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1) Jon and Marshall is a CPA firm. Which of the following would be an appropriate driver for a client audit?

a. Number of hours billed

b. Number of tax returns filed

c. Number of the new CPAs hired during the year

d. All of the above

2) Jasmine Inc. manufactures plant-based meat products. They have always used a predetermined overhead rate based on labor hours. The production manager is switching to Activity-Based Costing and is assigning costs based on Processing and Packaging cost pools.

This switch would be expected to result in all of the following except:

a. More accurate pricing

b. Overcosting of high volume, low complexity products

c. Increased profitability from elimination of unprofitable products

d. Identification of activities that could be eliminated to improve profitability

3) Burrow Co. uses activity-based costing in their manufacturing process. The company produces two products, Tiger25 and Tiger50. Burrow has provided the costing department the following information from this years budget relating to the production of these two products:

	Tiger25	Tiger50
Units to be produced	100,000	175,000
Machine-hours expected	8,000	9,000
Direct labor-hours expected	18,000	22,000
Materials handling (number of moves)	500	200
Machine setups (number of setups)	200	100

The following costs are expected to be incurred throughout the year, and are related to the cost drivers being measured:

Materials handling costs	$90,000
Machine setups costs	$45,000

If overhead was applied solely based on the number of setups, what would the overhead rate be?

Select one:

a. $150

b. $225

c. $450

d. None of the above

4) Burrow Co. uses activity-based costing in their manufacturing process. The company produces two products, Tiger25 and Tiger50. Burrow has provided the costing department the following information from this years budget relating to the production of these two products:

	Tiger25	Tiger50
Units to be produced	100,000	175,000
Machine-hours expected	8,000	9,000
Direct labor-hours expected	18,000	22,000
Materials handling (number of moves)	500	200
Machine setups (number of setups)	200	100

The following costs are expected to be incurred throughout the year, and are related to the cost drivers being measured:

Materials handling costs	$90,000
Machine setups costs	$45,000

What are the rates that will be used to apply overhead costs using activity-based costing?

Select one:

a. $121.44/move, $135/setup

b. $122.33/move, $145.54/setup

c. $128.57/move, $150/setup

d. $131/move, $225/setup