 1 :011 Question 10 Estimated Estimated Activity Cost Driver OH costs Activity level Supervision Direct Labor $ $50,000 $150,000 Inspection #lnspections $40,000 2,000 Machine use Machine hours $400,000 10,000 Activity data forthe two products manufactured by the company at year end are as follows: Overheadto be applied = $ Radios CD Players E Direct Labor$ $120,000 $30 ,000 # Inspections 500 1,500 Machine hours 5000 5,000 Supervision Inspection Machine Use |.|aster_. Testtctal |:-:=ints |:-:=E Y = $50.000 Estimated OH costs $150.000 Estimated Direct labor dollars = 40 per direct labor dollar $40.000 Estimated OH costs 2.000 inspections = 820 per inspection = $400000 Estimated OH costs 10.000 machine hours = 540 per machine hour 9 Internet | Protected Mode: On 'v’h V Q1009E V 1x 2v 3v The Good Sounds Corp. is attemptingto geta betterestimate ofthe cost oftheirproducts. As a first step. they are attempting to allocate overhead by defining three activity cost pools andthree corresponding cost drivers. They believe tn at the cost drivers of each ofthese pools correlate with the costs of that activity pool. The estimated overhead costs and activity levels for each activity are given as follows: Overheadto be applied = $ TV/ 88/ 98/ 1°“ 118/ Ecclnts Welcome. Stephni Robinson Cale E‘-:'rille:: l-.l:" .'—"...; 1 :011 Question 10 Estimated Estimated Activity Cost Driver OH costs Activity level Supervision Direct Labor $ $50,000 $150,000 Inspection #lnspections $40,000 2,000 Machine use Machine hours $400,000 10,000 Activity data forthe two products manufactured by the company at year end are as follows: Radios CD Players E Direct Labor$ $120,000 $30 ,000 # Inspections 500 1,500 Machine hours 5000 5,000 Machine Use Determine Overhead to be applied to the Radios based on activity Supervision Inspection Machine Use l.laeter_. Testtctal points |:-:=s Total Overhead to be applied to the Radios = 848.000 + 510 000 + 8200 000 = $258,000 Y AM... ...s,,cc..u.... A = o20 per inspection U = $400000 Estimated OH costs 10.000 machine hours = 540 per machine hour : 4|] * $120000 direct labor dollars = 548.000 : 500 inspections * 520 per inspection = 810 000 = 5.000 machine hours " $40 per machine hour = °200 000 9 Internet | Protected Mode: On 'v’h V Q1009E V 1x 2v 3v The Good Sounds Corp. is attemptingto geta betterestimate ofthe cost oftheirproducts. As a first step. they are attempting to allocate overhead by defining three activity cost pools andthree corresponding cost drivers. They believe tn at the cost drivers of each ofthese pools correlate with the costs of that activity pool. The estimated overhead costs and activity levels for each activity are given below: UnitCost ofa Radio = $ |.laeter_. Testtctal |:-:=i Welcome. Stephni Robinson Dale E‘-:'rille:: l-.l:" .'—"...; 1 :011 Question 11 ‘x 5v 5:: V 3v 9w my 1% —: points Estimated Estimated Activity Cost Driver DH costs Activity level Supervision Direct Labor$ $50.000 $150,000 Inspection #lnspections $40,000 2000 Machine use Machine hours $400,000 10,000 Activity data for the two products manufactured by the company at year end are as follows: Radios CD Players Direct Labor $ $120,000 $30 .000 # Inspections 500 1500 Machine hours 5000 5,000 Determine Activityr Rates Supervision Inspection Machine Use = = $60000 Estimated OH costs $150000 Estimated Direct labor dollars = S 40 per direct labor dollar $40000 Estimated OH costs 2.000 inspections = °20 per inspection $400000 Estimated OH costs 10000 machine hours = n2: mach me ha I; V :I‘ 9 Internet | Protected Mode: On {‘5 v 4410093 v l g, httpsflfdmsdevlytdufdmeebPagesfflashfcontenflstudenbl'masteryTestaspx?courseID:534245?SduserID:23920225£dsflD=13351ro|etype= STUD : \' Welcome. Stephni Robinson Cale E‘-:'rille:: l-.l:" .'—"...; 1 :011 Question 11 1x 2v 3v ‘x 5v 5:: TV/ 3v 9w “iv “e -.=IntE The Good Sounds Corp. Estimated Estimated is attemptingto geta Activity Cost Driver OH costs Activity level betterestimate ofthe Supervision Direct Labor$ $00,000 $150,000 cost oftheirproducts. Inspection #lnspections $40,000 2000 Machine use Machine hours $400,000 10,000 As a first step. the'y are 8090190an allocate Activity data for the two products manufactured by the company at year end are as follows: overhead by defining three activity cost pools Radios CD Meyers E Mme °°”95_‘?°“”.'”9 Direct Labor 0 0120000 030000 costdrivers.They believe # Inspections SUD 15m thatthe cost drivers of Machine hours Slum SIDED each ofthese pools correlate with the costs of that activity pool. . H UBLCIIIIIIIC UVUIIICCIU lU U5 GPPIIUU lU lIIU “GIUIUD UCIDCU UII dbllu‘ll)‘ A Supervision = 3 40 * 0120.000 direct labor dollars = 548.000 I—l wreath 801M”. arm given Inspection = 500 inspections ” 520 per inspection I: 510 000 _ _ n _ below; Machine Use = 5.000 machine hours * $40 per machine hour = L"ELIU |.||.||.| Total Overhead to be applied to the Radios = 848.000 + 810 000 + 320'] IIIIIIIII = 5253 000 J Unit cost of a Radio = [Direct Materials + Direct Labor + Overhead as per above} Units of Radios produced UnitCost ofa Radio = $ E = 1.500.000 + 120.000 +8 000 . 20.000 E! ClD:u.' l.|aster_. Testtetal |:-:=i = $93.90 l_l' ii Done 9 Internet | Protected Mode: On 'V’h ' £10096 V ...
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This note was uploaded on 03/26/2012 for the course AC505 AC505 taught by Professor Dillan during the Spring '10 term at Keller Graduate School of Management.

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AC 505 4.1 Mastery test - ..___. E hflpgh‘d

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