Assessment Chapter 26

24 Questions | By Huaccounting | Last updated: Feb 8, 2017

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Chapter 26 Assessments

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Questions and Answers

1.

All of the following are methods of allocating factory overhead costs except
- A.
  
  Single plantwide rate method
- B.
  
  Multiple production department factory overhead rate method
- C.
  
  Activity-based costing method.
- D.
  
  Average costing method.
2.

The total factory overhead for Martin Company is budgeted for the year at $375,000. Martin manufactures two garden products: a leaf blower and a garden wagon. These products require four direct labor hours (DLH) to manufacture. Each product is budgeted for 2,500 units of production for the year. Determine the total number of budgeted direct labor hours for the year
- A.
  
  10,000 DLH
- B.
  
  20,000 DLH
- C.
  
  1,250 DLH
- D.
  
  30,000 DLH
3.

The total factory overhead for Martin Company is budgeted for the year at $375,000. Martin manufactures two garden products: a leaf blower and a garden wagon. These products require four direct labor hours (DLH) to manufacture. Each product is budgeted for 2,500 units of production for the year. Determine the single plantwide factory overhead rate.
- A.
  
  $37.50 DLH
- B.
  
  $18.75 DLH
- C.
  
  $75.00 DLH
- D.
  
  $150.00 DLH
4.

The total factory overhead for Martin Company is budgeted for the year at $375,000. Martin manufactures two garden products: a leaf blower and a garden wagon. These products require four direct labor hours (DLH) to manufacture. Each product is budgeted for 2,500 units of production for the year. Determine the factory overhead allocated to each garden wagon using the single plantwide factory overhead rate.

Discuss
- A.
  
  $37.50
- B.
  
  $150.00
- C.
  
  $75.00
- D.
  
  $300.00
5.

The total factory overhead for Simmons Company is budgeted for the year at $450,000 and divided into two departments: Fabrication $315,000 and Assembly $135,000. Simmons manufactures two products: chairs and tables. Each chair requires one direct labor hour in Fabrication and three direct labor hours in Assembly. Each table requires three direct labor hours in Fabrication and six direct labor hours in Assembly. Each product is budgeted for 3,750 units of production for the year. Determine the total number of budgeted direct labor hours for the year in the Assembly department.
- A.
  
  11,250 DLH
- B.
  
  33,750 DLH
- C.
  
  22,500 DLH
- D.
  
  7,500 DLH
6.

The total factory overhead for Simmons Company is budgeted for the year at $450,000 and divided into two departments: Fabrication $315,000 and Assembly $135,000. Simmons manufactures two products: chairs and tables. Each chair requires one direct labor hour in Fabrication and three direct labor hours in Assembly. Each table requires three direct labor hours in Fabrication and six direct labor hours in Assembly. Each product is budgeted for 3,750 units of production for the year.Determine the departmental factory overhead rate for the Fabrication department.
- A.
  
  $42 per DLH
- B.
  
  $84 per DLH
- C.
  
  $4 per DLH
- D.
  
  $21 per DLH
7.

The total factory overhead for Simmons Company is budgeted for the year at $450,000 and divided into two departments: Fabrication $315,000 and Assembly $135,000. Simmons manufactures two products: chairs and tables. Each chair requires one direct labor hour in Fabrication and three direct labor hours in Assembly. Each table requires three direct labor hours in Fabrication and six direct labor hours in Assembly. Each product is budgeted for 3,750 units of production for the year.Determine the factory overhead allocated per unit for each table, using the department factory overhead allocation rates.
- A.
  
  $60
- B.
  
  $87
- C.
  
  $63
- D.
  
  $24
8.

Which of the following best describes a document that initiates changing a product or proces
- A.
  
  An activity rate allocation report
- B.
  
  An engineering change order
- C.
  
  A retooling setup order
- D.
  
  An activity cost pool analysis
9.

Which of the following statements is true?
- A.
  
  Product cost distortion cannot occur when the multiple production department rate method is used
- B.
  
  Using the activity-based costing method typically results in more accurate product costs than the single plantwide rate
- C.
  
