cost acc all combined

8/17/2019 cost acc all combined

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Chapter 31. Costscandisplayvariable,fixed,ormixedbehavior,anditimportantthattheyareclassifiedaccurately.

a. True

b. False

ANSWER: True

2. Acostthatdoesnotchangeasoutputchangesisavariablecost,andonethatchangesisafixedcost.

a. True

b. False

ANSWER: False

3. Acostobjectistheitemforhichmanagersantcostinformation,sothefirststepistodetermineappropriatecostobjects

.

a. True

b. False

ANSWER: True

!. Fixedcostsarecoststhat,intotal,areconstantithintherelevantrangeastheleveloftheassociateddrivervaries.

a. True

b. False

ANSWER: True

". #ariablecostsaredefinedascoststhat,intotal,areconstantregardlessofchangeinanactivitydriver.

a. True

b. False

ANSWER: False

$. %ixedcostsarecoststhathavebothafixedandavariablecomponent.

a. True

b. False

ANSWER: True

&. 'esources,suchasdirectmaterials,directlabor,electricity,e(uipment,andsoon,areeconomicelementsthatenableo

netoperformactivities.

a. True

b. False

ANSWER: True


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Chapter 3* Cost +ehavior

. Thelevelofactivityperformanceheretheamountofactivitycapacityneededcorrespondstothelevelofefficienc

yre(uirediscalledtheactivitycapacity.

a. True

b. False

ANSWER: False

-. 'esourcesarecategoriedasflexible,hicharesuppliedasneeded,andcommitted,hicharesuppliedinadvanceofusage.

a. True

b. False

ANSWER: True

1/. Activity0

baseduseofresourcescanimprovebothmanagerialcontrolanddecisionmaingbecauseitencouragesmanagerstopaym

oreattentiontocontrollingresourceusageandspending.

a. True

b. False

ANSWER: True

11. %ethodsofestimatingcostsusedbycompaniesincludetheindustrialengineeringmethod,theaccountanalysi

smethod,andtheinstantdecisionmethod.

a. True

b. False

ANSWER: False

12. Theindustrialengineeringmethodisusedtodeterminehichactivities,andinhatamounts,arenecessaryto

completeaprocess.

a. True

b. False

ANSWER: True

13. Theaccountanalysismethodcanbeusedtoestimatecostsbyclassifyingaccountsinthegeneralledgerasv

ariable.a. True

b. False

ANSWER: False


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Chapter 2/* nventory %anagement* conomic 4rder 5uantity, 6T, and the Theory of Constraints

1!. Thethreeidelyused(uantitativemethodsofseparatingamixedcostintoitsfixedandvariablecomponentsaret

hehigh0lomethod,thescatterplotmethod,andthemethodofleasts(uares.

a. True

b. False

ANSWER: True1". Thehigh0

lomethodpreselectsthetopointsthatareusedtocomputetheparametersFand7intheexpression89F:#7

a. True

b. False

ANSWER: False

1$. Theplotofdatapointsshoingtherelationshipbeteenmaterialshandlingcostsandactivityoutputiscalledas

cattergraph.

a. True b. False

ANSWER: True

1&. nthemethodofleasts(uares,eachsinglemeasureofclosenessisfirsts(uared.;(uaringthedeviationsavoidspr

oblemscausedbyamixofpositiveandnegativenumbers.

a. True

b. False

ANSWER: True

1. Afeatureofregressionroutines,notprovidedbythescatterplotofhigh0

lomethods,istoprovideinformationtoandintheassessmentofreliabilityoftheestimatedcostsformula.

a. True

b. False

ANSWER: True

1-. Thepercentageofvariabilityinthedependentvariableexplainedbyanindependentvariable


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ANSWER: False

21. Findingastrongstatisticalassociationbeteenanactivitycostandanactivitydrivercanprovideevidenceto

managersaboutthecorrectnessofadriverselection.

a. True

b. False

ANSWER: True

22. >heneverleasts(uaresisusedtofitane(uationinvolvingtoormoreindependentvariables,themethodiscalledm

ultipleregression.

a. True

b. False

ANSWER: True

23. >hen%ultipleregressionisused,theuserhasachoiceofusingmanualcomputationorusingregressionprograms.

a. True

b. False

ANSWER: False

2!. %ultipleregressionisadependabletoolforidentifyingthebehaviorofactivitycosts.

a. True

b. False

ANSWER: True

2". %ultipleregressioncanbeusefultoassesscostbehaviorhendependentvariableisaffectedbyonlyonein

dependentvariable.

a. True

b. False

ANSWER: False

2$. Anumberofcostbehaviorpatternsdonotfolloalinearpattern,instead,theyfolloanonlinearcostcurvecalledthe

learningcurve.

a. True

b. False

ANSWER: True

2&. %anagersagreethattheideasbehindthelearningcurvecanextendtotheserviceindustryonly.

a. True

b. False


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ANSWER: False


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2. Thebasisofthelearningcurveisthataseperformanactionoverandover,eimprove,andeachadditionalperf

ormancetaeslesstimethantheprecedingones.

a. True

b. False

ANSWER: True

2-. Theexperiencecurverelatescosttoincreasedefficiency,suchthatthemoreatasisperformed,theloerthecost

of doing ill be.

a. True

b. False

ANSWER: True

3/. Thecumulativeaverage0

timelearningcurvemodelstatesthatthecumulativeaveragetimeperunitincreasesbyaconstantpercentage.

a. True

b. False

ANSWER: False

31. Themostidelyusedmethodtodeterminecostbehaviorismanagerialjudgement.

a. True

b. False

ANSWER: True

32. %anagerialjudgementincludesthepossibilityofmixedcosts.

a. True

b. False

ANSWER: False

33.+eforeoptingtousemanagerialjudgment,managementshouldmaesurethateachcostispredominantlyfixedorvariable.

a. True

b. False

ANSWER: True


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3!. +asedonmanagerialjudgement,thebestpredictorofmanufacturingcostsistheunitsavailable.

a. True

b. False

ANSWER: False

3". facompanychangesfromsilledlabortorobots,thepreviousdataareoflittlevalueinpredictingfuturecosts.

a. True b. False

ANSWER: True

3$. explainchangesincostsasunitsproducedchange.

ANSWER: ?nitleveldrivers

3&. explainchangesincostfactorsotherthanchangesinunitsproduced.

ANSWER: @on0unit0basedcostsdrivers

3. analysisfocusesonhocostsreacttochangesinactivitylevels.

ANSWER: Costbehavior

3-. areassumedtobethesoledriversofatraditionalcostmanagementsystem.

ANSWER: ?nitbasedcostdrivers

!/. resulthenorganiationsac(uiremanymultiperiodservicecapacitiesbypayingcashupfront.

ANSWER: Committedfixedexpenses

!1. arethoseac(uiredfromoutsidesourcesherethetermsofac(uisitiondonotre(uireanylong0

termcommitments.

ANSWER: Flexibleresources

!2. arecostsincurredthatprovidelong0termactivitycapacity.

ANSWER: Committedresources

!3. A functiondisplaysaconstantlevelofcostforarangeofoutputandthenjumpstoahigherlevel.

ANSWER: step0cost


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!!. Coststhatfolloastep0costbehavioraredefinedas costs.

ANSWER: step0fixed

!". The analysismethodisamethodofdeterminingcostbehavior.

ANSWER: account

!$. The methodmaybeusedtodeterminetheactivitiesandamountsforcostbehavior.

ANSWER: industrialengineering

!&. and studiesmaybeusedinconjunctioniththeindustrialengineeringmethod.

ANSWER: Timemotion

!. Thethree(uantitativemethodsofseparatingamixedcostintoitsfixedandvariablecomponentsare*thehigh0

lomethod,thescatterplotmethodandthemethodof .

ANSWER: leasts(uares

!-. Themethodofleasts(uaresre(uiresa inordertobeutilied.

ANSWER: regression

"/. The8inthee(uation89F:#7representsthe ,thedependentvariable

ANSWER: totalcost

"1. The parameteristhepointathichthemixedcostlineinterceptsthecost


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"". Acorrelationcoefficientnear:1meansthattovariablesaremovinginthe direction.

ANSWER: same

"$. Acorrelationcoefficientnear/meansthattovariablesare .

ANSWER: unrelated

"&. Acorrelationcoefficientnear01meansthattovariablesaremovinginthe direction

ANSWER: opposite

". The

methodisusedheneverleasts(uaresisusedtofitane(uationinvolvingtoormoreindependentvariables.

ANSWER: multipleregression

"-. %ultipleregressionhas or independentvariables.

ANSWER: tomore

$/. isusefulhenthedependentvariableisaffectedbymorethanoneindependentvariable.

ANSWER: %ultipleregression

$1. >henacostbehaviorpatterndoesnotfolloalinearpattern,anonlinearcostcurveisusedcalledthe

curve.

ANSWER: learning

$2. achtimecumulative volumedoubles, fallbyaconstantandpredictablepercentage.

ANSWER: costs

$3. Costs in mareting, distribution, and service after the sale asnumberofunitsproducedandsold

.

ANSWER: decreaseincreases

$!. Cumulative average0time

curveassumesthecumulativeaveragetimeperunitdecreasesbyaconstantpercentageeachtimethecumulative(uantity

ofunitsproduceddoubles.

ANSWER: learning

$". Dnoledge ofcostand activity0levelrelationshipis usedbyexperienced .


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ANSWER: managers

$$. Costbehavioranalysisfocusesonhocosts

a. reacttochangesinprofit.

b. reacttochangesinactivitylevel.

c. changeovertime.

d. bothaandc.

ANSWER: b

$&. Thedriversthatexplainchangesincostsasunitsproducedchangearecalled*

a. @on0unit0leveldrivers

b. Activitybasedcostdrivers

c. ?nit0leveldrivers

d. Allofthese

ANSWER: c

$. Eriversthatexplainchangesincostsasfactorsotherthanchangesinunitsproducedarecalled*

a. Functionalbasedcostdrivers

b. @on0unit0basedcostdrivers

c. ?nit0basedcostdrivers

d. @oneofthese

ANSWER: b

$-. natraditionalcostmanagementsystem,costbehaviorisassumedtobedrivenonlyby

a. unitbasedcostdrivers.

b. non0unitlevelcostdrivers.

c. activity0basedcostdrivers.

d. noneofthese.

ANSWER: a

&/. >hichofthefolloingouldbeanexampleofaunit0basedcostdriver

a. engineeringorders

b. materialmoves

c. inspectionhours

d. directlaborhours

ANSWER: d


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&1. AG!,///permonthsalarypaidtoasupervisorisanexampleofa*

a. fixedcost.

b. variablecost.

c. stepcost.

d. mixedcost.

ANSWER: a

&2. >henthevolumeofactivityincreasesithintherelevantrange,thefixedcostperunit

a. decreasesatfirst,thenincreases.

b. remainsthesame.

c. decreases.

d. increases.

ANSWER: c

&3. FixedcostperunitisG&hen2",///unitsareproducedandG"hen3",///unitsareproduced.>hatisthetotalfixedcosthennothingisproduced

a.

G13/,///b.

G2//,///

c. G12

d.G1&",///

ANSWER: d

RATIONALE: ;?HH4'T@I CAJC?JAT4@;*G&K2",///9G1&",///

&!. Therangeofactivityithinhichalinearcostfunctionisvalidiscalledthe

a. normalrange.

b. relevantrange.

c. activityrange.

d. noneofthese.

