QUESTION 48 The following conditions with departmental indirect-cost rates will result in allocation of costs similar...
QUESTION 48
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The following conditions with departmental indirect-cost rates will result in allocation of costs similar to ABC costing except:
Significant costs are incurred on different activities within a department
significant costs are incurred for different activities with different cost -allocation bases within a department
a single activity accounts for a sizable portion of the costs of the department
several activities cause a sizable portion of the costs of the department
Homework Answers
Option - 'D'
Conditions with departmental indirect-cost rates will result in allocation of costs similar to ABC costing except several activities cause a sizable portion of the costs of the department.
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QUESTION 48
The following conditions with departmental indirect-cost rates
will result in allocation of costs similar...
1. Smaller cost distortions occur when the traditional systems' single indirect-cost rate and the activity-cost-driver rates:...
1. Smaller cost distortions occur when the traditional systems' single indirect-cost rate and the activity-cost-driver rates: a) are similar in proportion to each other b) use the same cost driver units c) are more different than alike d) use the same total costs for computations 2. Activity-based costing is most likely to yield benefits for companies with all of the following characteristics EXCEPT: a) operations that remain fairly consistent b) a highly competitive environment, where cost control is critical c)...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Account inquiry (hours) $86,400 Account billing (lines) $53,000 Account verification (accounts) $36,250 Correspondence (letters) $76,000 Potter & Weasley uses activity based costing. Allocation Base 2400 32,000 25,500 11,000 The above activities are used by Departments P and Q as follows: Department PL Department Account inquiry (hours) 500 600 Account billing (lines) 10,000 4,000 Account verification (accounts) 6,000 7,000 Correspondence (letters) 1,000...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Account inquiry (hours) Account billing (lines) Account verification (accounts) Correspondence (letters) Potter & Weasley uses activity based costing. Indirect Activity Costs $85,500 $57,000 $35,250 $73,000 Allocation Base 3700 31,000 28,500 11,000 The above activities are used by Departments P and Q as follows: Department Q Department P 800 Account inquiry (hours) Account billing (lines) Account verification (accounts) Correspondence (letters) 400 10,000 6,000 1.000 4,000...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) $85,300 4,000 Account billing (lines) $54,000 33,000 Account verification (accounts) $39,250 28,500 Correspondence (letters) $89,000 9,000 Potter & Weasley uses activity based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 400 800 Account billing (lines) 10,000 4,000 Account verification (accounts) 6,000 7,000 O A....
1. Calculate the current indirect cost allocation rate per professional hour. Calculate the total amount that...
1. Calculate the current indirect cost allocation rate per professional hour. Calculate the total amount that would be billed to Laughlin given the current costing structure Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. Calculate the amount that would be billed to Laughlin using ABC costing. Which type of billing system is more fair to clients? Explain. Print Done Benson & Company is an architectural firm specializing in home remodeling...
True or false 1. Indirect manufacturing costs are easily traceable to products. 2. One important reason...
True or false
1. Indirect manufacturing costs are easily traceable to products. 2. One important reason that managers allocate overhead costs to products is to promote the efficient use of resources. 3. U.S. Generally Accepted Accounting Principles require all manufacturing costs be allocated to products for inventory costing purposes. 4. Total companywide estimated overhead costs will change depending on if plant wide allocation or departmental allocation is used. 5. The plant wide approach to allocating overhead is typically the simplest...
Requirements: 1. Compute the activity cost allocation rates for the year. 2. Complete the job cost...
Requirements:
1.
Compute the activity cost allocation rates for the year.
2.
Complete the job cost record for Job 557.
Kauler Industries, a small, family-run manufacturer, has adopted an ABC system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: (Click the icon to view activities, total costs, and cost drivers.) During May, Larry and Civilla Kauler machined and assembled Job 557. Larry worked a total of 12 hours on the...
Question 4: Activity Based Costing (20 marks in total) You have recently attended a seminar on...
