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33. Factory overhead taken as a whole would be a perfect example of a. mixed costs. b. fixed costs. c. variable costs. d. irrelevant costs.
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Read more“32. Which of the following situations would result in activity-based costing not being beneficial to an entity? a. Products differ substantially in volume, lot size, or complexity of manufacture. b. A high statistical correlation exists between direct labor and the incurrence of overhead costs. c. Top management and marketing people use the new data to cost products more accurately and reflect a more approprtate selling price for its products. d. Products differ substantially in their need for various activities such as setups, inspections, and so forth, involved in the manufacturing process.”
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Read more31. A cost driver a. is a term that applies only to activity-based costing systems. b. relates only to direct labor-hours or machine-hours. c. is identified only for the first stage in cost assignment. d. is identified for both the first stage and the second stage in cost assignment.
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Read more30. Overhead allocation based on volume alone a. is a key aspect of the activity-based costing model. b. will systematically overcost high-volume products and undercost low-volume products. c. will systematically overcost low-volume products and undercost high-volume products. d. must be used for external financial reporting since an activity-based costing system cannot be designed to generate full product costs for external reporting purposes.
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Read more29. Which of the following regarding activity-based costing is not true? a. Both departmental overhead rates and activity-based costing rely upon a two-stage allocation process. b. Overhead costing using departmental rates typically utilizes more cost pools than activity-based costing. c. An activity is an event or transaction that acts as a causal factor in the incurrence of cost in an organization. d. Activity-based costing typically will result in more accurate allocation of overhead costs between high-volume and low-volume products.
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Read more“28. Departmental overhead rates may not correctly assign overhead costs due to the use of direct labor hours in allocating overhead cost to products rather than machine time or quantity of materials used. b. the high correlation between direct labor-hours and the incurrence of overhead costs. c. over reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production. d. difficulties associated with identifying cost pools for the first stage of the allocation process.”
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Read more27. A successful JIT system is based upon which of the following concepts? a. The company must rely upon a large number of suppliers to ensure frequent deliveries of small lots. b. The company should always choose those suppliers offering the lowest prices. c. The company should avoid long-term contracts with suppliers in order to exert pressure on suppliers to make prompt and frequent deliveries. d. A small number of supplier make frequent deliveries of specific quantities thus avoiding the buildup of large inventories of materials on hand.
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Read more26. The flow of goods through a JIT system is based on: a. a workstation efficiently completing its processing of a batch of units so that the units can proceed forward to the next workstation regardless of whether the next workstation is ready to receive them. b. processing goods in large batch sizes rather than less economical small batches. c. maintaining a stockpile of raw materials in anticipation of errors in production. d. producing to meet customer demand with no buildup of inventory at any point in the production process.
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Read more“25. The Donaldson Company uses a job-order cost system. The following data were recorded for July: July 1 Added During July Work in Process Direct Direct Job Number Inventory Materials Labor 475 $1,500 $ 500 $ 300 476 $1,000 $ 700 $ 900 477 $ 900 $1,000 $1,500 478 $ 700 $1,200 $2,000 Overhead is charged to production at 80 percent of direct materials cost. Jobs 475, 477, and 478 were completed during July and transferred to finished goods. Jobs 475 and 478 have been delivered to the customer. Donaldson’s Work in Process inventory balance on July 31 was: a. $7,280 b. $2,600 c. $3,160 d. $3,320”,”3Total costs in Work in Process for July =Beginning balance = $4,100Direct material = $2,500Direct labor = $4,700Applied MOH (.8×2500) = $2,000Total cost for the month = $13,300Transferred to Finished Gods during he month:Job 475: 1500+500+300+(.8×500) = $2,700Job 477: 900+100+1500+(.8×100) = $2,580J0b 478: 700+1200+2000+(.8×1200) = $4,860Total finished and transferred = $10,140Total costs in Work in Process = Total cost for the period – Total finished and transferred = $13,300 – $10,140 = $3
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