  Activity rates are calculated by dividing the activity base by budgeted activity cost.
- D.
  
  Factory overhead costs using activity rates are allocated to products by dividing the activity-base usage by the activity rate.
10.

Canada Company manufactures and sells sportswear products. Canada uses activity-based costing to determine the cost of the customer return processing and the shipping activity. The customer return processing activity has an activity rate of $45 per return, and the shipping activity has an activity rate of $10 per shipment. Canada shipped 3,000 units of Product 1 in 1,200 shipments (some shipments are more than one unit). There were 150 returns. Determine the total activity costs for the return and shipping activities of Product 1.
- A.
  
  $165,000
- B.
  
  $74,250
- C.
  
  $18,750
- D.
  
  $12,000
11.

Canada Company manufactures and sells sportswear products. Canada uses activity-based costing to determine the cost of the customer return processing and the shipping activity. The customer return processing activity has an activity rate of $45 per return, and the shipping activity has an activity rate of $10 per shipment. Canada shipped 3,000 units of Product 1 in 1,200 shipments (some shipments are more than one unit). There were 150 returns. Determine the per-unit customer costs for combined shipping and returns of Product 1.
- A.
  
  $2.25 per unit
- B.
  
  $24.75 per unit
- C.
  
  $6.25 per unit
- D.
  
  $55 per unit
12.

Northside Clinic uses activity-based costing to determine the cost of servicing patients. There are three activity pools: Patient admissions ($50 per patient), Laboratory services ($150 per diagnosis), and X-ray imaging ($400 per image).Daisy Satar went to the clinic and had blood drawn regarding 2 separate diagnoses, 3 separate images read and interpreted by a doctor. What is the total activity-based cost of Satar's visit?

Discuss
- A.
  
  $1,150
- B.
  
  $1,500
- C.
  
  $500
- D.
  
  $1,550
13.

Product costs consist of all of the following main costs except:
- A.
  
  Direct materials.
- B.
  
  Direct labor.
- C.
  
  Factory overhead
- D.
  
  Property, plant, and equipment
14.

The total factory overhead for Dayton Company is budgeted for the year at $675,000. Dayton manufactures two drapery products: sheer curtains and insulated curtains. These products require six direct labor hours (DLH) to manufacture. Each product is budgeted for 7,500 units of production for the year. Determine the total number of budgeted direct labor hours for the year.
- A.
  
  45,000 DLH
- B.
  
  90,000 DLH
- C.
  
  15,000 DLH
- D.
  
  2,500 DLH
15.

The total factory overhead for Dayton Company is budgeted for the year at $675,000. Dayton manufactures two drapery products: sheer curtains and insulated curtains. These products require six direct labor hours (DLH) to manufacture. Each product is budgeted for 7,500 units of production for the year. Determine the single plantwide factory overhead rate.
- A.
  
  $15.00 per DLH
- B.
  
  $7.50 per DLH
- C.
  
  $90.00 per DLH
- D.
  
  $45.00 per DLH
16.

The total factory overhead for Dayton Company is budgeted for the year at $675,000. Dayton manufactures two drapery products: sheer curtains and insulated curtains. These products require six direct labor hours (DLH) to manufacture. Each product is budgeted for 7,500 units of production for the year. Determine the factory overhead allocated per unit for insulated curtains using the single plantwide factory overhead rate.
- A.
  
  $15.00
- B.
  
  $270.00
- C.
  
  $45.00
- D.
  
  $90.00
17.

The total factory overhead for Towson Company is budgeted for the year at $652,000 and divided into two departments: Fabrication $460,000 and Assembly $192,000. Towson manufactures two products: treadmills and weight machines. Each treadmill requires three direct labor hours in Fabrication and one direct labor hour in Assembly. Each weight machine requires two direct labor hours in Fabrication and five direct labor hour in Assembly. Each product is budgeted for 4,000 units of production for the year. Determine the total number of budgeted direct labor hours for the year in the Assembly department.
- A.
  
  24,000 DLH
- B.
  
  20,000 DLH
- C.
  
  4,000 DLH
- D.
  
