1. Would factory security and assembly activities be best classified at an appliance

manufacturing plant as unit-level, batch-level, product-level, or organization-sustaining?

Security

Assembly

A)

Product

Unit

B)

Batch

Batch

C)

Organization

Unit

D)

Organization

Product

2. An activity-based costing system that is designed for internal decision-making generally

will not conform to generally accepted accounting principles. Which of the following is NOT

a reason for this happening?

A)

Some manufacturing costs (i.e., the costs of idle capacity and organization

sustaining costs) will not be assigned to products.

B)

Some nonmanufacturing costs are assigned to products.

C)

Allocation bases other than direct labor-hours, direct labor cost, and machine

hours are used.

D)

First-stage allocations may be based on subjective interview data.

3. Tatman Corporation uses an activity-based costing system with the following three activity

cost pools:

Activity Cost Pool

Total Activity

Fabrication.........................

10,000 machine-hours

Order processing ...............

800 orders

Other..................................

Not applicable

The Other activity cost pool is used to accumulate costs of idle capacity and

organization-sustaining costs.

The company has provided the following data concerning its costs:

Wages and salaries............

$320,000

Depreciation ......................

220,0002

Occupancy.........................

120,000

Total ..................................

$660,000

The distribution of resource consumption across activity cost pools is given below:

Activity Cost Pools

Fabrication

Order

Processing

Other

Total

Wages and salaries......

20%

65%

15%

100%

Depreciation ................

15%

35%

50%

100%

Occupancy...................

5%

70%

25%

100%

The activity rate for the Fabrication activity cost pool is closest to:

A)

$3.30 per machine-hour

B)

$13.20 per machine-hour

C)

$10.30 per machine-hour

D)

$8.80 per machine-hour

4. Hosley Corporation uses an activity-based costing system with three activity cost pools.

The company has provided the following data concerning its costs:

Costs:

Wages and salaries......

$360,000

Depreciation ................

100,000

Occupancy...................

120,000

Total ............................

$580,000

The distribution of resource consumption across the three activity cost pools is given

below:

Activity Cost Pools

Fabricating

Order

Processing

Other

Total

Wages and salaries........

50%

40%

10%

100%

Depreciation ..................

10%

45%

45%

100%

Occupancy.....................

5%

60%

35%

100%

How much cost, in total, would be allocated in the first-stage allocation to the Other

activity cost pool?

A)

$123,000

B)

$174,000

C)

$58,000

D)

$203,0003

5. Feldpausch Corporation has provided the following data from its activity-based costing

system:

Activity Cost Pool

Total Cost

Total Activity

Assembly.....................

$1,137,360

84,000

machine-hours

Processing orders ........

$28,479

1,100

orders

Inspection ....................

$97,155

1,270

inspection-hours

The company makes 470 units of product W26B a year, requiring a total of 660

machine-hours, 50 orders, and 40 inspection-hours per year. The product's direct

materials cost is $40.30 per unit and its direct labor cost is $42.22 per unit. The

product sells for $118.00 per unit. According to the activity-based costing system, the

product margin for product W26B is:

A)

$6,444.70 per unit

B)

$4,679.20 per unit

C)

$3,384.70 per unit

D)

$16,675.60 per unit