Question 4: Activity Based Costing (20 marks in total) You have recently attended a seminar on activity-based costing (ABC). FOL's accounting system has three cost categories: direct materials, direct labour and overhead costs. FOL has allocated indirect production costs based on direct labour cost. The following is the 2019 budget for the Cattle Drench department. These costs are spread evenly over the 12 month period. Materials 306000 Direct labour 201600 Overhead costs 54000 You are now suggesting to David that...
Uhlt 4 Activity Based Costing Question 22 (1 point) Which of the following statements about activity-based...
Uhlt 4 Activity Based Costing Question 22 (1 point) Which of the following statements about activity-based costing is TRUE? It does not affect cost control. It provides less information than traditional cost systems. It provides similar results to traditional costing when different products use resources from different activities in different proportions. Indirect cost allocation bases are unlikely to be cost drivers. It provides similar results to traditional costing when one activity creates a substantial amount of total cost. Question 23...
Calculating Departmental Overhead Rates Using Post-Allocation Costs Valron Company has two support departments, Human Resources and...
Calculating Departmental Overhead Rates Using Post-Allocation Costs Valron Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments Human Resources General Factory Fabricating Assembly Direct costs $160,000 $340,000 $114,600 $93,000 Normal activity: Number of employees — 60 80 170 Square footage 1,000 — 5,700 13,300 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Account inquiry (hours) $86,400 Account billing (lines) $53,000 Account verification (accounts) $36,250 Correspondence (letters) $76,000 Potter & Weasley uses activity based costing. Allocation Base 2400 32,000 25,500 11,000 The above activities are used by Departments P and Q as follows: Department PL Department Account inquiry (hours) 500 600 Account billing (lines) 10,000 4,000 Account verification (accounts) 6,000 7,000 Correspondence (letters) 1,000...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Account inquiry (hours) Account billing (lines) Account verification (accounts) Correspondence (letters) Potter & Weasley uses activity based costing. Indirect Activity Costs $85,500 $57,000 $35,250 $73,000 Allocation Base 3700 31,000 28,500 11,000 The above activities are used by Departments P and Q as follows: Department Q Department P 800 Account inquiry (hours) Account billing (lines) Account verification (accounts) Correspondence (letters) 400 10,000 6,000 1.000 4,000...
Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) $85,300 4,000 Account billing (lines) $54,000 33,000 Account verification (accounts) $39,250 28,500 Correspondence (letters) $89,000 9,000 Potter & Weasley uses activity based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 400 800 Account billing (lines) 10,000 4,000 Account verification (accounts) 6,000 7,000 O A....
1. Calculate the current indirect cost allocation rate per professional hour. Calculate the total amount that would be billed to Laughlin given the current costing structure Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. Calculate the amount that would be billed to Laughlin using ABC costing. Which type of billing system is more fair to clients? Explain. Print Done Benson & Company is an architectural firm specializing in home remodeling...
True or false
1. Indirect manufacturing costs are easily traceable to products. 2. One important reason that managers allocate overhead costs to products is to promote the efficient use of resources. 3. U.S. Generally Accepted Accounting Principles require all manufacturing costs be allocated to products for inventory costing purposes. 4. Total companywide estimated overhead costs will change depending on if plant wide allocation or departmental allocation is used. 5. The plant wide approach to allocating overhead is typically the simplest...
Requirements:
1.
Compute the activity cost allocation rates for the year.
2.
Complete the job cost record for Job 557.
Kauler Industries, a small, family-run manufacturer, has adopted an ABC system. The following manufacturing activities, indirect manufacturing costs, and usage of cost drivers have been estimated for the year: (Click the icon to view activities, total costs, and cost drivers.) During May, Larry and Civilla Kauler machined and assembled Job 557. Larry worked a total of 12 hours on the...
Uhlt 4 Activity Based Costing Question 22 (1 point) Which of the following statements about activity-based costing is TRUE? It does not affect cost control. It provides less information than traditional cost systems. It provides similar results to traditional costing when different products use resources from different activities in different proportions. Indirect cost allocation bases are unlikely to be cost drivers. It provides similar results to traditional costing when one activity creates a substantial amount of total cost. Question 23...
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