ANSWER: b

&". Assumingcostsarerepresentedontheverticalaxisandvolumeofactivityonthehoriontalaxis,hichofthefolloingcostsouldberepresentedbyalinethatisparalleltothehoriontalaxis

a. totaldirectmaterialcosts

b. aconsultantpaidG&"perhourithamaximumfeeofG1,2//

c. employeeshoarepaidG1/perhourandguaranteedaminimumeelyageofG2//

d. rentonexhibitspaceataconvention

ANSWER: d


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&$. Iiventhefolloinggraphs,hichgraphrepresentsfixedcosts

a.

b.

c.

d. noneofthese

ANSWER: b

&&. Asthevolumeofactivityincreasesithintherelevantrange,thevariablecostperunit

a. decreases.

b. decreasesatfirst,thenincreases.

c. remainsthesame.

d. increases.

ANSWER: c

&. AmanufacturingcompanypaysanassemblylineorerG12perhour.>hatistheproperclassificationofthislaborcost

a. variablecost

b. semivariablecostc. fixedcost

d. mixedcost

ANSWER: a

&-. ThedirectmaterialcostisG2/,///hen2,///unitsareproduced.>hatisthedirectmaterialcostfor2,"//unitsproduced

a.

G1",///b.

G",///c.

G2/,///d.

G2",///

ANSWER: d

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G2/,///B2,///K2,"//9G2",///


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/. ;andusyCorporationhasthefolloingcostsfor1,///units*

TotalCost CostperUnit

Eirectmaterials G1,"// G1."/

Eirectlabor &,"// &."/

Eepreciationonbuilding 3/,/// 3/.//

>hatisthetotalcostofdirectmaterialsfor1//units

a.G1."/

b.G3.//c.

G1"/.//d.

G22".//

ANSWER: c

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*1//KG1."/9G1"/

1. >hichofthefolloingcostsisavariablecosta. materialsusedinproduction

b. researchanddevelopment

c. supervisorsLsalaries

d. rent

ANSWER: a

2. Eirectmaterialsareanexampleofa

a. fixedcost.

b. variablecost.

c. stepcost.

d. mixedcost.

ANSWER: b


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3. >hichofthefolloingstatementsisT'?aboutfixedandvariablecosts

a. #ariablecostsareconstantintotalandfixedcostsareconstantperunit.

b. +othcostsareconstanthenconsideredonatotalbasis.

c. +othcostsareconstanthenconsideredonaper0unitbasis.

d. Fixedcostsareconstantintotalandvariablecostsareconstantperunit.

ANSWER: d

!. >hichofthefolloingstatementsisT'?aboutrelevantrange

a. >hencostsreachalevelabovetherelevantrange,theyareconsideredappropriateforanalysis.

b. JinearestimatesofaneconomistLscurvilinearcostfunctionisonlyvalidithintherelevantrange.

c. >hencostsreachalevelbelotherelevantrange,theyareconsideredappropriateforanalysis.

d. Thenonlinearrelevantrangeisignored,andonlythosecostsoutsideofthisrangemaybeconsidered.

ANSWER: b

". >hichofthefolloingis@4Tacorrectstatementconcerningcostbehavior

a. Accordingtoeconomics,inthelongrun,allcostsarevariable.

b. #ariablecostsincreaseintotalinrelationtotheactivitydriver.

c. ?nitfixedcostsincreaseordecreaseinverselyinrelationtotheactivitydriver.

d. @oneoftheabove

ANSWER: d

$. Thefolloingisanexampleofamixedcost*

a. directmaterials

b. materialsusedinproduction

c. salarypluscommissiononsales

d. supervisorsMsalaries

ANSWER: c

&. Thelinearityassumptionismostlielytobeacloseapproximationforanunderlyingnonlinearcostfunction

a. ithinarelevantrangeofactivity.

b. overthelongrun.

c. forshort0runperiods.

d. bothaandc.

ANSWER: a


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. %ixedcosts,bydefinition,containboth

a. productandperiodcosts.

b. fixedandvariablecosts.

c. directandindirectcosts.

d. Controllableandno controllablecosts.

ANSWER: b

-. Assumingcostsarerepresentedontheverticalaxisandvolumeofactivityonthehoriontalaxis,hichofthefolloingcosts

ouldberepresentedbyalinethatstartsattheoriginandreachesamaximumvaluebeyondhichthelineisparalleltothehori

ontalaxis

a. totaldirectmaterialcosts

b. aconsultantpaidG1//perhourithamaximumfeeofG2,///

c. employeeshoarepaidG1"perhourandguaranteedaminimumeelyageofG3//

d. rentonexhibitspaceataconvention

ANSWER: b

-/. Jonghornnterprisesrentsatrucforaflatfeeplusanadditionalchargepermile.>hattypeofcostistherent

a. stepcost

b. fixedcost

c. variablecost

d. mixedcost

ANSWER: d

-1. fproductionvolumeincreasesfrom1$,///to2/,///units,a. totalcostsillincreaseby2/percent.

b. totalcostsillincreaseby2"percent.

c. totalvariablecostsillincreaseby2"percent.

d. mixedandvariablecostsillincreaseby2"percent.

ANSWER: c

-2. %arloeCompanycurrentlyleasesadeliverytrucfrom+urtonnterprisesforafeeofG2"/permonthplus

G/.!/permile.%anagementisevaluatingthedesirabilityofsitchingtoamodern,fuel0efficienttruc,hichcanbeleasedfromIoliath,nc.,forafeeofG$//permonthplusG/./"permile.Alloperatingcostsand

fuelareincludedintherentalfees.ngeneral,aleasefrom

a. Ioliath,nc.,iseconomicallypreferabletoaleasefrom+urtonnterprisesregardlessofthemonthlyuse.

b. +urtonnterprisesiseconomicallypreferablebelo1,///milespermonth.

c. +urtonnterprisesiseconomicallypreferabletoaleasefromIoliath,nc.,regardlessofthemonthlyuse.

d. +urtonnterprisesiseconomicallypreferableabove1,///milespermonth.

ANSWER: b


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-3. Ane(uipmentleasethatspecifiesapaymentofG,///permonthplusG&permachinehourusedisan

exampleofa

a. fixedcost.

b. variablecost.

c. stepcost.

d. mixedcost.

ANSWER: d

Figure3-1

;onor;ystemsundertaesitsonmachinemaintenance.Thedepreciationonthee(uipmentisG2/,///peryearandoperatin

gcostisG2permachinehour.Jastyear2&",///machinehoursereusedtoproduce1//,///units.

-!. SeeFigure3-

1.Eevelopacoste(uationforthetotalmachinemaintenancecost.a.89G2&",///

b.89G2/,///c.8 9G2/,/// :G2 %N'

d. 89G2%N'

ANSWER: c

RATIONALE: 89G2/,///:2%N'

-". RefertoFigure3-1.Computethetotalvariablemachinemaintenancecostlastyear.a.

G2&",///

b.G2!/,///c.

G22/,///d.

G""/,///

ANSWER: d

RATIONALE: T#C9G2


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-&. SeeFigure3-1.>hatisthetotalmaintenancecostperunitproduceda.G/.""

b.

G!.2/c.

G"."/d.

G".&/

ANSWER: d

RATIONALE: 89G2/,///:G2


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1/2. Committedresources

a. aresuppliedasneeded.

b. areac(uiredbyacontractfortheexactamountoftheirusage.

c. mayexceedthedemandfortheirusage.

d. alloftheabove.

ANSWER: c

1/3. >hichofthefolloingisanexampleofacommittedfixedexpense

a. depreciationonafactorybuilding

b. supervisorLssalary

c. directlabor

d. insuranceonabuilding

ANSWER: a

1/!. Theexpensesthatresulthenorganiationsac(uiremanymultiperiodservicecapacitiesbypayingcashupfrontor

byenteringintoanexplicitcontractthatre(uiresperiodiccashpaymentsarecalled*

a. %anagedfixedexpenses

b. Committedfixedexpenses

c. Eiscretionaryfixedexpenses

d. Heriodexpenses

ANSWER: b

1/". Thetypeofresourcesthatareac(uiredfromoutsidesources,herethetermsofac(uisitiondo@4Tre(uireanylong0termcommitmentforanygivenamountoftheresourcearecalled*

a. Flexibleresources

b. Committedresources

c. Eiscretionaryfixedexpenses

d. Committedfixedexpenses

ANSWER: a

1/$. Thecostsincurredthatprovidelong0termactivitycapacity,usuallyastheresultofstrategicplanningarecalled*

a. Eiscretionaryfixedexpenses


c. %ixedcosts

d. ;tep0variablecosts

ANSWER: b


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1/&. >hichofthefolloingisanexampleofadiscretionaryfixedexpense

a. contractorers

b. propertytaxesonafactorybuilding

c. depreciationonafactorybuilding

d. insuranceonabuilding

ANSWER: a

1/. Thecostsincurredfortheac(uisitionofshort0

runactivitycapacity,usuallyastheresultofyearlyplanningarecalled*

a. Eiscretionaryfixedexpenses


c. %ixedcosts

d. ;tep0variablecosts

ANSWER: a

1/-. >henafirmac(uirestheresourcesneededtoperformanactivity,itisobtaining

a. practicalcapacity.

b. resourceusage.

c. activitycapacity.

d. unusedcapacity.

ANSWER: c

11/. Theactivity0 basedresourceusagemodelallosmanagerstobettercalculatethechangesinresourcesupplyanddemandresultingfromd

ecisionssuchas*

a. tomaeorbuyproductioncomponents.

b. maximiationofindividualunitperformance.

c. increasingtheallocationofcosts.

d. focusingonmanagingcostsratherthanactivities.

ANSWER: a

111. Anursinghomere(uiresonenurseforeachsixpatients.Thisisanexampleofa

a. fixedcost.

b. variablecost.

c. stepcost.

d. mixedcost.

ANSWER: c


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112. >hichofthefolloingisanexampleofastep0fixedcost

a. costofdisposablegonsusedbypatientsinahospital

b. costofsoaingsolutiontocleanjeelryhatisthecostofresourceusagea.G3//,///

b.G2!/,///

c.G3/

d.G$/,///

ANSWER: b

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*


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Figure3-3

The;andovalCompanyhasfourprocessengineersthatareeachabletoprocess1,"//designchanges.Jastyear",2"/design

changesereproducedbythefourengineers.achengineerispaidG$/,///peryear

11$. RefertoFigure3-3.Calculatetheactivityrateperchangeorder.

a. G!perchangeorder

b. G1/perchangeorder

c. G!/perchangeorder

d. G1"perchangeorder

ANSWER: c

RATIONALE:activity rate 9

b. 1,3&"changeorders

c. !,///changeorders

d. 2,///changeorders

ANSWER: a

RATIONALE:Total capacityavailability actual activity9 unused capacity

11. RefertoFigure3-3.>hatistheunusedcapacityindollarsa.G$/,///

b.G3/,///c.G2!/,///d.

