Question

Hello, I am doing homework questions and was hoping to compare answers. Thanks,

1) Ernsting Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2015, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.

For 2015 Ernsting Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:

Cost pool	Manufacturing overhead costs	Activity level
Design changes	$60,000	300 design changes
Setups	320,000	5,000 setups
Inspections	40,000	8,000 inspections
Total manufacturing overhead costs	$420,000

During 2015, two customers, Wealth Managers and Health Systems, are expected to use the following printing services:

Activity	Wealth Managers	Health Systems
Pages	60,000	76,000
Design changes	10	0
Setups	20	10
Inspections	30	38

Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Wealth Managers during 2015?

2) A transportation company provides bussing, limo and taxi service. The company charges: $350 per day for bussing service; $2.00 per kilometre for taxi service; and, $3.50 per kilometre for limo service. Two individual clients, the school board and the city government offices use the majority of the limo service on a contract agreement. Bussing services are used exclusively by the school board, and the taxi service is used almost exclusively by the general public, although the school board uses the taxi services when individual students have to be transported on occasion. Indirect costs are accumulated on internal records at $1.50 per kilometre for limo use and $1.00 per kilometre for taxi use, and $195 per day for each of the twenty buses.

The company's costing system has tracked the following activities for the month:

Client	Limo Km	Taxi Km	Average Days/Bus
School board	360	90	19
City gov't	1,943	125	n/a

Compute the billing to each major client for the month.

3)

Which of the following is NOT a characterization of activity-based costing?

Select one:

A. identifying all resources used by activities regardless of how individual costs behave in the short run

B. identification of only variable costs

C. using the cost hierarchy to allocate costs to products

D. identification of all costs used by activities

4)

Indications that a product cost system needs revision include

Select one:

A. the company uses a single allocation base system developed long ago.

B. managers lose bids they expected to win and win bids they expected to lose.

C. prime cost represent the vast majority of product cost.

D. the product line consists of a products which are produced at different locations.

5)

Traditional cost systems can be used to

Select one:

A. help identify new designs to reduce costs.

B. can be used to enhance budgeting.

C. reveal activities that can be eliminated.

D. help control nonfinancial items such as number of setup hours.

E. accurately assign direct costs.

6)

The term used to describe a situation when at least one miscosted product causes other products to be miscosted in the organization is known as

Select one:

A. product undercosting.

B. cross-subsidization.

C. product sub-optimization.

D. product marketing.

E. product overcosting.

7)

Determining what activities add customer value is an example of what facet of activity-based management?

Select one:

A. achieve planned growth

B. improve selection of process activities to enhance profit

C. increase effective coordination among business function activities

D. reduce costs of non-value-added activities

E. match the company's use of resources to customer demand

8)

Which of the following statements about activity-based costing is TRUE?

Select one:

A. Indirect cost allocation bases are unlikely to be cost drivers.

B. It provides similar results to traditional costing when one activity creates a substantial amount of total cost.

C. It provides similar results to traditional costing when different products use resources from different activities in different proportions.

D. It provides less information than traditional cost systems.

E. It does not affect cost control.

9)

Outsourcing the accounting function is an example of what facet of activity-based management?

Select one:

A. improve selection of process activities to enhance profit

B. achieve planned growth

C. increase effective coordination among business function activities

D. match the company's use of resources to customer demand

E. reduce costs of non-value-added activities

Answer 1