1. Which costing method assumes all products use overhead costs in the same proportions?
All cost allocation methods Plantwide overhead rate method Activity-based costing Departmental overhead rate method
2. Which of the following would usually not be used in computing plantwide overhead rates?
Direct labor dollars Number of quality inspections Machine hours Direct labor hours
3. With ABC, overhead costs should be traced to which cost object first?
Departments Units of product Activities Product batches
| 1. | Which costing method assumes all products use overhead costs in the same proportions? | ||||||||
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| 2. | Which of the following would usually not be used in computing plantwide overhead rates? | ||||||||
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| 3. | With ABC, overhead costs should be traced to which cost object first? | ||||||||
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Related questions
| Select a letter A through D that corresponds to the description of that term. Some letters are used more than once. |
| A. | Uses more than one rate to allocate overhead costs to products. |
| B. | Uses only volume-based measures such as direct labor hours to allocate overhead costs to products. |
| C. | Typically uses the most overhead allocation rates. |
| D. | Focuses on the costs of carrying out activities. |
| Term | ||
| 1. | Activity-based costing | |
| 2. | Plantwide overhead rate method | |
| 3. | Departmental overhead rate method |
The following data are for the two products produced by Tadros Company.
| Product A | Product B | ||||
| Direct materials | $ | 14 per unit | $ | 24 per unit | |
| Direct labor hours | 0.6 DLH per unit | 1.5 DLH per unit | |||
| Machine hours | 0.5 MH per unit | 1.1 MH per unit | |||
| Batches | 125 batches | 250 batches | |||
| Volume | 10,000 units | 2,000 units | |||
| Engineering modifications | 10 modifications | 50 modifications | |||
| Number of customers | 500 customers | 400 customers | |||
| Market price | $ | 34 per unit | $ | 95 per unit per unit | |
The company's direct labor rate is $20 per direct labor hour (DLH). Additional information follows.
| Costs | Driver | |||
| Indirect manufacturing | ||||
| Engineering support | $ | 22,500 | Engineering modifications | |
| Electricity | 28,800 | Machine hours | ||
| Setup costs | 41,000 | Batches | ||
| Nonmanufacturing | ||||
| Customer service | 74,000 | Number of customers | ||
Required:
(Round your per unit cost answers to 2 decimal places and other answers to nearest whole number. Loss amounts should be indicated with minus sign.)
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5. Which method of product costing gives better information to managers of this company?
Departmental overhead rate method
Activity-based costing method
Plantwide overhead rate method
X Company has two production departments, 1 and 2. Listed beloware budgeted information for the two departments, and actualinformation for one of its products, Product X:
| Department 1 | All Products | Product X |
| Overhead | $5,800,000 | - |
| Direct labor | $850,000 | $12,393 |
| Direct labor hours | 50,000 | 729 |
| Machine hours | 110,000 | 1,030 |
| Units produced | 59,000 | 670 |
| Department 2 | ||
| Overhead | $1,800,000 | - |
| Direct labor | $680,000 | $4,896 |
| Direct labor hours | 40,000 | 288 |
| Machine hours | 140,000 | 840 |
| Units produced | 39,000 | 670 |
3. Using a plantwide allocation system with direct labor hoursas the cost driver, what was the allocation to Product X [roundoverhead rates to the nearest cent]?
4. Using a departmental allocation system with direct laborhours as the cost driver in Department 1 and machine hours as thecost driver in Department 2, what was the allocation to Product X[round overhead rates to the nearest cent]?