G1",///

ANSWER: b

RATIONALE: unusedcapacityKactivityrate9unusedcapacityindollars&"/KG!/9G3/,///

11-. >hichofthefolloingis@4Tamethodofdeterminingcostbehavior

a. industrialengineeringmethod

b. accountanalysismethod

c. statisticaland(uantitativemethods

d. confidenceintervalmodel

ANSWER: d


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12/. Themethodforanalyingcostbehaviorthatgenerallyclassifiesgeneralledgeraccountsis

a. accountanalysismethod.

b. multipleregressionmethod.

c. industrialengineeringmethod.

d. learningcurvemethod.

ANSWER: a

121. Thecostbehaviormethodthatmayusetimeandmotionstudiestodeterminetheactivitiesandamountsforco

stbehavioranalysisis

a. accountanalysismethod.

b. industrialengineeringmethod.

c. regressionanalysis.

d. high0lomethod.

ANSWER: b

122. >hichofthefolloingdecision0

maingtoolsould@4Tbeusefulindeterminingtheslopeandinterceptofamixedcost

a. scattergraphs

b. least0s(uaresmethod

c. high0lomethod

d. accountanalysismethod

ANSWER: d

123. fatagivenvolumetotalcostsandfixedcostsarenon,thevariablecostsperunitmaybecomputedasfollos*

a.


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12". ntheformula89F:#7,#referstothe

a. dependentvariable.

b. intercept.

c. slope.

d. totalvariablecosts.

ANSWER: c

12$. ntheformula89F:#7,Freferstothe

a. slope.

b. intercept.

c. dependentvariable.

d. independentvariable.

ANSWER: b

12&. ntheformula89F:#7,8referstothe

a. slope.

b. intercept.



ANSWER: c

12. ntheformula89F:#7,7referstothe

a. slope.

b. intercept.



ANSWER: d

12-. Totalcostsmaybecomputedasfollos*

a. Fixedcosts:


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13/. Amigosndustriesanalyedtherelationshipbeteentotalfactoryoverheadandchangesindirectlaborhours.

tfoundthefolloing*89G$,///:G$7

The8inthee(uationisanestimateof

a. totalvariablecosts.

b. totaldirectlaborhours.

c. totalfactoryoverhead.

d. totalfixedcosts.

ANSWER: c

131. Assumethefolloinginformation*

Volume TotalCost

-/units G1,2//

-units G1,3//

1/$units G1,!//

>hatisthevariablecostperunit

a.

G1".//b.

G12."/c.

G13.&"d.

G1!.&

ANSWER: b

RATIONALE: ;?HH4'T@ICAJC?JAT4@;*


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132. Thefolloingcostfunctionseredevelopedformanufacturingoverheadcosts*

ManufacturingOverheaCost CostFunction

lectricity G2//:G2/perdirectlaborhour

%aintenance G!//:G3/perdirectlaborhour

;upervisorsLsalaries G2/,///permonth

ndirectmaterials G1$perdirectlaborhour

f6anuaryproductionisexpectedtobe2,///unitsre(uiring3,///directlaborhours,estimatedmanufacturingoverheadc

ostsouldbe

a.G2/,&33.b.

G1-,///.c.

G1"2,$//.d.

G21,$//.

ANSWER: d

RATIONALE:

;?HH4'T@I CAJC?JAT4@;*

lectricityOG2//:


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133. Advantagesofthemethodofleasts(uaresoverthehigh0lomethodincludeallofthefolloing7CHT

a. astatisticalmethodisusedtomathematicallyderivethecostfunction.

b. onlytopointsareusedtodevelopthecostfunction.

c. thes(uareddifferencesbeteenactualobservationsandthelineeanessesofthehigh0lomethodincludeallofthefolloing7CHT

a. onlytoobservationsareusedtodevelopthecostfunction.

b. thehighandloactivitylevelsmaynotberepresentative.

c. themethoddoesnotdetectifthecostbehaviorisnonlinear.

d. themethodisrelativelycomplexanddifficulttoapply.

ANSWER: d

13". Thehigh0lomethodmaygiveunsatisfactoryresultsif

a. thepointsareunrepresentative.

b. volumeofactivityisheavy.

c. volume ofactivity islight.

d. the datapointsallfallon aline.

ANSWER: a

Figure3-!

Thefolloinginformationisavailableforelectricitycostsforthelastsixmonthsoftheyear*

Month "rouctionVolume $lectricit%Costs

6anuary 1,!// G2,2//

February 2,// ",!//

%arch 3,2// ",&//

April 1,&"/ 3,-//

%ay 1,2// 2,!//

6une 2,1// !,/"/

13$. RefertoFigure3-! .?singthehigh0lomethod,estimatedvariablecostperunitofproductionis

a.

G1.&"b.

G1.$"c.

G1."3d.

G1.2$

ANSWER: b

RATIONALE:


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31/869

13&. RefertoFigure3-!.>hatarethefixedcostsa.G!2/

b.G1//c.

G2//

d.noneofthese

ANSWER: a

RATIONALE: G2,!//9FC:G1.$"


32/869

1!/. +arronnterpriseshasthefolloinginformationaboutitstrucfleetmilesandoperatingcosts*

&ear Miles OperatingCosts

2/1$ !//,/// G2"$,///

2/1& !/,/// 2/,///

2/1 "$/,/// 32/,///

>hatisthebestestimateoftotalcostsusingthehigh0lomethodiftheexpectedfleetmileagefor2/1is"//,///miles

a.

G2,///b.

G2-$,///c.

G2"$,///d.

G32/,///

ANSWER: b

RATIONALE:



33/869

Figure3-+

JongberryCorporationmanufacturesandsellspartyitems.Thefolloingrepresentativedirectlaborhoursandproductioncost

sareprovidedforafour0monthperiod*

Month

%ay

'irect(a)or*ours

3,$//

"rouctionCosts

G1",///

6une !,// 1&,"//

6uly $,/// 2/,///

August !,// 1&,"//

Total 1-,2// G&/,///

Jet a bn7

8;

9

9

9

9

99

Fixedproductioncostspermonth

#ariableproductioncostsperdirectlaborhour@umberofmonthsEirectlaborhourspermonthTota

lmonthlyproductioncosts;ummation

1!2. RefertoFigure3-+ .Themonthlyproductioncostcanbeexpressedas

a. 79a8:b

b. 79a:b8

c. 89a:b7

d. 89b:a7

ANSWER: c

1!3. RefertoFigure3-+.?singthehigh0lomethod,hatisthecostformulaforestimatingcosts

a.Total cost 9G2/,/// : G2./7

b. Totalcost9G&,"//:G2./7

c. Totalcost9G",///:2./7

d. Totalcost9G2./7

ANSWER: b

RATIONALE:


34/869

1!!. RefertoFigure3-+.Hredictacostfor",///laborhours.a.G1&,-//

b.G1&,&//

c.G1$,$$&

d.G3/,!//

ANSWER: a

RATIONALE: 89G&,"//:2./


35/869

1!. >hichofthefolloingisanadvantageofusingthescatterplotmethodoverthehigh0lomethodtoestimatecosts

a. tisastatisticalmethodtodeterminetheQbestfit.R

b. Acostanalystcanreviethedatavisuallyandeliminateoutliers.

c. The(ualityofthecostformulareliesontheobjectivejudgmentoftheanalyst.

d. Thecostformulacanbedeterminedsimplybylooingattopointsofdata.

ANSWER: b

1!-. ;poaneCorporationfounditsmaintenancecostandsalesdollarstobesomehatcorrelated.JastyearLshighandlo

observationsereasfollos*

MaintenanceCos t Sales

G!$,/// G$//,///

G"2,/// G//,///

>hatisthefixedportionofthemaintenancecost

a.

G2,///b.G"2,///c.

G$/,///d.

G1!,///

ANSWER: a

RATIONALE

:



36/869


37/869

1"1. 'efertoFigure30$.?singacomputerorcalculator ,computetheestimateofvariablecostperunitofproductionusingthemethodofleasts(uares.'oundedtotodecimalplaces,thisvalueouldbea.G3.21.

b.G2.&/.

c.G1.31.

d.G1.23.

A N SWER: c

RATIO N ALE: ;?HH4'T@I CAJC?JAT4@;*

%onth 7 y 78 x2

6une &" G2"/ G1,&"/ ",$2"

6uly 11" 31/ 3",$"/ 13,22"

August 1-/ !// &$,/// 3$,1//

;eptember $/ 2!/ 1!,!// 3,$//

4ctober 13" 3"" !&,-2" 1,22"

Totals "&" 1,""" G1-2,&2" &$,&&"

#9

9 OG1-2,&2" 0


38/869

1"3. 'efertoFigure 30$.?singacomputerorcalculator,computetheestimateofmaintenancecostsat1//unitsof productionusingthemethod ofleasts(uares.Thisvalueouldbe

a.G2-1. b.G321.c.G33$.d.G$-.

ANSWER: a

RATIONALE:

y9G1$/:G1.3179G1$/:


39/869

Figure3-,

Thefolloingcomputerprintoutestimatedoverheadcostsusingregression*

tfor*/ St.error

"arameter

ntercept

$stimate

1//.!1

"arameter0

!.1

"rt

/.///3

ofparameter

2/.

EJN 1!./" $.& /.///1 2./&

';(uarehatisthemodel

a. 4verhead9!.1:$.&EJN

b. 4verhead91//.!1:1!./"EJN

c. 4verhead91!./":1//.!1EJN

d. EJN9!.1:$.&4verhead

ANSWER: b


40/869

1"&. 'efertoFigure30&.Thecoefficientofdeterminationinthismodeltellsusthat

a. theslopeis1!./".

b. theinterceptis1//.!1.

c. /percentofthevariationintheoverheadvariableisexplainedbyEJN.

d. theslopeissignificant.

ANSWER: c

1". 'efertoFigure30&.Thehypothesistestsofthecostparametersindicate


41/869

c. themodelissignificant-1percentofthetime.

d. thattheindependentvariableexplains-1percentofthecost.

ANSWER: d

1$2. >hatisthedifferencebeteenacorrelatione(ualto01andacorrelatione(ualto/

a. Acorrelatione(ualto0

1meanstoalternativesaremovinginthesamedirection,hereasacorrelationof/meanstheyaremoving

inoppositedirections.

b. Acorrelatione(ualto0

1meanstoalternativesaremovinginthesamedirection,hereasacorrelationof/meanstheyareunrelat

ed.

c. Acorrelatione(ualto0

1meanstoalternativesaremovinginoppositedirections,hereasacorrelationof/meanstheyaremovin

ginthesamedirection.

d. Acorrelatione(ualto0

1meanstoalternativesaremovinginoppositedirections,hereasacorrelationof/meanstheyareunrela

ted.

ANSWER: d

1$3. Amanagerialaccountanthasdeterminedthefolloingrelationshipsbeteenoverheadandseveralpossiblebases*

4asis Correlation 5ith Total

Overhea

Eirect labor hours /.!2Eirect labor dollars /.2&-%achine hours 0/.3&mployee minutes in coffee breas 0/.2!3

Thebestbasisforoverheadapplicationis

a. directlaborhours.

b. coffeebreas.

c. directlabordollars.

d. machinehours.

