4.A manufacturer uses activity-based costing to assign overhead cost to products. Budgeted cost information for its activities follows. The activity rate for Purchasing is:

ActivityBudgeted CostActivity Cost DriverBudgeted Activity UsagePurchasing$ 405,000Purchase orders13,500purchase ordersFactory services96,000Square feet15,000square feetSetup195,000Setups150Setups

Multiple Choice

• $6.40 per square foot.
• $27.00 per purchase order.
• $30.00 per purchase order.
• $1,300.00 per setup.
• $27.00 per square foot.

5.Data Company provides accounting services. The company computed the following activity rates using activity-based costing. The forensic accounting department has 20 employees, occupies 3,000 square feet, and completed 80 jobs.

ActivityActivity RateClerical support$ 1,200per employeeBuilding$ 100per square footSupplies$ 160per job

Compute overhead cost per job for the forensic accounting department.

Multiple Choice

• $1,460.
• $4,210.
• $4,000.
• $3,910.
• $3,750.

6.Steel Company uses activity-based costing and reports the following for this year. Allocate overhead costs to a job that uses 30 machine hours and 20 direct labor hours.

ActivityBudgeted CostActivity Cost DriverBudgeted Activity UsageCutting$ 99,000Machine hours (MH)3,300machine hoursAssembly379,600Direct labor hours (DLH)7,300direct labor hoursTotal$ 478,600

Multiple Choice

• $3,248.
• $1,940.
• $5,560.
• $2,132.
• $5,430.

9.Which of the following statements istruewith regard to the departmental overhead rate method?

Multiple Choice

• It is especially accurate in assigning overhead costs that are not driven by production volume.
• It uses a different overhead rate for each department.
• Each department has the same rate for the same activity pool.
• It requires one overhead cost pool and one rate.
• It is the same as activity-based costing.