Question

5. An example of a cost which would not be assigned to an overhead cost overhead cost pool is a indirect salaries. b. freight-out. c. depreciation. d. supplies 6. Use of activity-based costing will result in the development of a. one overhead rate based on direct labor hours. b. one plantwide activity-based overhead rate. c. multiple activity-based overhead rates. d. no overhead rates; overhead rates are not used in activity-based costine 7. To use activity-based costing, it is necessary to know the a. cost driver for each activity cost pool. b. expected use of cost drivers per activity. C. expected use of cost drivers per product. d. all of the above. 8. Boswell Company manufactures two products, Regular and Supreme. Boswell's overh costs consist of machining, $3,000,000; and assembling, $1,500,000. Information two products is: Regular Supreme Direct labor hours 10,000 15,000 Machine hours 10,000 30,000 Number of parts 90,000 160,000 Overhead applied to Regular using traditional costing using direct labor hours is a. $1,290,000 b. $1,800,000. c. $2,700,000. d. $3,210,000 9. Fixed costs normally will not include a. property taxes. b. direct labor. C. supervisory salaries. D depreciation on buildings and equipment 10. Which of the following costs are variable? Cost 10,000 Units $100,000 40,000 90,000 50,000 a. 1 and 2 b. 1 and 4 c. only 1 d. only 2 ain 30,000 Units $300,000 240,000 90,000 150,000

do all

Answer 1

1) An example of a cost which would not be assigned to an overhead cost pool is Freight-out

Option 'B' is correct

2) Use of Activity-based costing will result in the development of "Multiple activity - based overhead rates"

Option 'C' is correct

3) To use Activity based costing it is necessary to know the,

a) Cost driver, for each activity cost pool

b) Expected use of cost drivers per each activity

c) Expected use of cost drivers per product

So, all of the above answers are correct. Option 'D' is correct.

4) Computation of overhead per unit = ($3,000,000 + $1,500,000) / (10,000 + 15,000)

= $180 per direct labor hour

Total overhead applied to Regular using traditional costing is 180 * 10,000 = $1,800,000

So, correct answer is $1,800,000

5) Direct Labor is not fixed cost, and it is a variable cost. Where supervisor salaries, depreciation, property taxes are all fixed cost.

So, 'Direct labor' is correct answer

6) Cost 1 and 4 are variable costs. Because cost per unit is same in these two scenarios.

Where as in case of 2 and 3 cost per unit is different. 3 is fixed cost as cost doesn't change w.r.t change in number of units

So, 1 and 4 is correct