ANSWER: a

1$!. >hatisthedifferencebeteenacorrelatione(ualto01andacorrelatione(ualto:1

a. Acorrelatione(ualto01meanstoalternativesaremovinginthesamedirection,hereasacorrelationof :1meanstheyaremovinginoppositedirections.

b. Acorrelatione(ualto01meanstoalternativesaremovinginthesamedirection,hereasacorrelationof

:1meanstheyareunrelated.

c. Acorrelatione(ualto01meanstoalternativesaremovinginoppositedirections,hereasacorrelationof

:1meanstheyaremovinginthesamedirection.

d. Acorrelatione(ualto01meanstoalternativesaremovinginoppositedirections,hereasacorrelationof

:1meanstheyareunrelated.


42/869

ANSWER: c


43/869

1$". >hatdoesacorrelationcoefficientnear:1mean

a. Tovariablesaremovingintheoppositedirection.

b. Tovariablesaremovinginthesamedirection.

c. Tovariablesareunrelated.

d. 4nevariableisnotagoodpredictoroftheother.

ANSWER: b

1$$. Theappropriaterangeforthecoefficientofcorrelatio

nhatdoesacorrelationcoefficientnear/mean




d. 4nevariableisagoodpredictoroftheother.

ANSWER: c

1$. >hichofthefolloingstatementsis@4Ttrue

a. nselectinganindependentvariableforcostbehavioranalysis,itisimportanttodeterminetheactivitythatcaus

esthecostbeinganalyedtooccur.

b. Hrofessionaljudgmentisveryimportantinselectinganactivitymeasureforaparticularcost.

c. Alocorrelationbeteentovariablesprovesthatonecausestheother.

d. Theleast0s(uarescostestimationmethodcanbeusedtomeasurethelinearfunction.

ANSWER: c

1$-. >hatdoesacorrelationcoefficientnear01mean




d. 4nevariableisnotagoodpredictoroftheother.

ANSWER: a


44/869

1&/. Theconfidenceintervalforthepredictedvalueof8

a. isameasureofthelielihoodthatthepredictionintervalillnotcontaintheactualcost.

b. isconstructedbymultiplyingthet 0statistictimesthestandarderror.

c. canonlybecomputedith-"percentconfidence.

d. alloftheabove.

ANSWER: b

1&1. Thefolloingdataisavailableofestimatedoverheadcostsusinglinearregression*

tfor*/ St.error

ntercept

"arameter $stimate

1//.!1

"arameter0

!.1

"rt

/.///3

ofparameter

2/.

EJN 1!./" $.& /.///1 2./&

';(uare


45/869

Figure3-6

Thefolloingcomputerprintoutestimatedoverheadcostsusingmultipleregression*

tfor*/ St.error

ntercept

"arameter $stimate

1///

"arameter0

1.-$

"rt

/./2"/

ofparameter

"1/.2/!

;etuphours 2" 1.-$ /.///1 /.3/"

of arts 1// -."/ /.///1 1/."2&

';(uare


46/869

1&". 'efertoFigure30.>hatisthepredictedoverheadcosta.

G2,"//

b.

G&",///c.

G&$,///

d.noneofthese

ANSWER: c RATIONALE: overhead9G2"


47/869

Figure3-

NerefordCompanyisplanningtointroduceaneproductithan/percentlearningrateforproductionforbatchesof1,///u

nits.ThevariablelaborcostsareG3/perunitforthefirst1,///0

unitbatch.achbatchre(uires1//hours.ThereareG1/,///infixedcostsnotsubjecttolearning.

1&-. 'efertoFigure30-.>hatisthecumulativetotaltimehatisthebatchunittimehatisthecumulativetotaltimeusingtheincrementalunit0timelearningcurvetoproduce2,///units

a. 1/

b. 1//

c. -/

d. /

ANSWER: a

RATIONALE: ;?HH4'T@I CAJC?JAT4@;* /./ K1//9 /: 1//9 1/

12. 'efertoFigure30-.>hatisthecumulativeaveragetimeperbatchusingtheincrementalunit0

timelearningcurvefor2,///units

a. 1/

b. 1//

c. -/

d. /

ANSWER: c


48/869

RATIONALE: ;?HH4'T@ICAJC?JAT4@;* O


49/869

13. Thelearningcurvethatdecreasesbyaconstantpercentageeachtimethecumulative(uantitydoublesisnonasthe

a. cumulativeaverage0timemodel.

b. cumulativetotal0timemodel.

c. incrementalunit0timemodel.

d. decrementalaverage0timemodel.

ANSWER: c

1!. ApparentCorp.hasdevelopedthefolloinginformationonproductcostsandinventoriesforathree0monthperiod*

7pri l Ma % 8une

Finishedgoodsinventory,units*

+eginning 2/ 2" 3/

%anufactured 2" !/ 3"

Available !" $" $"

;old 2" !/ "/

nding 2/ 2" 1"

%anufacturingcosts G!,/// G$,/// G",","//

+asedonmanagerialjudgment,thebestpredictorofmanufacturingcostsis

a. beginninginventory.

b. unitsmanufactured.

c. endinginventory.

d. unitsavailable.

ANSWER: b

1". famotorcyclemanufacturerchangesfromsilledlabortocomputer0controlledassemblyprocedures,thepastdata

a. areoflittleornovalueinpredictingfuturecosts.

b. areusefulinpredictingfuturecosts.

c. arerepresentativeoffuturecosts.

d. shouldbeusedithoutadjustmentstopredictfuturecosts.

ANSWER: a


50/869

1$. Tornadonterpriseshasthefolloinginformationavailableregardingcostsatvariouslevelsofmonthlyproduction*

Hroductionvolume &,/// 1/,///

Eirectmaterials G&/,/// G1//,///

Eirectlabor "$,/// /,///

ndirectmaterials 21,/// 3/,///

;upervisorsLsalaries 12,/// 12,///Eepreciationonplantande(uipment 1/,/// 1/,///

%aintenance 32,/// !!,///

?tilities 1",/// 21,///

nsuranceonplantande(uipment 1,$// 1,$//

Hropertytaxesonplantande(uipment 2,/// 2,///

Total G21-,$// G3//,$//

'e(uire d *

a.dentifyeachcostasbeingvariable,fixed,ormixedbyritingthenameofeachcostunderoneofthefollo

ingheadings*#ariableCostsFixedCosts%ixedCosts

b. Eevelopane(uationfortotalmonthlyproductioncosts.

c. Hredicttotalcostsforamonthlyproductionvolumeof,///units.

ANSWER:

a. #ariable Costs Fixed Costs %ixed CostsEirect materials ;upervisorsL salaries %aintenanceEirect labor Eepreciation ?tilitiesndirect materials nsurance

Hroperty taxes

b. #ariablecosts9


51/869

1&. Foreachofthefolloingsituations,draagraphthatbestdescribesthecostbehaviorpattern.Theverticalaxisrepresentsc

osts,andthehoriontalaxisrepresentsvolume.

a. Eirectmaterialsperunit

b. Eepreciationexpenseonabuildingperunit

c. AnemployeepaidG"/perhourithaguaranteedsalaryofG1,///peree

d. AconsultantpaidG1//perhourithamaximumfeeofG2,///

e. ;alariesofteachershereeachteachercanhandleamaximumof1"students

ANSWER:

1. TheNamilton%illsCompanycostaccountantantstodeterminethecostbehaviorforoverhead.+asedonobservationanddi

scussioniththeplantorers,thefolloingaccountshavebeenidentifiedasthemostrelevant*;upervisorsalariesanddepr eciationarebelievedtobegenerallyfixedndirectlabor,?tilities,andHurchasingaregenerallybelievedtobevariablendirec

tlaborprimarilyisresponsibleformovingmaterials?tilitycostisprimarilycausedbytheelectricitytorunmachineryandHur

chasingcostsaredrivenbythenumberofpurchaseorders.Theseaccountsandtheirbalancesaregivenbelo*

9nirect

(a)or Utilities "urchasing

Supervisor%

Salaries

'epreciation

on"lantan$

:uipment

8anuar% G 2,"// G 2!,/// G &$,!// G !/,/// G 13,///

Fe)ruar% 31,$// 21,2// &/,// !$,/// 13,///

March 33,$// 2",/// &",2// $!,/// 13,///7pril !1,!// 2",/// /,!// "",$// 13,///

Ma% !/,/// 2",/// &-,// "/,// 13,///

8une 3!,/// 2",/// &-,!// 3!,/// 13,///

Total G2/-,1// G1!",2// G!$2,/// G2-/,!// G &,///


52/869

nformationontheactivitiesisgivenbelo*

;ofmovesmachine

hours

purchase

orers

8anuar% 3!/ ",!// 2"/

Fe)ruar% 3/ ",2// 3//

March !// ",// !"/

7pril "// $,2// 3/

Ma% !/ $,/// 3!/

8une !2/ ",$// 2//

Total 2,"2/ !,2// 1,-2/

'e(uired*

1. >hydidthecostaccountantdecidethatsalariesanddepreciationerefixed

2. Calculatetheaverageaccountbalanceforeachofthe"accountsandcalculatetheaveragemonthlyamountforeachofthethre

edrivers.

3. Calculatethefixedoverheadandvariableratesforeachofthecosts.>riteane(uationforthetotaloverheadcost.

!. n6anuary,!-/moves!,3&"machinehours,and22/purchaseordersereexpected.>hatistheamountofoverheadpredicted

ANSWER: 1.Eepreciationisfixed.;alariesisfixedbecauseitdoesnotvaryiththedrivers.

2.

ndirect ?tilities Hurchasing ;upervisory

Eepreciationonlabor ;alaries

Hlantand(uipment

Total G2/-,1// G1!",2// G!$2,/// G2-/,!// G&,///

ofmonths $ $ $ $ $

A#I G3!,"/ G2!,2// G&&,/// G!,!// G13,///

;ofmoves machinehours purchaseorers

Total 2,"2/ 3!,2// 1,-2/

ofmonths $ $ $

avg !2/ ",&// 32/

3.F4N 9 G!,!// : G13,/// 9G$1,!//#C9JG3!,"/B!2/9G2.-

?tilities9G2!,2//B",&//9G!.2!$Hurcha

sing9G&&,///B32/9G2!/.$2"

Total4N9G$1,!//:G2.-


53/869

1-. Theaverageunitcostatamonthlyvolumeof-,///unitsisG3,andtheaverageunitcostatamonthlyvolumeof22,"//unitsis

G2.1/.

'e(uire d *

Eevelopane(uationfortotalmonthlycosts.

ANSWER:

#ariablecostperunit9


54/869

Factoryoverheadcosts9G"3/:1.3$


55/869

1-1. ThefolloingdataereobtainedfromtheboosofThomasCompany*

Month OverheaCosts 'irect(a)or*ours

1 G1! 3

2 1 "3 2" &

! 12 !

" 2$

$ 2

Thenormale(uationsare Y789aY7:bY72

Y89an:bY7

'e(uire d *

?seacomputerorcalculatortopreparethefolloing*

a. Hlotthedataforoverheadcostasafunctionofdirectlaborhoursusingthescatterplotmethod.

b. Computethefixedandvariablecomponentsoftheoverheadcostsusingthehigh0lomethod.

c.Computethefixedandvariablecomponentsoftheoverheadcostsusingtheleast0s(uaresmethod.

d.Eiscussthestrengthsandeanessesofthethreedifferentcostestimationtechni(uesusedinpartsa,b,andc.

ANSWER:

a.

