QUESTION 1 A single indirect cost rate distorts product costs because a there is an assumption that all support activities affect all products in a uniform way b it recognizes specific activities that are required to produce a product c competitive pricing is ignored d it assumes all costs are product costs QUESTION 2 Extreme Service Company provides the following ABC costing information Activities Total Costs Activity cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows Department A Department B Account inquiry hours 2,700 hours 4,200 hours Account billing lines 900,000 lines 750,000 lines Account verification accounts 8,000 accounts 6,000 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account inquiry cost will be assigned to Department A a $54,000 b $320,000 c $160,000 d $84,000 QUESTION 3 Columbus Company provides the following ABC costing information Activities Total Costs Activity cost drivers Labor $384,000 8,000 hours Gas $36,000 6,000 gallons Invoices $180,000 7,500 invoices Total costs $600,000 The above activities used by their three departments are Lawn Department Bush Department Plowing Department Labor 2,500 hours 1,400 hours 4,100 hours Gas 1,800 gallons 1,000 gallons 3,200 gallons Invoices 1,300 invoices 300 invoices 5,900 invoices How much of invoice cost will be assigned to the Bush Department a $7,200 b $141,600 c $31,200 d $180,000 QUESTION 4 For a company which produce its products in batches, the CEO's salary is a(n) cost a batch level b output unit level c facility sustaining d product sustaining QUESTION 5 Facility sustaining costs are the costs of activities a undertaken to support individual products or services regardless of the number of units or batches in which the units are produced b related to a group of units of a product or services, rather than each individual unit of product or service c that managers cannot trace to individual products or services but that support the organization as a whole d performed on each individual unit of a product or service such as the cost of energy, machine depreciation, and repair

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Posted on Jul 09, 2024

QUESTION 1

A single indirect-cost rate distorts product costs because ________.

	a.	there is an assumption that all support activities affect all products in a uniform way
	b.	it recognizes specific activities that are required to produce a product
	c.	competitive pricing is ignored
	d.	it assumes all costs are product costs

QUESTION 2

QUESTION 3

QUESTION 4

QUESTION 5

Facility-sustaining costs are the costs of activities ________.

	a.	undertaken to support individual products or services regardless of the number of units or batches in which the units are produced
	b.	related to a group of units of a product or services, rather than each individual unit of product or service
	c.	that managers cannot trace to individual products or services but that support the organization as a whole
	d.	performed on each individual unit of a product or service such as the cost of energy, machine depreciation, and repair