QUESTION 1

1. Overhead costs

   		cannot be traced to cost objects, but can be allocated to cost objects
   		can be traced to cost objects in a cost-effective manner.
   		are not incurred by most companies.
   		primarily are variable costs.

5 points

QUESTION 2

1. Barr Company makes steel and titanium handle bars for bicycles. It requires approximately one hour to make one handle bar of either type. During the most recent accounting period, Barr Company made 7,000 steel bars and 3,000 titanium bars. Setup costs amounted to $42,000. One batch of each type of bar was run each month. If a single company-wide overhead rate based on direct labor hours is used to allocate overhead costs to products, the amount of setup cost assigned to the steel bars will be

   		$42,000
   		$4,200
   		$12,600
   		$29,400

5 points

QUESTION 3

1. The East and West Railroad has 2 divisions. The company recently invested $800,000 to maintain its railroad track and pertinent data for the two divisions are as follows:

   Total Miles Traveled:

   East Division, 800,000 miles

   West Division, 1,200,000 miles

   The amount of track improvement cost that should be allocated to the West Division is

   		$480,000
   		$500,000
   		$320,000
   		$400,000

5 points

QUESTION 4

1. Leather Company makes two types of women's handbags. Making a standard handbag requires 2 hours of labor while making a deluxe handbag requires 5 hours of labor. During the most recent accounting period the company made 2,000 standard handbags and 500 deluxe handbags. Indirect manufacturing costs amounted to $52,000. Based on this information:

   		$20.80 of overhead cost should be allocated to each handbag regardless of the type of handbag
   		$8 of overhead cost should be allocated to each handbag regardless of the type of handbag
   		$16 of overhead cost should be assigned to each standard handbag and $40 of overhead cost should be assigned to each deluxe bag.
   		None of the above

5 points

QUESTION 5

1. Shed Industries produces two products. The products' identified costs are as follows:

   Product A Product B

   Direct Materials $20,000 $15,000

   Direct Labor Cost $12,000 $24,000

   The company's overhead costs of $54,000 are allocated based on direct labor cost. Assume 4,000 units of product A and 5,000 units of Product B are produced. What is the cost per unit for product A?

   		$12.50
   		$17.00
   		$14.75
   		None of these

5 points

QUESTION 6

1. The process of dividing a total cost into parts and assigning it to a cost object is known as

   		divide and conquer.
   		cost allocation.
   		accurate costing.
   		cost division.

5 points

QUESTION 7

1. Mickey & Co. expects overhead costs of $30,000 per month and direct production costs of $12 per unit. The estimated production activity for the 2009 accounting period is as follows: Units Produced:

   Quarter 1: 11,500

   Quarter 2: 9,000

   Quarter 3: 8,250

   Quarter 4: 11,250

   The predetermined overhead rate based on units produced is (rounded to the nearest penny)

   		$1.33 per unit
   		$0.75 per unit
   		$21.00 per unit
   		$9.00 per unit

5 points

QUESTION 8

1. Halt Company employs material handling employees who move materials between production divisions at a labor cost of $160,000 a year. It is estimated that these employees move 800,000 pounds of material per year. If 60,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March?

   		$13,333
   		$12,000
   		$12,800
   		$26,666

5 points