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Activity-based costing
|
[removed] |
accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. |
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allocates overhead to multiple activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers. |
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assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. |
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allocates overhead directly to products and services based on activity levels. |
The break-even point is where
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total sales equal total variable costs. |
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contribution margin equals total fixed costs. |
|
total sales equal total fixed costs. |
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total variable costs equal total fixed costs. |
When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using
|
variable costing. |
|
product costing. |
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operations costing. |
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absorption costing |
Seasons Manufacturing manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
| Income would increase by $ |
40,000 |
|
Income would decrease by $8,000. |
|
Income would increase by $8,000. |
|
Income would increase by $140,000. |
Carter, Inc. can make 100 units of a necessary component part with the following costs:
|
Direct Materials |
$1 |
20,000 |
|
Direct Labor |
||
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Variable Overhead |
60,000 |
|
|
Fixed Overhead |
If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
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Make and save $30,000 |
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Buy and save $10,000 |
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Buy and save $30,000 |
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Make and save $10,00 |
A company has a process that results in 15,000 pounds of Product A that can be sold for $16 per pound. An alternative would be to process Product A further at a cost of $200,000 and then sell it for $28 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action?
|
Sell now, the company will be better off by $200,000. |
|
Sell now, the company will be better off by $20,000. |
|
Process further, the company will be better off by $180,000. |
|
Process further, the company will be better off by $20,000 |
Activity-based costing
accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver.
allocates overhead to multiple activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers.
assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools.
allocates overhead directly to products and services based on activity levels.
The break-even point is where
total sales equal total variable costs.
contribution margin equals total fixed costs.
total sales equal total fixed costs.
total variable costs equal total fixed costs.
When a company assigns the costs of direct materials, direct labor, and both variable and fixed manufacturing overhead to products, that company is using
variable costing.
product costing.
operations costing.
absorption costing
Seasons Manufacturing manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
Income would increase by $40,000.
Income would decrease by $8,000.
Income would increase by $8,000.
Income would increase by $140,000.
Carter, Inc. can make 100 units of a necessary component part with the following costs:
Direct Materials
$120,000
Direct Labor
20,000
Variable Overhead
60,000
Fixed Overhead
40,000
If Carter can purchase the component externally for $220,000 and only $10,000 of the fixed costs can be avoided, what is the correct make-or-buy decision?
Make and save $30,000
Buy and save $10,000
Buy and save $30,000
Make and save $10,00
A company has a process that results in 15,000 pounds of Product A that can be sold for $16 per pound. An alternative would be to process Product A further at a cost of $200,000 and then sell it for $28 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action?
Sell now, the company will be better off by $200,000.
Sell now, the company will be better off by $20,000.
Process further, the company will be better off by $180,000.
Process further, the company will be better off by $20,000
