Question

The most preferable allocation base is one that meets the criteria of:

Fairness

Cause and effect  Correct!  

   

Benefits received

   

Ability to bear

Question 2

A company allocates its corporate overhead to the divisions based on division sales (i.e., a division with 20% of the total company sales is allocated 20% of the corporate overhead). This is an example of:

  

Fairness

   

Cause and effect

Benefits received

Ability to bear  Correct!  

Question 3

A company allocates its human resources department to the divisions based on the number of employees in the division (i.e., a division with 25% of the total company employees is allocated 25% of the human resources cost). This is an example of:

  

Fairness

Cause and effect

Benefits received  Correct!  

   

Ability to bear

Question 4

Setup cost is generally treated as

Unit level

Batch level  Correct!  

   

Product level

   

Organization sustaining

Question 5

The cost of providing audited financial statements to the Securities and Exchange Commission is generally treated as:

  

Unit level

   

Batch level

Product level

Organization sustaining  Correct!  

Question 6

10 / 10 pts

Depreciation computed using the units of output/units of production method is generally treated as:

Unit level  Correct!  

   

Batch level

   

Product level

   

Organization sustaining

Question 7

Design cost is generally treated as:

  

Unit level

Batch level

Product level  Correct!  

   

Organization sustaining

Question 8

0 / 10 pts

Overhead costs are allocated to product cost objects in an activity-based cost system in the following manner:

Overhead costs are assigned to activities, then costs are assigned to products.  Correct!  

   

Overhead costs are assigned to departments, then costs are assigned to products.

   

Overhead costs are assigned to activities, then costs are assigned to departments before assigning to products.

   

Overhead costs are traced directly to products making assigning them unnecessary.

   

None of the above.

Question 9

10 / 10 pts

A company has fixed manufacturing overhead of $200,000 that needs to be allocated to the product cost object. The overhead has been separated into multiple pools, each with its own allocation base, as shown in the following table.

Activity Center	Amount (a)	Activity Driver Quantities A (b)	Activity Driver Quantities B (c)	Description of Driver
Move raw materials	$ 75,000	2,000	3,000	lbs. moved
Setup machines	100,000	200	300	# of setups
Run machines	25,000	6,000	4,000	machine hours
Totals	$200,000

Using activity-based costing, the overhead rate for running the machines is:

  

$4.167 for product A and $6.25 for Product B

   

$75

   

$200

$2.50 -  Correct!  

   

None of the above

Question 10

10 / 10 pts

A company has fixed manufacturing overhead of $200,000 that needs to be allocated to the product cost object. The overhead has been separated into multiple pools, each with its own allocation base, as shown in the following table.

Activity Center	Amount (a)	Activity Driver Quantities A (b)	Activity Driver Quantities B (c)	Description of Driver
Move raw materials	$ 75,000	2,000	3,000	lbs. moved
Setup machines	100,000	200	300	# of setups
Run machines	25,000	6,000	4,000	machine hours
Totals	$200,000

Assuming the overhead rate for moving materials is $12 per pound moved, the allocation of move materials overhead to product B would be:

  

$24,000

$36,000-  Correct!  

   

$60,000

   

$87,600

   

None of the Above

Answer 1

1. The most preferable allocation base is one that meets the criteria of:

Answer :-

Fairness.

2. A company allocates its corporate overhead to the divisions based on division sales (i.e., a division with 20% of the total company sales is allocated 20% of the corporate overhead). This is an example of:

Answer:- Benefits received.

3. A company allocates its human resources department to the divisions based on the number of employees in the division (i.e., a division with 25% of the total company employees is allocated 25% of the human resources cost). This is an example of:

Answer:- Cause and effect.

4. Setup cost is generally treated as

Answer: Unit level.

5. The cost of providing audited financial statements to the Securities and Exchange Commission is generally treated as:

Answer:- Product level.

6. Depreciation computed using the units of output/units of production method is generally treated as:

Answer:- Unit level .

7. Design cost is generally treated as:

Answer:- Batch level.

8. Overhead costs are allocated to product cost objects in an activity-based cost system in the following manner:

Answer:- Overhead costs are assigned to activities, then costs are assigned to products.

9. Using activity-based costing, the overhead rate for running the machines is:

Answer:- $200.

10. Assuming the overhead rate for moving materials is $12 per pound moved, the allocation of move materials overhead to product B would be:

Answer;- $24,000.

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