1. Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.

Activity	Cost	Cost Driver
Material handling	$ 285,000	Number of parts
Material insertion	2,850,000	Number of parts
Automated machinery	1,328,000	Machine hours
Finishing	247,200	Direct labor hours
Packaging	247,200	Orders shipped
Total	$ 4,957,400

The following information pertains to the three product lines for next year:

	Economy	Standard	Deluxe
Units to be produced	11,200	6,200	3,200
Orders to be shipped	1,120	620	320
Number of parts per unit	10	15	25
Machine hours per unit	2	4	6
Labor hours per unit	3	3	3

Under Barnett's activity-based costing system, what is the per-unit overhead cost of Deluxe?

a.$277.

b.$267.

c.$419.

d. None of the answers is correct.

2. Which of the following isleastlikely to be classified as a facility-level activity in an activity-based costing system?

a. Production setup.

b. Plant maintenance.

c. Property taxes.

d. Plant management salaries.

3. Activity Based-costing systems are structured on multiple, volume-based cost drivers.

1. True
2. False

4. Many traditional costing systems:

a. combine widely varying elements of overhead into a single cost pool.

b. produce results far superior to those achieved with activity-based costing.

c. trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates.

d. use a host of different cost drivers (e.g., number of production setups, inspection hours, orders processed) to improve the accuracy of product costing.

5. The controller for Jack's Rabbits, Inc., estimates that the company's fixed overhead is $150,000 per year. He also has determined that the variable overhead is approximately $0.20 per rabbit raised and sold. Since the company has a single product, overhead is applied on the basis of output units, or in other words, rabbits raised and sold.

What is the predetermined overhead rate per rabbit if the output estimate or prediction is 150,000 rabbits?

a.$1.00

b.$1.20

c.$7.50

d.$0.20

e.$3.00

6. Osgood Company, which applies overhead at the rate of 170% of direct material cost, began work on job no. 101 during June. The job was completed in July and sold during August, having accumulated direct material and labor charges of $32,000 and $19,000, respectively. On the basis of this information, the total overhead applied to job no. 101 amounted to:

a. $54,400.

b.$86,700.

c.$83,300.

d.$32,300.

e.$0.

7.Metalica Company applies overhead based on machine hours. At the beginning of 20x1, the company estimated that manufacturing overhead would be $450,000, and machine hours would total 30,000. By 20x1 year-end, actual overhead totaled $420,000, and actual machine hours were 25,000. On the basis of this information, the 20x1 predetermined overhead rate was:

a.$28 per machine hour.

b.$15 per machine hour.

c.$14 per machine hour.

d.$16.8 per machine hour.

e.$18 per machine hour.

8.As soon as products are completed, their product costs are transferred from Raw Materials Inventory to Finished-Goods Inventory.

1. True
2. False

9. Janitors salaries costs that were incurred in a company's production factory should be classified as salaries expense.

1. True
2. False