ACC650
Module 3 - Week 3 Quiz Activity-Based Costing
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1. Activity-based
costing systems:
a. use 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 use fewer
cost drivers than more traditional costing systems.
have a tendency to
distort product costs.
2. Burgoon uses
an economic order quantity model and has determined an optimal order size of
500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and
holding costs are $4 per unit. The reorder point is:
25 packages.
50 packages.
100 packages.
203 packages.
225 packages.
1. Feinstein,
Inc., an appliance manufacturer, is developing a new line of ovens that uses
controlled-laser technology. The research and testing costs associated with the
new ovens is said to arise from a:
unit-level activity.
batch-level activity.
product-sustaining
activity.
facility-level
activity.
competitive-level
activity.
2. Burgoon uses
an economic order quantity model and has determined an optimal order size of
500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and
holding costs are $4 per unit. The reorder point is:
25 packages.
50 packages.
100 packages.
203 packages.
225 packages.
3. St. James, Inc., currently uses 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 (DLH), production setups (SU), and number of parts
components (PC) as cost drivers. Data on the cost pools and respective driver
volumes follow.
Product Pool No. 1 (Driver: DLH) Pool No. 2 (Driver: SU)
Pool No. 3 (Driver: PC)
Beta
1,200
45
2,250
Zeta
2,800
55
750
Pool Cost $160,000 $280,000 $360,000
4. In an
activity-based costing system, direct materials used would typically be
classified as a:
unit-level cost.
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