JOB_COSTING_MCQs

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22.

 

Alamo’s customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company’s wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to: 
A. $0.
B. $29.
C. $85,260.
D. $117,740.
E. $203,000.

 23. Aladin’s customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company’s wholesale operation (the remainder were for the retail division), costs allocated to the wholesale operation should amount to: 
A. $0.
B. $29.
C. $85,260.
D. $117,740.
E. $203,000.

 

24. Alaina’s customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company’s wholesale operation; the remainder were for the retail division. Costs allocated to the wholesale operation are: 
A. $0.
B. $31,200.
C. $118,560.
D. $193,440.
E. $203,000.

 25. Astro’s customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 10,000 calls and incurred costs of $312,000. Of these calls, 3,800 were for the company’s wholesale operation; the remainder were for the retail division. Costs allocated to the retail division are: 
A. $0.
B. $31,200.
C. $118,560.
D. $193,440.
E. $203,000.

 

 Riverside Florists uses an activity-based costing system to compute the cost of making floral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $180,000 typically perform both tasks; other firm-wide overhead is expected to total $70,000. These costs are allocated as follows:
  
Riverside anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year.

 

26. The cost of wages and salaries and other overhead that would be charged to each bouquet made is: 
A. $7.15.
B. $8.75.
C. $12.50.
D. $13.75.
E. some other amount.

 

27. The cost of wages and salaries and other overhead that would be charged to each delivery is closest to: 
A. $19.63.
B. $20.31.
C. $26.75.
D. $40.63.
E. some other amount.

 

 HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.
  
The following information pertains to the three product lines for next year:
  

 

28. What is HiTech’s pool rate for the material-handling activity? 
A. $1.00 per part.
B. $2.25 per part.
C. $6.62 per labor hour.
D. $13.23 per part.
E. A rate other than those listed above.

 

29. What is HiTech’s pool rate for the automated machinery activity? 
A. $24.00 per machine hour.
B. $24.50 per labor hour.
C. $49.42 per unit.
D. $50.00 per machine hour.
E. A rate other than those listed above.

 

30. What is HiTech’s pool rate for the finishing activity? 
A. $5.00 per labor hour.
B. $5.00 per machine hour.
C. $5.00 per unit.
D. $7.50 per unit.
E. A rate other than those listed above.

 

31. What is HiTech’s pool rate for the packaging activity? 
A. $4.86 per machine hour.
B. $5.00 per labor hour.
C. $10.00 per unit.
D. $100.00 per order shipped.
E. A rate other than those listed above.

 

32. Under an activity-based costing system, what is the per-unit overhead cost of Economy? 
A. $141.
B. $164.
C. $225.
D. $228.
E. An amount other than those listed above.

 

33. Under an activity-based costing system, what is the per-unit overhead cost of Standard? 
A. $164.
B. $228.
C. $272.
D. $282.
E. An amount other than those listed above.

 

34. Under an activity-based costing system, what is the per-unit overhead cost of Deluxe? 
A. $272.
B. $282.
C. $320.
D. $440.
E. An amount other than those listed above.

 35. Assume that HiTech is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Deluxe product line is closest to: 
A. $456,471.
B. $646,471.
C. $961,176.
D. $1,141,176.
E. An amount other than those listed above.

 

36. Assume that HiTech is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Standard product line is closest to: 
A. $456,471.
B. $646,471.
C. $961,176.
D. $1,141,176.
E. An amount other than those listed above.

 

 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.
  

 

37. The overhead cost allocated to Beta by using traditional costing procedures would be: 
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some other amount.

 

38. The overhead cost allocated to Zeta by using traditional costing procedures would be: 
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some other amount.

 

39. The overhead cost allocated to Beta by using activity-based costing procedures would be: 
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some other amount.

 

40. The overhead cost allocated to Zeta by using activity-based costing procedures would be: 
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some other amount.

 
 

41. Martin and Beasley, an accounting firm, provides consulting and tax planning services. For many years, the firm’s total administrative cost (currently $270,000) has been allocated to services on this basis of billable hours to clients. A recent analysis found that 55% of the firm’s billable hours to clients resulted from tax planning services, while 45% resulted from consulting services.
The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows:
  
A recent analysis of staff support found a strong correlation with the number of clients served. In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting clients served totaled 35% of the total client base, consumed 30% of the firm’s computer hours, and accounted for 20% of the total client transactions.
If Martin and Beasley switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would: 
A. decrease by $32,500.
B. increase by $32,500.
C. decrease by $59,500.
D. change by an amount other than those listed above.
E. change, but the amount cannot be determined based on the information presented.

  Kelly and Logan, an accounting firm, provides consulting and tax planning services. For many years, the firm’s total administrative cost (currently $250,000) has been allocated to services on the basis of billable hours to clients. A recent analysis found that 65% of the firm’s billable hours to clients resulted from tax planning services, while 35% resulted from consulting services.
The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows:
  
A recent analysis of staff support found a strong correlation with the number of clients served (consulting, 20; tax planning, 60). In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting consumed 30% of the firm’s computer hours and had 20% of the total client transactions.

 

42. Assuming the use of activity-based costing, the proper percentage to use in allocating staff support costs to tax planning services is: 
A. 20%.
B. 60%.
C. 65%.
D. 75%.
E. 80%.

 

43. If Kelly and Logan switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would: 
A. decrease by $23,500.
B. increase by $23,500.
C. decrease by $32,500.
D. change by an amount other than those listed above.
E. change, but the amount cannot be determined based on the information presented.

61. Storch Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company’s competitor can accomplish the same process in six hours, Stanley’s non-value-added cost would be: 
A. $0.
B. $150.
C. $300.
D. $900.
E. $1,200.