Hudson Inc.

Hudson Inc. has the following information available for September:

Beginning Ending

Raw materials $ 8,000 $ 5,000

Work-in-process 30,000 40,000

Finished goods 7,000 3,000

Raw materials purchased $ 25,000

Direct labor costs 70,000

Manufacturing overhead costs 30,000

Administrative costs 12,000

Marketing costs 6,000

Refer to the Hudson Inc. information above. Cost of goods sold for September is:

1. $122,000.
2. $140,000.
3. $119,000.
4. $143,000.

Which of the following would be classified as a service department?

1. The accounting department of a manufacturing company.
2. The painting department of an automobile manufacturer.
3. The bottling department of a soft drink manufacturer.
4. The claims processing department of an insurance company.

Which of the following is false regarding activity-based costing (ABC)?

1. The cost of implementing ABC may outweigh the benefits.
2. Increased accuracy with budgeting resources is often realized.
3. Companies that have a high potential for cost distortions are more likely to benefit with ABC.
4. Opportunities for continuous improvement are rarely revealed by using ABC.

Which of the following types of companies would be most likely to benefit from activity-based costing?

1. Companies with a low potential for cost distortions
2. Companies that have a large proportion of unit-level costs
3. Companies that have a relatively high proportion of overhead compared to direct materials and direct labor
4. None of these choices is correct.