.

b. b9


56/869


57/869

Jeast0

;(uares%ethod*Thismethodusesallavailabledata.tusesamathematicalcriterion,hichprovidesfora

nobjectiveapproachtocostestimation.naddition,thismethodcanprovideinformationonhogoodthec

ostestimatinge(uationfitsthehistoricalcostdataandinformationneededtoconstructprobabilityinterval

sforcostestimates.talsocanbeusedtodevelope(uationsthatarenotlinearinnature.Thismethodre(uire

smoredatapointsthanthehigh0loorscatterplotmethods.


58/869

1-2. %achinehoursandelectricitycostsforJindberghndustriesfortheyear2/1$areasfollos*

Month Machine*ours $lectricit%Costs

6anuary 2,/// G-,2//

February 2,32/ 1/,"//

%arch 1,"2/ $,&"/

April 2,!/ 11,"//

%ay 3,/!/ 1!,12"6une 2,$!/ 11,///

6uly 3,2/ 12,3&"

August 2,// 11,3&"

;eptember 1,$// &,&"/

4ctober 2,-$/ 13,///

@ovember 3,&$/ 1","//

'e(uire d *

Eecember 3,3$/ 13,&"

a. ?singthehigh0lomethod,developanestimateofvariableelectricitycostspermachinehour. b. ?singthehigh0lomethod,developanestimateoffixedelectricitycostspermonth.

c. ?singthehigh0lomethod,developacostfunctionformonthlyelectricitycosts.

d. stimateelectricitycostsforamonthinhich3,///machinehoursareored.

ANSWER: a. G3.-1 O


59/869

1-3. Iiventhefolloinginformation*

Month *R'eptCosts ; ne5hires ;terminations

6anuary G&",/// !!! 13&

February G"$-,/// 2&$ 2"/

%arch G$/3,/// 21- 13

April G!!",/// 3!3 --

%ay G!$3,/// 3"" &"

6une G!-,/// 2- 36uly G!//,/// 1-$ !&

August G!23,/// 2" -2

;eptember G!$-,/// 3/& 1/1

4ctober G"3,/// 3- 1&"

@ovember G$$&,/// !/2 23

Eecember G!/3,/// 3$1 1/

'e(uired*

a. CalculateanestimateofN'departmentcostsusingthehi0

lomethodusingofnehiresasthevariableparameter

b. CalculateanestimateofN'departmentcostsusingthehi0

lomethodusingterminationasthevariableparameter

c. >hichparameterdoyoufeelisabetterdriverofN'cost

ANSWER: ;olution*

a.#ariableusing@eNires9

b.Fixed usingterminations9G"$-,///


60/869

1-!. Theplantmanagerre(uestedinformationtoassistinestimatingmaintenancecosts.Thefolloingcomputerprintoutas

generatedusingtheleast0s(uaresmethod*

ntercept 2""/

;lope 1."

Correlationcoefficient /.!

Activityvariable ?nitsofproductionvolume

'e(uired*

a.?singtheinformationfromthecomputerprintout,developacostfunctionthatcanbeusedtoesti

matemaintenancecostsatdifferentvolumelevels.

b. stimatemaintenancecostsifexpectedproductionfornextmonthis1/,///units.

ANSWER:

a. Totalmaintenancecosts9G2,""/:G1."7

b. Totalmaintenancecosts9G2,""/:


61/869

1-". Thefolloingexcelprintoutprovidesinformationtoestimateoverheadcostsusinglinearregression*

Coefficients

Standard

Error t Stat P-value Lower 9! "##er 9!

ntercept $/3".-&/2& 1!11./"!$! !.2&&$!2 /.//2$-$ 2&2./&1 -2-.$-&

EJN !.""!2$- 1.$/-$3&31 2.31-12 /./22/" /.!$"!3 .2&/!22!!

setups &&1.1/2-3 "!.-3!131& 1!./3$" $.!!0/& $!!.!2!3$ -&.&1!2-

moves 2-.-!1112! 2.&!$&"3!2 1/.!1"! $.2$0/$ 23.312/-" 3$."&/12--

Re$ression Statistics

%ultiple' /.--$"!!12';(uare /.--31/!-

Adjusted';(uare /.--/$231&!

;tandardrror 3!&.-"$3"-&

4bservations 12

'e(uired*a. >ritethemultipleregressionmodelhatdoestheZt;tatMmeasure

c. >hatistheestimateofoverheadifthedepartmenthas1,2/"EJN,""setupsand12"move

s

ANSWER: a.4verhead9G$,/3".--:G!."$


62/869

1-$. The6ohnsonCompanyistryingtofindanappropriateallocationbaseforfactoryoverhead.Hresentedarefivemont

hsofdata*

Month 'irect(a)or*ours Machine*ours Factor%Overhea

6une 1/ 3 G!"

6uly 2/ " &"

August 1" ! &/

;eptember 3/ " 13/

4ctober 2" 3 /

r 9

'e(uired*a. Calculatethecorrelationcoefficientbeteenfactoryoverheadanddirectlaborhours.

b. Calculatethecorrelationcoefficientbeteenfactoryoverheadandmachinehours.

c. ;hould6ohnsonCompanyusedirectlaborhoursormachinehoursfortheirallocationbaseforfactoryoverhead >hy

a.7


63/869

1-&. Thefolloingcomputerprintoutestimatedoverheadcostsusinglinearregression*

tfor*/ St.error

"arameter $stimate "arameter0 "rt ofparameter

ntercept &" 2.2" /./2"/ 33.33

;etuphours 13 ".1/ /.///1 2.!"

ofparts "/ 1.$" /./"// 3/.3/

';(uareritethemultipleregressionmodel.

b. >hatdoes';(uaremean

c. Hrovidea-"percentconfidenceintervalaroundthenumberofpartsparameter.

ANSWER: a. 4verheadcosts9G&":G13


64/869

1-. Alamo,nc.,isbeginningtheproductionofaneproduct.%anagementbelievesthat"//laborhoursillbere(uiredtoco

mpletetheneunit.An/percentincrementalunit0

timelearningcurvemodelfordirectlaborhoursisassumedtobevalid.Assumethe(90/.321-.Eataoncostsareasfollos*

Eirectmaterials G"/,///perunit

Eirectlabor G2/perdirectlaborhour

#ariablemanufacturingoverhead G3/perdirectlaborhour

'e(uire d *

a.;etupatableithcolumnsforcumulativenumberofunitsshoingthecumulativetotaltimeinhoursus

ingtheincrementalunit0

timelearningcurve.Completethetablefor1,2,3,and!unitsgiventheindividualunittimeforthenthuni

tas"//,!//,3"1,and32/for1to!unitsrespectively.

b.;etupasimilartableassuminga-/percentiththeincrementalunit0timelearningcurveiththe

individualunittime forthenth unitas"//, !"/,!3/,!/" for1to !unitsrespectively.

c. >hatisthedifferenceinvariablecostofproducingfourunits

ANSWER:

a. ?nits /U Total Nrs.1 "// "//2 !// -//3 3"1 1,2"1! 32/ 1,"&1

b. ?nits -/U Total Nrs.1 "// "//2 !"/ -"/3 !3/ 1,3/! !/" 1,&"

c. /./ model9 G2//,///:


65/869

1--. TheDnappCompanyneedstopredictthelaborcostinproducingsmallceramicdolls.Thefolloingproductioninform

ationisavailable*

&ear 'olls"rouce (a)or*ours (a)or'ollars

2/11 1,1"/ "/ G1&,///

2/12 1,$// -&" 23,!//

2/13 1,1// // 2",$//

2/1! 2,1// 1,1"/ 3$,//2/1" 1,"// -"/ 3!,2//

2/1$ 1,3// &" 3",///

>agerateshavesteadilyincreasedsince2/11hoever,managementexpectsnofurtheri

ncreasesin2/1&.

'e(uire d *

a.;electtheappropriateindependentvariableforpredictinglaborcost.xplainthereasonforyourselection.

b.Eevelopane(uationtopredictfor2/1&thelaborcostofproducingceramicdolls.?sethehigh0

lomethod.

ANSWER:

a. nperiodsofchangingprices,unadjustedcostdatashouldnotbeusedasthedependentvariable.Assumingthatthe

technologyhasnotchanged,laborhoursusedindollproductioncanbesubstitutedforlabordollarsindevelopingth

ecost0estimatinge(uation*

89a:b7

Totallaborhours9aconstant:


66/869

9G1$,$//:G1!.//


67/869

2. %anagementinformationsystemscanbedividedintoaunit0basedtypeandactivity0basedtype.

a. True

b. False

ANSWER: True

3. Hredeterminedoverheadratesarecalculatedattheendofeachyearusingtheformula*overheadrate9budgetedannualdri

verlevelBbudgetedannualdriverlevel.a. True

b. False

ANSWER: False

!. ?nit0leveldriversarefactorsthatmeasurethedemandsplacedonunit0levelactivitiesbyproducts.

a. True

b. False

ANSWER: True

". fappliedoverheadisgreaterthanactualoverheaditiscalledoverappliedoverhead.

a. True

b. False

ANSWER: True

$. ?nit0basedproductcostingassignsmanufacturingandsellingcoststoproducts.

a. True

b. False

ANSWER: False

&. Thedifferencebeteenactualoverheadandappliedoverheadisanunderappliedoverhead.

a. True

b. False

ANSWER: False


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. 4verheadassignmentsshouldreflecttheamountofoverheaddemandedbyeachproduct.

a. True

b. False

ANSWER: True

-. Thejustificationfornotusingadepartmentalrateforoverheadcostassignmentisthatitincreasesaccuracy.

a. True

b. False

ANSWER: False

1/. @on0unit0baseddriversarefactorsthatmeasurethedemandsthatcostobjectsplaceonactivities.

a. True

b. False

ANSWER: True

11. foverheadisasignificantproportionoftheunitmanufacturingcosts,thedistortioncausedbyusingmulti0

leveldriverscanbeserious.

a. True

b. False

ANSWER: False

12. Activity0basedcostingusesonlyunit0leveldriversforcosting.

a. True

b. False

ANSWER: False

13. Theactivity0basedcostassignmentisthemostaccuratemethodofcostingbecauseitfollosacause0and0

effectpatternofoverheadconsumption.

a. True

b. False

ANSWER: True

1!. Anactivity0basedcostingsystemtracescoststoactivitiesandthentoproductsandothercostobjects.

a. True

b. False

ANSWER: True

1". Thefirststepindesigninganactivity0basedcostingsystemistoidentifyactivities.

a. True

b. False

ANSWER: True1$. Alistoftheactivitiesidentifiedinthedesignofanactivity0basedsystemiscalledanactivityinventory.


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a. True

b. False

ANSWER: True

1&. Activityattributesarenonfinancialandfinancialinformationitemsthatdescribeindividualactivities.

a. True

b. False

ANSWER: True

1. Hroductclassificationattributesdefineanddescribeactivitiesandarethebasisforproductclassification.

a. True

b. False

ANSWER: False

1-. Afteridentifyinganddescribingactivities,thenextstepistodeterminethecostoftheperformanceofeachactivity

.

a. True

b. False

ANSWER: True

2/. Classifyingactivitiesintofourgeneralcategoriesfacilitatesproductcostingbyassociatingtheresponsetodiffere

nttypesofactivitydrivers.

a. True

b. False

ANSWER: True

21. ffortstosimplifyactivity0basedcostingsystems


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23. ?singthebefore0the0

factsimplificationmethodTEA+Celiminatestheneedfordetailedintervieingandsurveyingtodetermineresourcedriv

ers.

a. True

b. False

ANSWER: True

2!. After0the0factsimplificationincludestoapproaches*theapproximatelyrelevantreducedA+Csystemandthee(uallyaccurateen

hancedA+Csystem.

a. True

b. False

ANSWER: False

2". Therearemanyto0

drivercombinationsthatmaybeusedtoreducetheA+Csystemithoutsacrificingaccuracy.

a. True b. False

ANSWER: True

2$. A


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32. The useof

activitydriverstoassigncoststendsto high0volumeproducts.

