Organizations with largely fixed costs tend to be highly profitable during boom years because costs do not rise (much) with increases in volume, but the reverse also true. During bust years, costs remain high despite drops in volume.

True

False

0.5 points

QUESTION 2

What does "economies of scale" mean?

	Groups of companies with similar valuations.
	Gaining a cost advantage with an increase in size or output.
	Management of available resources and the costs associated with them.

0.5 points

QUESTION 3

Standard costing develops "benchmarks" or "norms" that are used by management to monitor for discrepancies.

True

False

0.5 points

QUESTION 4

Financial Mgt

Select all the true statements about standard costing.

	Estimates the overall cost by using previous actuals.
	Estimates the overall cost to create a standard through analyis and averaging costs over time.
	Enables a company to more quickly create cost forecasts and react to unexpected variances.
	Can only be used to account for materials and labor (not for overhead costs).

0.5 points

QUESTION 5

The ABC Company, maker of birdhouses, has decided to implement an ABC system. The Cost Accountant has been provided the following data for the past month:

Birdhouse Models Quantity Produced Total Machine Hours Total Labor Hours

Basic 100 10 25

Standard 100 20 40

Deluxe 25 40 60

The Spend pools are provided as:

Material $3,000

Direct Labor $5,000

Overhead $2,000

If Overhead is allocated based on the activity of Quantity Produced, how much of the $2,000 cost will be allocated to the Deluxe Birdhouse?

	$222
	$888
	$960
	$1,142

0.5 points

QUESTION 6

The ABC Company, maker of birdhouses, has decided to implement an ABC system. The Cost Accountant has been provided the following data for the past month:

Birdhouse Models Quantity Produced Total Machine Hours Total Labor Hours

Basic 100 10 25

Standard 100 20 40

Deluxe 25 40 60

The Spend pools are provided as:

Material $3,000

Direct Labor $5,000

Overhead $2,000

If Overhead is allocated based on the activity of Total Machine Hours, how much of the $2,000 cost will be allocated to the Deluxe Birdhouse?

	$1,142
	$222
	$960
	$667

0.5 points

QUESTION 7

The ABC Company, maker of birdhouses, has decided to implement an ABC system. The Cost Accountant has been provided the following data for the past month:

Birdhouse Models Quantity Produced Total Machine Hours Total Labor Hours

Basic 100 10 25

Standard 100 20 40

Deluxe 25 40 60

The Spend pools are provided as:

Material $3,000

Direct Labor $5,000

Overhead $2,000

If Direct Labor Hours is allocated based on Total Machine Hours, which birdhouse model will have the most expensive Direct Labor component of total cost?

	Deluxe Model
	Standard Model
	Basic Model
	All three will have the same cost since the total spending remains constant at $5,000

0.5 points

QUESTION 8

Cost allocation is the process of spreading or assigning indirect costs to a finished product. Assume that the cost of an overhead item is $100. There are 3 products that benefit from this overhead item and during this period 10 units of A, 20 units of B and 70 units of C are produced.

If the allocation of overhead expense is based on units of production, which product will absorb the most of the $100?

	Product A
	Product B
	Product C
	All products will receive the same amount of overhead (called "fair share").

0.5 points

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1. Organizations with largely fixed costs tend to be highly profitable during boom years because costs do not rise (much) with increases in volume, but the reverse also true. During bust years, costs remain high despite drops in volume. True False 0.5 points QUESTION 2 1. What does "economies of scale" mean? Groups of companies with similar valuations. Gaining a cost advantage with an increase in size or output. Management of available resources and the costs associated with them. 0.5 points QUESTION 3 1. Standard costing develops "benchmarks" or "norms" that are used by management to monitor for discrepancies. True False 0.5 points QUESTION 4 1. Copy of Select all the true statements about standard costing. Estimates the overall cost by using previous actuals. Estimates the overall cost to create a standard through analyis and averaging costs over time. Enables a company to more quickly create cost forecasts and react to unexpected variances. Can only be used to account for materials and labor (not for overhead costs). 0.5 points QUESTION 5 1. The ABC Company, maker of birdhouses, has decided to implement an ABC system. The Cost Accountant has been provided the following data for the past month: Birdhouse Models Quantity Produced Total Machine Hours Total Labor Hours Basic 100 10 25 Standard 100 20 40 Deluxe 25 40 60 The Spend pools are provided as: Material $3,000 Direct Labor $5,000 Overhead $2,000 If Overhead is allocated based on the activity of Quantity Produced, how much of the $2,000 cost will be allocated to the Deluxe Birdhouse? $222 $888 $960 $1,142 0.5 points QUESTION 6 1. The ABC Company, maker of birdhouses, has decided to implement an ABC system. The Cost Accountant has been provided the following data for the past month: Birdhouse Models Quantity Produced Total Machine Hours Total Labor Hours Basic 100 10 25 Standard 100 20 40 Deluxe 25 40 60 The Spend pools are provided as: Material $3,000 Direct Labor $5,000 Overhead $2,000 If Overhead is allocated based on the activity of Total Machine Hours, how much of the $2,000 cost will be allocated to the Deluxe Birdhouse? $1,142 $222 $960 $667 0.5 points QUESTION 7 1. The ABC Company, maker of birdhouses, has decided to implement an ABC system. The Cost Accountant has been provided the following data for the past month: Birdhouse Models Quantity Produced Total Machine Hours Total Labor Hours Basic 100 10 25 Standard 100 20 40 Deluxe 25 40 60 The Spend pools are provided as: Material $3,000 Direct Labor $5,000 Overhead $2,000 If Direct Labor Hours is allocated based on Total Machine Hours, which birdhouse model will have the most expensive Direct Labor component of total cost? Deluxe Model Standard Model Basic Model All three will have the same cost since the total spending remains constant at $5,000 0.5 points QUESTION 8 1. Cost allocation is the process of spreading or assigning indirect costs to a finished product. Assume that the cost of an overhead item is $100. There are 3 products that benefit from this overhead item and during this period 10 units of A, 20 units of B and 70 units of C are produced. If the allocation of overhead expense is based on units of production, which product will absorb the most of the $100? Product A Product B Product C All products will receive the same amount of overhead (called "fair share"). 0.5 points S AV E A N D S U B M I T Click Save and Submit to save and submit. Click Save All Answers to save all answers