1. Consider the following statements regarding costing Systems: I...

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1. Consider the following statements regarding costing
Systems:
I Overheard cost are applied to products on the basis of volume-related, measures
II All manufacturing cost are easily traceable to the goods produced
III Traditional cost systems tend to distort unit manufacturing cost when numerous goods are made that have widely varying production requirements.

I only, II only, III only, I and III or II and III

2. Consider the following statements :
I. Product diversity creates costing problems because divers products tent to utilize manufacturing activities in different ways.
II. Overhead cost that are not incurred at the unit level create costing problems because such cost do not vary with traditional application bases such as direct labor hours or machine hours.
III. Product diversity typically exists when a single product (e.g, a ball point pen) is made in different colors.
Which of the above statements are true?

I only, II only, I and II, I AND III OR II AND III

3. In an activity based costing system, direct materials used would typically be classified as a :
Unit level cost, batch level cost, product sustaining cost, facility level cost or matrix level cost

4. St James Inc., currently used traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity based costing and the creation of individual cost pools that will use direct labor hours (DHL) production setups (SU), and the number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.
The overhead cost allocated to Beta by using activity based costing procedures would be:
Pool 1(Driver DHL)                Pool 2 (Driver Su)         Pool 3 (Driver PC)
Beta 1,200                                        45                            2,250
Zeta 2,800                                          55                              750
Pool Cost $160,000                         $280,000                $360,000

$240,000, $356,000, $444,000, $560,000 some other answer

5. At the economic order quantity:
Total annual inventory costs, holding costs, and ordering cost are all minimized
Total annual inventory cost and holding cost are minimized
Total annul inventory cost are minimized and holding cost equal ordering cost
Total annual inventory cost are minimized and holding costs exceed ordering costs
Total annual inventory cost are minimized and ordering costs exceed holding costs

6. Which of the following does not minimize ordering costs when suing JIT purchasing? Reducing the number of vendors, negotiating long term supply agreement, making less frequent payments, maintaining a safety stock or eliminating inspections

7. St James Inc., currently used traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of labor hours. The company is considering a shift to activity based costing and the creation of individual cost pools that will use direct labor hours (DHL) production setups (SU), and the number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.
The overhead cost allocated to Zeta by using activity based costing procedures would be:
Pool 1Driver DHL)          Pool 2 (Driver Su)       Pool 3 (Driver PC)
Beta 1,200                                  45                         2,250
Zeta 2,800                                 55                            750
Pool Cost $160,000             $280,000                      $360,000

$240,000, $356,000, $444,000, $560,000 or some other answer

8. Which of the following classified as an inventory shortage cost?
Purchase order preparation, production disruption, lost of sales and lost customers, spoilage, production disruption, lost sales and lost customers

9. Cartwright Graphics uses a special purpose paper on 80% of it’s jobs. The paper is purchased in 100 sheet packages at a cost of $100 per package. Management estimates that the cost of placing and receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1.50. Cartwright uses 2,600 packages each year. Production is constant and the lead time to receive an order id 1 week. The reorder point is:
25 packages, 50 packages, 100 packages, 203 packages or 225 packages

10. The following tasks are associated with an activity based costing system:
1 assignment of cost to products
2 calculation of pool rates
3 identification of cost drivers
4 identification of cost pools
Which of the following choices correctly express the proper order of the preceding tasks?
1,2,3,4
2,4,1,3
3,4,2,1
4,2,1,3
4,3,2,1

11. St James Inc., currently used traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity based costing and the creation of individual cost pools that will use direct labor hours (DHL) production setups (SU), and the number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.
The overhead cost allocated to zeta by using traditional costing procedures would be:
Pool 1(Driver DHL)          Pool 2 (Driver Su)          Pool 3 (Driver PC)
Beta 1,200                                  45                            2,250
Zeta 2,800                                 55                                 750
Pool Cost $160,000                $280,000                      $360,000
240,000, 356,000, 444,000, 560,000 some other amount

12. Activity based costing systems :
Uses a single, volume based cost driver
Assign overhead to products based on the products relative usage of direct labor
Often reveal products that were under or over costed by traditional costing systems.
Typically uses fewer cost drivers that more traditional costing systems
Have a tendency to distort product cost

13. Feinstein inc, an application manufacturer, is developing a new line of ovens that uses controlled laser technology. The research and testing cost associated with the new ovens is said to arise from a :
Unit level activity, batch level activity, product sustaining activity, facility level activity or competitive level activity

14. St James Inc., currently used traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity based costing and the creation of individual cost pools that will use direct labor hours (DHL) production setups (SU), and the number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.
The overhead cost allocated to Beta by using traditional costing procedures would be:
Pool 1 (Driver DHL)            Pool 2 (Driver Su)       Pool 3 (Driver PC)
Beta 1,200                               45                             2,250
Zeta 2,800                               55                                  750
Pool Cost $160,000             $280,000                         $360,000
240,000, 356,000, 444,000, 560,000 some other amount

15. Alamos customer service department follows up on customers complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred cost of $203,000. If 2,940 of these calls were for the company’s wholesale operation (remainder were for the retail division) cost allocated to the retail division should amount to:
$0,
$29,
$85, 260
$117, 740
$203,000

16. Inventory holding cost typically include:
Clerical costs purchase order preparation
Cost of deterioration, theft or spoilage
Cost associated with lost sales to customers
Forgone interest on money tied up in inventory
Cost of deterioration, theft or spoilage and forgone interest on money tied up in inventory

17. during recent accounting period, Martys shipping department processed 26 order. Each order typically takes four hours to complete: however, the average time increased to five hours because of various departmental inefficiencies.
If shipping labor is paid $14 per hour, the company’s non value added cost would be:
$0
$56
$364
$1,456
$1,820

18. Burgoon uses an economic order quantity model and has determined an optimal order size of 500 units. Annual demand is 10,000 units, order cost are $50 per order, and holding costs are $4 per unit. The company’s annual ordering and holding cost total:
2,000
3,000
21,000
41,000
Some other amount

19. Alaina’s customer service department follows up on customers complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred cost of $312,000. Of these calls, 3,800 were for the companys wholesale oiperation; the remainder were for the retail division.
Cost allocation to the wholesale operation are:
0,
31,200
118,560
193,440
203,000

20. Cartwright Graphics uses a special purpose paper on 80% of it’s jobs. The paper is purchased in 100 sheet packages at a cost of $100 per package. Management estimates that the cost of placing and receiving a typical order is $15, and the annual cost of carrying a package in inventory is $1.50. Cartwright uses 2,600 packages each year. Production is constant and the lead time to receive an order id 1 week. The economic order quantity is approximately:
203 packages, 225 packages, 228 packages, 565 packages or 631 packages

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1 III only
2 I only
3 Unit level cost...

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