  22,000 DLH
18.

The total factory overhead for Towson Company is budgeted for the year at $652,000 and divided into two departments: Fabrication $460,000 and Assembly $192,000. Towson manufactures two products: treadmills and weight machines. Each treadmill requires three direct labor hours in Fabrication and one direct labor hour in Assembly. Each weight machine requires two direct labor hours in Fabrication and five direct labor hour in Assembly. Each product is budgeted for 4,000 units of production for the year. Determine the departmental factory overhead rate for the Fabrication department.
- A.
  
  $11.50
- B.
  
  $57.50
- C.
  
  $14.82
- D.
  
  $23.00
19.

The total factory overhead for Towson Company is budgeted for the year at $652,000 and divided into two departments: Fabrication $460,000 and Assembly $192,000. Towson manufactures two products: treadmills and weight machines. Each treadmill requires three direct labor hours in Fabrication and one direct labor hour in Assembly. Each weight machine requires two direct labor hours in Fabrication and five direct labor hour in Assembly. Each product is budgeted for 4,000 units of production for the year. Determine the factory overhead allocated per unit for each weight machine, using the department factory overhead allocation rates.

Discuss
- A.
  
  $81.50
- B.
  
  $86.00
- C.
  
  $77.00
- D.
  
  $163.00
20.

Jason's Outdoors manufactures two products: snow skis and water skis. Jason's managerial accountant suspects that product cost distortion through factory overhead allocation is occurring where snow skis are underpriced and water skis are overpriced. As a result, all of the following statements are trueexcept:
- A.
  
  Jason will likely lose sales of water skis
- B.
  
  Jason may incorrectly decide to expand production of snow skis
- C.
  
  Jason's accountant should consider a single plantwide rate to correct the problem.
- D.
  
  Snow skis likely consumed a larger proportion of factory overhead than was allocated.
21.

The total factory overhead for Magnum Corporation is budgeted for the year at $500,000. This is divided into three activity pools: Fabrication, $246,000; Assembly, $144,000, and Setup, $110,000. Magnum manufactures two types of kayaks: Basic and Deluxe. The activity base usage quantities for each project by activity as follows:Each product is budgeted for 2,500 units of production for the year. What is the activity-based factory overhead per unit for the Deluxe kayak?
- A.
  
  $41.80
- B.
  
  $158.20
- C.
  
  $100.00
- D.
  
  $154.54
22.

Sebastian Company manufactures and sells sportswear products. Sebastian uses activity-based costing to determine the cost of the customer return processing and the shipping activity. The customer return processing activity has an activity rate of $60 per return, and the shipping activity has an activity rate of $20 per shipment. Sebastian shipped 4,000 units of Product 1 in 800 shipments (some shipments are more than one unit). There were 90 returns. Determine the total activity costs for the return and shipping activities of Product 1.
- A.
  
  $71,200
- B.
  
  $5,400
- C.
  
  $21,400
- D.
  
  $5,500
23.

Sebastian Company manufactures and sells sportswear products. Sebastian uses activity-based costing to determine the cost of the customer return processing and the shipping activity. The customer return processing activity has an activity rate of $60 per return, and the shipping activity has an activity rate of $20 per shipment. Sebastian shipped 4,000 units of Product 1 in 800 shipments (some shipments are more than one unit). There were 90 returns.Determine the per-unit customer costs for combined shipping and returns of Product 1.

Discuss
- A.
  
  $1.38 per unit
- B.
  
  $80 per unit
- C.
  
  $1.75 per unit
- D.
  
  $359.55 per unit
24.

Seaside Clinic uses activity-based costing to determine the cost of servicing patients. There are three activity pools: Patient admissions ($75 per patient), Laboratory services ($110 per diagnosis), and X-ray imaging ($350 per image).Harold Reed went to the clinic and had blood drawn regarding 1 separate diagnoses, 4 separate images read and interpreted by a doctor. What is the total activity-based cost of Reed's visit?

Discuss
- A.
  
  $535
- B.
  
  $1,510
- C.
  
  $2,140
- D.
  
  $1,585

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