ANSWER: unit0levelovercost


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33. A


73/869


74/869

!&. Acostingsystemthatusesactualcostsfordirectmaterialsandlaborandpredeterminedoverheadratestoapplyov

erheadiscalleda


75/869

"2. Foralabor0

intensivemanufacturingoperation,hichofthefolloingouldbethemostappropriateactivitydriver

a. machinehours

b. directlaborhours

c. numberofemployees

d. unitsofoutput

ANSWER: b

"3. nadepartmentthatisdrillingholesinmaterials,hichactivitybaseislielytobemostappropriateforassigningo

verheadcosts

a. unitsproduced

b. directlaborhours

c. machinehours

d. numberofbatches

ANSWER: c

"!. Allofthefolloingareunit0basedactivitydrivers7CHT

a. numberofsetups.

b. machinehours.

c. numberofunits.

d. directlaborhours.

ANSWER: a

"". Adepartmentthatiscapital0intensivemostlielyoulduseapredetermineddepartmentaloverheadratebasedonhichofthefolloingactivitybases

a. unitsofdirectmaterialused

b. directlaborhours

c. directlaborcost

d. machinehours

ANSWER: d


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Figure!01

TheForemostCompanypredictedfactoryoverheadfor2/1$and2/1&ouldbeG12/,///foreachyear.Thepredictedactiv

ityfor2/1$and2/1&ere3/,///and2/,///directlaborhours,respectively.Additionaldataareasfollos*

21< 21,

;alesinunits 2",/// 2",///;ellingpriceperunit G2/ G2/Eirectmaterialsanddirectlaborperunit G1/ G1/

Thecompanyassumesthatthelong0

runnormalproductionlevelis2/,///directlaborhoursperyear.Theactualfactoryoverheadcostfortheendof2/1$and

2/1&asG12/,///.Assumethatittaesonedirectlaborhourtomaeonefinishedunit.

"$. 'efertoFigure!0

1.>hentheannualestimatedfactoryoverheadrateisused,thegrossprofitsfor2/1$and2/1&,respectively,are

a.G1"/,///andG1"/,///.

b.G1"/,///andG1//,///.c.G2"/,///andG2"/,///.

d.G1//,///andG1"/,///.

ANSWER: b

"&. 'efertoFigure!0

1.>henthenormalfactoryoverheadrateisused,thegrossprofitsfor2/1$and2/1&,respectively,are

a.G/,///andG/,///.

b.G2//,///andG2//,///.

c.G12/,///andG1!/,///.

d.G1//,///andG1//,///.

ANSWER: d

RATIONALE: ;?HH4'T@I CAJC?JAT4@;*

'ate 9 G12/,///B2/,/// 9 G$

2/13*


77/869

Actualdirectlaborhoursored !$,//

+udgetedoverhead G3//,//

+udgeteddirectlaborhours 3/,//

Actualoverheadcostsincurred G!$/,//

". 'efertoFigure!02.fnormalcostingisused,theamountofoverheadappliedfortheyearis

a.G!1!,///.

b.G!//,///.

c.G!/,///.

d.G!$/,///.

ANSWER: d

RATIONALE: ;?HH4'T@ICAJC?JAT4@;*+udgetedoverheadB+udgeteddirectlaborhours9

G3//,///B3/,///9G1/BEJNG1/K!$,///9G!$/,///

"-. 'efertoFigure!02.Theactualoverheadrateforapplyingmanufacturingoverheadis

a.G&.1!.

b.G&."/.

c.G1/.//.

d.G1/."/.

ANSWER: c

RATIONALE: ;?HH4'T@ICAJC?JAT4@;*Actualoverheadrate9G3//,///B3/,///9G1/

$/. AvatarCorporationusesapredeterminedratetoapplyoverhead.Atthebeginningoftheyear,Avatarestimatedit

soverheadcostsatG2!/,///,directlaborhoursat!/,///,andmachinehoursat1/,///.Actualoverheadcostsincurreder eG2!-,2/,actualdirectlaborhoursere!1,///,andactualmachinehoursere11,///.

>hatisthepredeterminedoverheadratepermachinehourforAvatar

a.G$./

b.G"."

c.G22.$$

d.G2!.//

ANSWER: d

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G2!/,///B1/,///9G2!./ / per%N


78/869

Figure!03

TherecordsofFamily%anufacturingshothefolloinginformation*

stimatedmanufacturingoverhead G$-/,///

stimatedmachinehours !$,///

Actualmachinehoursored "/,///

Actualcostsincurred*ndirectmaterials G1&/,///

ndirectlabor 23/,///

?tilities 12/,///

nsurance 1//,///

'ent /,///

$1. 'efertoFigure!03.Theamountofoverappliedorunderappliedoverheadis

a. G1/,///underapplied.

b. G"/,///overapplied.c. G$/,///overapplied.

d. G$",2//underapplied.

ANSWER: b

RATIONALE:


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Applied overhead O


80/869

$2. 'efertoFigure!03.Thecompanyusesapredeterminedoverheadratetoapplyoverhead.%anufacturingoverheadappliedis

a.G&"/,///.

b.G&//,///.

c.G$-/,///.

d.G$!,///.

ANSWER: a

RATIONALE: ;?HH4'T@ICAJC?JAT4@;*Hredeterminedrate9G$-/,///B!$,///9G1"Appliedoverhead

9 G1"K"/,///9G&"/,///

$3. Thefolloinginformationpertainsto>hitestonendustriesfor2/1$*

stimated total overhead costs for 2/1! G3&,"//stimated direct labor costs for 2/1! 2",///Actual direct labor costs 22,"//Actual overhead costs 3$,///

Activity base Eirect labor costs

>hatisthepredeterminedoverheadratefor>hitestonendustriesfor2/1$

a.$$.&U

b. 1"/U

c. 1$/U

d.$2."U

ANSWER: b

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G3&,"//BG2",///91"/Uofdirectlaborcosts


81/869

Figure!0!

%annitouCompanymadethefolloingpredictionsfor2/1$*

Factoryoverheadcosts G3//,///

Eirectlaborhours "/,///hours

%achinehours 1//,///hours

6obA2


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Applied overhead


83/869

$&. Thefolloinginformationisprovidedfortheyear*

Actualdirectlaborhoursored 2&,"//

+udgetedoverhead G"2",///

+udgeteddirectlaborhours 3/,///

Actualoverheadcostsincurred G!1,2"/

fnormalcostingisused,theamountofoverheadappliedfortheyearisa.G"$,&"/.//.

b.G!!1,/31.2".

c.G!1,2"/.//.

d.G"2",///.//.

ANSWER: c

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*Hredeterminedoverheadrate9G"2",///B3/,///9G1&."/BEJNAppliedoverhea

d9G1&."/K 2&,"//9G!1,2"/

$. Thefolloinginformationisprovidedbythe;uttonCorporationfortheyear*

Actualoverhead G!"/,///

Actualmachinehoursored 2",///

+udgetedmachinehours 2&,"//

Appliedoverhead G!&,"//

fnormalcostingisused,budgetedoverheadusedtocalculatethepredeterminedrateouldbe

a.G!!3,2"/.b.G!"/,///.c.G!&,"//.d.G"3$,2"/.

ANSWER: d


Appliedoverhead9HredeterminedrateKActualactivity

G!&,"//9HredeterminedrateK2",///Hredeterminedrate9G1-."/perhour

Hredeterminedrate9+udgetedoverheadB+udgetedactivity

G1-."/9+udgetedoverheadB2&,"//

+udgetedoverhead9G1-."/K2&,"//9G"3$,2"/

$-. Assumethefolloing*Actualoverheadcostse(ualedestimatedoverhead.Actualdirectlaborhoursexceededestimateddirectlaborhoursusedtocalculatethepredeterminedoverheadrate.foverheadisappliedusingthepredeterminedo

verheadrate,thenoverheadis

a.G0/0.

b. underapplied.

c. overapplied.

d. indeterminablefromtheinformationgiven.

ANSWER: c


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85/869

&/. +earClandustriesusesajob0

ordercostingsystem.The%oldingEepartmentappliesoverheadbasedonmachinehours,hiletheAssemblyEepartmen

tappliesoverheadbasedondirectlaborhours.Thecompanymadethefolloingestimatesatthebeginningofthecurrentyea

r*

%oldin g Assembly

Thefolloinginformationasavailablefor6ob@o.&02-,hichasstartedandcompletedduringAugust*

8o) =o. ,-2

Moling 7ssem)l%

Eirect materials G3,"// G &,"//Eirect labor G-,/// G12,"//Eirect labor hours -// 1,2"/%achine hours "// !//

Thepredeterminedoverheadrateforthemoldingdepartmentis

a.G1//.

b. G3.

c. G&/.

d. G"/.

ANSWER: c

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*Hredeterminedoverheadrate9G&//,///B1/,///9G&/

%anufacturingoverheadcost G&//,/// G!//,///

%achinehours 1/,/// !,///

Eirectlaborhours 12,/// 1$,///


86/869

&1. JonestarCorporationusesajob0

ordercostingsystemtoaccountforproductcosts.Thefolloinginformationpertainsto2/1$/*

%aterialsHlacedintoHroduction G1!/,//

ndirectJabor !/,///

EirectJaboror0in0Hrocessnventory 3/,///

FactoryoverheadrateisG1perdirectlaborhour.

