The costs that are easiest to trace directly to products areA. direct materials and direct labor.B. direct labor and overhead.C. direct materials and overhead.D. none of the above; all three costs are equally easy to trace to the product.

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Which of the following is not a product-level activity?A. Material handlingB. Inventory managementC. Engineering changesD. Product design
Which of the following is not a benefit of activity-based costing?A. Enhanced control over overhead costsB. Better management decisionsC. Less costly to useD. More accurate product costing
Use of activity-based costing will result in the development ofA. one plantwide activity-based overhead rate.B. no overhead rates; overhead rates are not used in activity-based costing.C. one overhead rate based on direct labor hours.D. multiple activity-based overhead rates.
Which of the following is not a batch-level activity?A. Equipment setupsB. Purchase orderingC. InspectionD. Assembling
Gant Accounting performs two types of services, Audit and Tax. Gant"s overhead costs consist of computer support, $318000; and legal support, $159000. Information on the two services is: Direct labor cost: $50000 ( Audit); $100000 (Tax)CPU minutes: 40000 (Audit); 10000 (Tax)Legal hours used: 200 (Audit); 800 (Tax)Overhead applied to tax services using traditional costing isA. $190800.B. $286200.C. $318000.D. $159000.
Which of the following factors would suggest a switch to activity-based costing?A. The manufacturing process has been stable.B. provided by the existing system.C. Product lines similar in volume and manufacturing complexity.D. Overhead costs constitute a significant portion of total costs.
An activity that has a direct cause-effect relationship with the resources consumed is a(n)A. overhead rate.B. cost driver.C. cost pool.D. product activity.
Foxx Company incurs $350000 overhead costs each year in its three main departments, setup ($20000), machining ($235000), and packing ($95000). The setup department performs 40 setups per year, the machining department works 5000 hours per year, and the packing department packs 500 orders per year. Information about Foxx"s two products is as follows:Number of setups: 20 (Product A1); 20 (Product B1)Machining hours: 1000 (Product A1); 4000 (Product B1)Orders packet: 150 (Product A1); 350 (Product B1)Number of products manufactured: 600 (Product A1); 400 (Product B1)Using ABC, how much overhead is assigned to Product B1 each year?A. $175000B. $264500C. $280000D. $140000
For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $500000 and 4000 inspections. The actual overhead cost for that cost pool was $580000 for 5000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products isA. $125 per inspection.B. $145 per inspection.C. $116 per inspection.D. $100 per inspection.
Boswell Company manufactures two products, Regular and Supreme. Boswell"s overhead costs consist of machining, $1400000; and assembling, $700000. Information on the two products is:Direct labor hours: 10000 (Regular); 15000 (Supreme)Machine hours: 10000 (Regular); 30000 (Supreme)Number of parts: 90000 (Regular); 160000 (Supreme)Overhead applied to Regular using activity-based costing isA. $602000.B. $840000.C. $1498000.D. $1260000.
Which of the following is not a unit-level activity?A. Purchase orderingB. PaintingC. AssemblingD. Sewing
What sometimes makes implementation of activity-based costing difficult in service industries isA. attempting to reduce or eliminate non-value-added activities.B. the labeling of activities as value-added.C. identifying activities, activity cost plus, and cost drivers.D. that a larger proportion of overhead costs are company-wide costs.
Which best describes the flow of overhead costs in an activity-based costing system?A. Overhead costs → activity cost pools → cost drivers → productsB. Overhead costs → productsC. Overhead costs → machine hours → productsD. Overhead costs → direct labor cost or hours → products
Which of the following is not a batch-level activity?A. Equipment setupsB. InspectionC. Purchase orderingD. Assembling
Which of the following is true about activity-based costing?A. Less cost poolsB. More costly to useC. Eliminates arbitrary allocationsD. Same base as traditional costing
Gant Accounting performs two types of services, Audit and Tax. Gant"s overhead costs consist of computer support, $366000; and legal support, $180000. Information on the two services is:Direct labor cost: $50000 (Audit); $100000 (Tax) CPU minutes: 40000 (Audit); 10000 (Tax) Legal hours used: 200 (Audit); 800 (Tax) Gant Accounting performs tax services for Cathy Lane. Direct labor cost is $1200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Lane job using activity-based costing?A. $5772B. $6192C. $4392D. $4572
Which of the following is not a batch-level activity?A. Equipment setupsB. InspectionC. Materials handlingD. Engineering changes
Companies that switch to ABC often find they haveA. been overpricing some products.B. possibly losing market share to competitors. C. been sacrificing profitability by underpricing some products.D. all of the these answers are correct.

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A well-designed activity-based costing system starts withA. identifying the activity-cost pools.B. analyzing the activities performed to manufacture a product.C. computing the activity-based overhead rate.D. assigning overhead costs to products.
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