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Common allocation bases are


A) direct labor dollars, direct labor hours, direct material dollars
B) direct labor dollars, direct labor hours, machine hours
C) direct labor dollars, direct labor hours, machine dollars
D) machine dollars, direct labor dollars, machine hours

E) None of the above
F) B) and C)

Correct Answer

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Using a plantwide factory overhead rate distorts product costs when:


A) products require different ratios of allocation-base usage in each production department
B) significant differences exist in the factory overhead rates used across different production departments
C) both A and B are true
D) neither A nor B are true

E) A) and C)
F) A) and B)

Correct Answer

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The Bonnington Company manufactures small lamps and desk lamps. The following shows the activities per product: The Bonnington Company manufactures small lamps and desk lamps. The following shows the activities per product: Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps. A) $314,000 B) $209,333 C) $202,000 D) $104,000 Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps. The Bonnington Company manufactures small lamps and desk lamps. The following shows the activities per product: Using the following information prepared by the Bonnington Company, determine the total factory overhead to be charged to small lamps. A) $314,000 B) $209,333 C) $202,000 D) $104,000


A) $314,000
B) $209,333
C) $202,000
D) $104,000

E) A) and C)
F) None of the above

Correct Answer

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The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Calculate the cost of services for a hair cut. A) $3.00 B) $6.50 C) $3.50 D) $16.50 The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Calculate the cost of services for a hair cut. A) $3.00 B) $6.50 C) $3.50 D) $16.50 Calculate the cost of services for a hair cut.


A) $3.00
B) $6.50
C) $3.50
D) $16.50

E) B) and C)
F) A) and D)

Correct Answer

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Estimated activity-base usage quantities are the total activity-base quantities related to each product.

A) True
B) False

Correct Answer

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Using multiple department factory overhead rates instead of a single plantwide factory overhead rate:


A) results in more accurate product costs
B) results in distorted product costs
C) is simpler and less expensive than a plantwide rate
D) applies overhead costs to all departments equally

E) A) and B)
F) B) and C)

Correct Answer

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Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

A) True
B) False

Correct Answer

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The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: Calculate the total factory overhead to be charged to each unit of Hooks. A) $33 B) $50 C) $11 D) $61 The Skagit Company manufactures Hooks and Nooks. The following shows the activities per product and total activity information: Calculate the total factory overhead to be charged to each unit of Hooks. A) $33 B) $50 C) $11 D) $61 Calculate the total factory overhead to be charged to each unit of Hooks.


A) $33
B) $50
C) $11
D) $61

E) A) and B)
F) None of the above

Correct Answer

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Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit. Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will be allocated to the deluxe widget production if the budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?


A) $391,500
B) $225,000
C) $261,000
D) $337,500

E) A) and C)
F) A) and B)

Correct Answer

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Direct labor hours is not a cost pool that is regularly used in the activity-based costing method.

A) True
B) False

Correct Answer

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