>hatistheamountofunder0oroverappliedoverheadforJonestarCorporationin2/1$

a. G!/,///overapplied

b. G2/,///overapplied

c. G!/,///underapplied

d. G2/,///underapplied

ANSWER: d

RATIONALE:;?HH4'T@I CAJC?JAT4@;*

Actual overhead


87/869

&3. Accountbalancesfromthe+oilermaersCompanyareasfollos*

%anufacturing 4verhead G2!/,///underapplied

>orinHrocess 1//,///

FinishedIoods 3//,///

CostofIoods;old //,///

funderappliedoroverappliedoverheadismaterialandisallocatedto>orinHrocess,FinishedIoods,andCostofIoods;o

ld


88/869


89/869

&!. 'efertoFigure!0".>hatisthepredeterminedoverheadrate&". 'efertoFigure!0".Nomuchoverheadisappliedtoeach-voltbatteriesandAAAbatteriesrespectively


90/869

Figure!0$

TheFastXFuriousCompanyproducestoproducts*toyplanesandtoyracecars.Theyusedepartmentaloverheadratesfort

hetoproductiondepartments*moldingandfinishing.%oldingusesmachinehourstoassignoverheadandFinishinguse

sdirectlaborhours."/,///planesand2"/,///racecarsareproduced.Hleasefindthefolloingdata*

Moling Finishing Total

stimated4verhead G2"/,/// G1//,/// G3"/,///

Actual4verhead G2!/,/// G12/,/// G3$/,///

xpectedEirectJaborNours

planes ",/// ",/// 1/,///

racecars ",/// 3",/// !/,///

xpected%achineNours

planes 1&,/// 3,/// 2/,///

racecars 3,/// &,/// 1/,///

ActualEirectJaborNours

planes !,"// ",3// 1/,///

racecars ","// 3!,"// !/,///

Actual%achineNours

planes 1$,"// 3,"// 2/,///

racecars 3,2// $,// 1/,///

&. 'efertoFigure!0

$.>hatarethedepartmentaloverheadratesforthemoldingandfinishingdepartmentrespectively

a.G2"G2."/

b.G.33G2

c.G2"G1/

d.G12."/G2."/

ANSWER: d

RATIONALE: molding2"/,///B2/,///9G12."/finishing1//,///B!/,///9G2."/

&-. 'efertoFigure!0$.Nomuchoverheadisappliedtotheplanes

a.G$/,///

b.G2"/,///

c.G21-,"//

d.G22",///

ANSWER: c

RATIONALE: molding12."/ K1$,"// 92/$,2"/ finishing2."/ K",3//9 13,2"/total 4Napplied 921-,"//


91/869

/. 'efertoFigure!0$.>hatistheoverheadperunitforracecars


92/869

!. JamarCorporationusesdepartmentalmanufacturingoverheadratestoapplyoverhead.Eirectlaborcostisusedt

oapplymanufacturingoverheadinEepartmentAandmachinehoursareusedforEepartment+.

'ept.7 'ept.4

EirectJaborCost G$$,/// G33,///

Factory4verhead G&-,2// G$/,///

EirectJaborNours ,/// -,///

%achineNours !,/// 1",///

>hatpredeterminedoverheadrateouldbeusedfordepartmentsAand+respectively

a.3UG"

b.3UG3

c.12/UG!

d.G.!/G"

ANSWER: c


93/869

". The;terlingCompanyappliesmanufacturingoverhead.Attheendoftheyearthefolloingdataereavailable*

Actual%anufacturing4verhead G11",//

stimated%anufacturing4verhead G11/,//

Applied%anufacturing4verhead G1//,//

Thefolloingaccountshadtheunadjustedbalances*

'a%aterialsnventory G1//,//

>or0in0Hrocessnventory G1//,//

FinishedIoodsnventory G1//,//

CostofIoods;old G3//,//

>hatisthejournalentryiftheamountisconsideredmaterial

a. >or in Hrocess G1,///Finished Ioods G1,///Cost of goods sold G3,/// %anufacturing overhead G",///

b. >or in Hrocess G3,///Finished Ioods G3,///Cost of goods sold G-,/// %anufacturing overhead G1",///

c. %anufacturing 4verhead G",///>or in Hrocess G 1,///Finished Ioods G 1,///

Cost of goods sold G 3,///

d. %anufacturing 4verhead G1",///>or in Hrocess G 3,///Finished Ioods G 3,///

Cost of goods sold G -,///

e. none of these

ANSWER: b

RATIONALE: applied%4N0actual%4N9underBoverapplied%4N1/,///011",///9&,///underappliedoverhead

>H 1//,///1B"K1",///93///

FI1//,///1B"K1",///93///

CI;3//,///3B"K1",///9-///total"//,///

>H3///

FI 3///

CI;-///

%4N1",///


94/869

Figure!0&

TheCheroeeCompanyusesapredeterminedoverheadrate.Thefolloingaccountshavetheseunadjustedbalances*

'a%aterialsG2/,///>orinHrocessG!/,///FinishedIoodsG1/,///CostofIoods;oldG"/,///

$. 'efertoFigure!0

&.foverheadisunderappliedbyG12,///andconsideredimmaterial,thejournalentryouldbe

a. Cost of Ioods ;old G12,///%anufacturing4verhead G12,///

b. %anufacturing4verhead G12,///

CostofIoods;old G12,///

c.'a%aterials G2,//

>orinHrocess G!,//

FinishedIoods G1,//

CostofIoods;old G",//

%anufacturing4verhead G12,///

d. %anufacturing4verhead G12,///

'a%aterials G2,///

>orinHrocess G!,///

FinishedIoods G1,///

CostofIoods;old G",///

e. %anufacturing4verhead G12,///

>orinHrocess G!,//

FinishedIoods G1,2//

CostofIoods;old G$,///

ANSWER: a

RATIONALE: underapplied%4N12///CI; 12///%4N12///


95/869

&. 'efertoFigure!0

&.f%anufacturingoverheadasG12,///overappliedandconsideredimmaterial,hatisthejournalentry

a. CostofIoods;oldG12,///

%anufacturing4verheadG12,///

b. %anufacturing4verheadG12,///

CostofIoods;oldG12,///

c. %anufacturing4verheadG12,///

'a%aterialsG2,///>orinHrocessG!,///FinishedIoodsG1,///CostofIoods;oldG",///

d. 'a%aterialsG2,///>orinHrocessG!,///FinishedIoodsG1,///CostofIoods;oldG",///


e. %anufacturing4verheadG12,///

>orinHrocessG!,//FinishedIoodsG1,2//CostofIoods;oldG$,///

ANSWER: b

RATIONALE: manufacturingoveheadG12,///overapplied%4N12,///CI; 12,///


96/869

. 'efertoFigure!0

&.f%anufacturingoverheadasG12,///overappliedandconsideredmaterial,hatisthejournalentry



b. %anufacturing4verheadG12,///

CostofIoods;oldG12,///


'a%aterialsG2,///>orinHrocessG!,///FinishedIoodsG1,///CostofIoods;oldG",///

d. 'a%aterialsG2,///>orinHrocessG!,///FinishedIoodsG1,///CostofIoods;oldG",///



>orinHrocessG!,//FinishedIoodsG1,2//CostofIoods;oldG$,///

ANSWER: e

RATIONALE: manufacturingoveheadG12,///overapplied%4N12,///>H!,//FI1,2//CI; $,///


97/869

-. 'efertoFigure!0

&.f%anufacturingoverheadasG12,///underappliedandconsideredmaterial,hatisthejournalentry



b. >orinHrocessG!,//

FinishedIoodsG1,2//

CostofIoods;oldG$,///



'a%aterialsG2,///

>orinHrocessG!,///

FinishedIoodsG1,///

CostofIoods;oldG",///

d. 'a%aterialsG2,///

>orinHrocessG!,///

FinishedIoodsG1,///

CostofIoods;oldG",///



>orinHrocessG!,//

FinishedIoodsG1,2//

CostofIoods;oldG$,///

ANSWER: b

RATIONALE: manufacturingoveheadG12,///underapplied>H!,//FI1,2//CI;$,///%4N12,///

-/. Hroductsmightconsumeoverheadindifferentproportionsduetodifferencesin

a. productsie.

b. setuptimes.

c. productcomplexity.

d. allofthese.

ANSWER: d

-1. Theproportionofanoverheadactivityconsumedbyaproductisthe

a. overheadratio.

b. consumptionratio.

c. (uicratio.

d. fixedratio.


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ANSWER: b


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-2. %oreaccurateproductcostinginformationisproducedbyassigningcostsusing

a. avolume0based,plantiderate.

b. volume0based,departmentalrates.

c. activity0basedpoolrates.

d. allofthese.

ANSWER: c

-3. ThaisomCompanyappliesmanufacturingoverhead.Attheendoftheyearthefolloingdataereavailable*

Actual%anufacturing4verhead G11",//

stimated%anufacturing4verhead G12/,//

Applied%anufacturing4verhead G11,//

>hatisthejournalentryiftheamountofunder0orover0appliedoverheadisconsideredsmall

a. CostofIoods;old G",///

%anufacturing4verhead G",///

b. CostofIoods;old G3,///


c. CostofIoods;old G2,///


d. %anufacturing4verhead G",///

CostofIoods;old G",///

e. %anufacturing4verhead G3,///CostofIoods;old G3,///

ANSWER: e

RATIONALE: actual%4N0applied%4N9underBoverapplied%4N11",///011,///93///overapplied%4N3/// CI;3///


100/869

Figure!0

TandemCompanymanufacturestoproducts


101/869

-&. 'efertoFigure!0

.fthenumberofmachinehoursisusedtoassignmachinehourcost,determinetheamountofmachinehourcosttobeassigned

toHroductE.

a.G12,///

b.G$/,///

c.G!,///

d.G1$,//

ANSWER: a

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G$/,///B2,"//9G2!G2!K"//9G12,///

Figure!-

;ummer%anufacturinghasfourcategoriesofoverhead.Thefourcategoriesandexpectedoverheadcostsforeachcategoryfo

rnextyeararelistedasfollos*

%aintenance G2"",///

%aterials handling 12",///;etups 3/,///

nspection 1/",///

Currently,overheadisappliedusingapredeterminedoverheadratebaseduponbudgeteddirectlaborhours.1//,///directlab

orhoursarebudgetedfornextyear.

Thecompanyhasbeenasedtosubmitabidforaproposedjob.Theplantmanagerfeelsthatobtainingthisjobouldresultinne

businessinfutureyears.?suallybidsarebaseduponfullmanufacturingcostplus1/percent.

stimatesfortheproposedjobareasfollos*Eirect materials G1",///

Eirect labor


102/869

-. 'efertoFigure!0-.>hatistheamountofoverheadallocatedtotheproposedjobif>inter%anufacturinguses

directlaborhoursasitsonlyactivitydriver

a.G2/,//

b.G3/,!//

c.G3/,///

d.G!1,2//

ANSWER: d RATIONALE: ;?HH4'T@ICAJC?JAT4@;*

4verheadrate9


103/869

1/1. Theuseofunit0basedactivitydriverstoassigncoststendsto

a. overcostlo0volumeproducts.

b. overcosthigh0volumeproducts.

c. undercostallproducts.

d. overcostallproducts.

ANSWER: b


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1/2. >hichofthefolloingis@4Talimitationofaplantideoverheadrate

a. Hroductdiversitymayconsumeoverheadactivitiesunderdifferingconsumptionratios.

b. 4verheadusageisnotstrictlylinedtotheunitsproducedbecausesomeproductsaremorecomplexanddiversethanothe

rs.

c. Hredeterminedratesusingbudgetedoverheadareusuallythebestestimateoftheamountofoverhead.

d. 4verheadcoststendtobeunderallocatedtohighlycomplexproducts.

ANSWER: c

1/3. Apossiblesolutiontoovercomedistortionscausedbyunitlevelratesis

a. assigncostsbymultiplyingactivityratestimestheamountofactivityconsumed.

b. calculateindividualratesforeachactivityithactivitydrivers.

c. increasethenumberofratesusedthatreflectthediverseactivityandnonunitoverheaddrivers.

d. allofthese.

ANSWER: d


105/869

Figure!01/

The%anoliCompanyhascollectedthefolloingdataforuseincalculatingproductcosts*

ActivityEata*


106/869

1/!. 'efertoFigure!0

1/.>hatistheunitproductcostforrugcleanersifaplantiderateisusedbasedondirectlaborhours

a.G11.//

b.G!.//

c.G".!/

d.G!.12

ANSWER: c RATIONALE: G3"/,///B"/,///9G&G&K1/,///9G&/,///:G2//,///9G2&/,///B"/,///9G".!/

1/". 'efertoFigure!0

1/.%anoliCompanyusesdepartmentaloverheadrates*%oldingusesmachinehoursandAssemblyuseslaborhours.>hatis

theunitproductcostforseepersifdepartmentaloverheadratesareused

a.G3."/

b.G."/

c.G3.//

d.G1.!/

ANSWER: a

RATIONALE: moldingG2"/,///B2/,///912."/assemblyG1//,///B!/,///92."/seepersmolding3,///K12."/

9G3&,"//assembly3",///K2."/9G&,"//total%4NG12",///primeG&"/,///totalcost

G&",///B2"/,///9G3."/perunit

1/$. 'efertoFigure!0

1/.>hataretheconsumptionratiosforrugcleanersandseepersrespectivelyfortheinspectionofproductsactivity

a./.3/.&

b./.2/.

c./.!/.$

d./.$&/.33

ANSWER: a

RATIONALE: inspectingproductsrugcleaners1,2//B!,///9/.3seepers2,//B!,///9/.&

1/&. 'efertoFigure!01/.>hatistheconsumptionratiofortheplantideactivityrateofdirectlaborhours

a./.2"/.&"

b./.&1/.2-

c./.2/.

d././.2

ANSWER: c

RATIONALE: directlaborhoursmops1/,///B"/,///9.2brooms!/,///B"/,///9.


107/869

1/. 'efertoFigure!0

1/.>hataretheconsumptionratiosforrugcleanersforthedepartmentsonthebasisofthedepartmentaldrivershatistheunitproductcostforrugcleanersusingactivitybasedcosting

a.G11.//

b.G&.2$

c.G!.//

d.G3.&"

ANSWER: b

RATIONALE: machiningG1"/,///B3/,///9G"settingupG/,///B1//9G//numberofmovesG&/,///B3"/9

G2//inspectionGG"/,///B!,///9G12."/rugcleanersmachiningG"K 2/,///9G1//,///settingup

G//K2"9G2/,///movingG2//K1!/9G2,///inspectionG12."/K1,2//9G1",///totalmoh

G1$3,///primecosts2//,///totalcosts3$3,///B"/,///units9G&.2$

111. Anactivity0basedcostingsystemuseshichofthefolloingprocedures

a. 4verheadcostsaretracedtodepartments,thencostsaretracedtoproducts.

b. 4verheadcostsaretracedtoactivities,thencostsaretracedtoproducts.

c. 4verheadcostsaretraceddirectlytoproducts.

d. Alloverheadcostsareexpensedasincurred.

ANSWER: b

112. fafirmhasimplementedactivity0basedproceduresforhomeofficeexpenses,itill

a. allocateallhomeofficeexpensesonthebasisofsalesrevenues.

b. allocateallhomeofficeexpensestohomogeneouscostpools.

c. allocatethecostsinapoolusingapredeterminedrateperunitofactivity.


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d. bothaandb.

ANSWER: c

113. Thesystemthatfirsttracescoststoactivitiesandthentoproductsiscalled*

a. EirectCosting

b. AbsorptionCosting

c. Functional0+asedCostingd. Activity0+asedCosting

ANSWER: d

11!. Activity0basedcostingassignscosttocostobjectsbyfirsttracingcoststo

a. productsandthentracingcoststocostobjects.

b. departmentsandthentracingcoststoproducts.

c. activitiesandthentracingcoststocostobjects.

d. customersandthentracingcoststoproducts.

ANSWER: c

11". Thenonfinancialandfinancialdatathatdescribeindividualactivitiesiscalled*

a. Activitydictionaries

b. Activityattributes

c. Concatenatedeys

d. A+Cinventories

ANSWER: b

11$. ThesimplelistofactivitiesidentifiedinanA+Csystemiscalled*

a. Activityinventory

b. Activitydictionary

c. Activityattributes

d. Activitydriver

ANSWER: a

11&. Asecondaryactivityis

a. thesecondactivityontheactivitylist.

b. anactivitydriver.

c. onethatisconsumedbyintermediatecostobjects.

d. onethatisconsumedbythefinalcostobject.

ANSWER: c


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Figure!011

Jongvie%anufacturingCompanymanufacturestoproducts


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121. 'efertoFigure!011.?singfunctional0

basedcosting,hatistheamountofoverheadcosttobeassignedtoHroductusinglaborhoursastheallocationbase

a.G",///

b.G!3,"//

c.G11,$//

d.G!$,!//

ANSWER: d RATIONALE: ;?HH4'T@ICAJC?JAT4@;*hichofthefolloing(uantitiesisanexampleofanactivitydriverinactivity0basedcosting

a. numberofsetups

b. numberofordersplaced

c. numberofmachinehours

d. alloftheabove

ANSWER: d

Figure!012

TheIardenvieCorporationhasidentifiedthefolloingoverheadcostsandactivitydriversfornextyear*

Overhea9tem>pecteCos

t 7ctivit%'river$>pecte

?uantit%

;etupcosts G2//,/// @umberofsetups 2"/

4rderingcosts /,/// @umberoforders 1,$//%aintenance !//,/// %achinehours 2,///

Hoer !/,/// Diloatthours !/,///

Thefolloingaretoofthejobscompletedduringtheyear*

6ob $A 6ob +Eirect materials G3,/// G!,///Eirect labor G2,// G!,//?nits completed 1// 1$/Eirect labor hours "/ / @umber of setups 1 !

@umber of orders ! "%achine hours 2/ 2"Diloatt hours 3/ "/

ThecompanyLsnormalactivityis2,///directlaborhours.


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123. 'efertoFigure!0

12.fthenumberofsetupsisusedtoassignsetupcosts,theamountofsetupcostsassignedto6ob$Aouldbe

a.G1,$//.

b.G1,///.

c.G//.

d.G1,$/.

ANSWER: c

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G2//,///B2"/9G//persetupG//K19G//

12!. 'efertoFigure!0

12.fthefouractivitydriversareusedtoallocateoverheadcosts,totaloverheadallocatedto6ob$Aouldbe

a.G","33.

b.G!,3/.

c.G",/3/.

d.G",$3/.

ANSWER: c


;etups


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113/869

12$. Theactivitythataidsmanagementinachievingobjectivessuchasproductorcustomercosting,continuousimprovem

entandenvironmentalmanagementiscalled*

a. Activitydriver

b. Activityclassification

c. Hrimaryey

d. Concatenatedey

ANSWER: b

Figure!013

The%olotovplantofDaboomndustrieshastocategoriesofoverhead*maintenanceandinspection.Costsexpectedforthes

ecategoriesforthecomingyearareasfollos*

%aintenance G"/,///

nspection &",///

Theplantcurrentlyappliesoverheadusingdirectlaborhoursandexpectedcapacityof"/,///directlaborhours.Thefolloing

datahavebeenassembledforuseindevelopingabidforaproposedjob*

G"//

Eirectlabor G2,///

%achinehours "//

@umberofinspections !

Eirectlaborhours //

Totalexpectedmachinehoursforalljobsduringtheyearis2",///,andthetotalexpectednumberofinspectionsis1,"//.

12&. 'efertoFigure!013.?singactivity0

basedcostingandtheappropriateactivitydrivers,thetotalcostofthepotentialjobouldbe

a.G1,2//.

b.G1,//.

c.G3,&//.

d.G3,&".

ANSWER: c

RATIONALE:


Eirect materials $ 500

Eirect labor 2,000

4verhead*


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115/869

12. 'efertoFigure!013.?singdirectlaborhourstoassignoverhead,thetotalcostofthepotentialjobouldbe

a.G2,///.

b.G!,///.

c.G!,"//.

d.G","//.

ANSWER: c RATIONALE:


Eirectmaterials G"//

Eirectlabor 2,///

4verhead*


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;etups 2//

5ualityinspections 1,///

12-. 'efertoFigure!01!.fmaterialmovesareusedtoassignmaterialhandlingcosts,theamountofmaterialhandling

costsallocatedtotheproposedjobouldbe

a. G $/.

b. G1!&.

c. G1&/.

d. G1/.

ANSWER: d

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G2&,///B$//9G!"permaterialmoveG!"K!9G1/

13/. 'efertoFigure!0

1!.fthenumberofinspectionsisusedtoassigninspectioncosts,theamountofinspectioncostsallocatedtotheproposedjob

ouldbe

;?HH4'T@ICAJC?JAT4@;*G-/,///B1,///9G-/G-/K$9G"!/a.G2,&//.

b.G--/.

c.G-//.

d.G"!/.

ANSWER: d

RATIONALE:

;?HH4'T@ICAJC?JAT4@;*G-/,///B1,///9G-/G-/K$9G"!/

131. +ienvenue,nc.,hasidentifiedthefolloingoverheadcostsandactivitydriversfornextyear*

$>pecte $>pecte

Overhea 9tem Cost 7ctivit% 'river ?uantit%

;etup costs G1//,/// @umber of setups "//4rdering costs !/,/// @umber of orders 3,2//%aintenance 2//,/// %achine hours !,///Hoer 2/,/// Diloatt hours /,///

Thefolloingaretoofthejobscompletedduringtheyear*

8o) CC 8o) ''

Eirect materials G3&" G1,///

Eirect labor G3"/ G1,2//?nits completed 1// 1$/Eirect labor hours "/ / @umber of setups 1 ! @umber of orders ! "%achine hours 2/ 2"Diloatt hours 3/ "/


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ThecompanyLsnormalactivityis!,///directlaborhours.

ftheactivitydriversareusedtoallocateoverheadcosts,theunitcost


118/869

Figure!01"

Carriage%anufacturingusesanactivity0

basedcostingsystem.Thecompanyproduces%odel21and%odel22.nformationrelatingtothetoproductsisasfollos*

Moel 21 Moel 22

?nits produced 2!,/// 3/,///%achine hours &,"// ,"//

Eirect labor hours ,/// 12,///%aterial handling


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Figure!01$

;amsonCompanyrecentlyinstalledanactivity0

basedrelationaldatabase.?singtheinformationcontainedintheactivityrelationaltable,thefolloingpoolrateserecompu

ted*

G!//perpurchaseorder

G2!permachinehour,Hrocess1G3/permachinehour,Hrocess2

G/perengineeringhour

Toproductsareproducedby;pecialHroducts*Jand%.Theplanthastomanufacturingprocesses,Hrocess1andHrocess2.

4therprocessesincludeengineering,producthandling,andprocurement.HroductJgoesthroughHrocess1hileHroduct%

goesthroughHrocess2.Theproductrelationaltablefor;pecialHroductsisasfollos*

Hroduct J

7ctivit% 'river; =ame 7ctivit%Usage

1 ?nits 2//,///

2 Hurchase4rders 2"/

3 %achineNours /,///

! ngineeringNours 1,2"/

Hroduct%

7ctivit%'river; =ame 7ctivit%Usage

1 ?nits 2",///

2 Hurchase4rders 12"

3 %achineNours 1/,///

! ngineeringNours 1,"//

13!. 'efertoFigure!0

1$.>hatistheunitcostofHroduct%

a.G1./

b.G"/!.//

c.G1/.$/

d.G12.//

ANSWER: a

RATIONALE:;?HH4'T@ICAJC?JAT4@;*

Hurchase orders


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121/869

13". 'efertoFigure!0

1$.NomuchpurchasingoverheadcostillbeassignedtoHroductJusingth

Documents

cost acc all combined