Question $1$

When combining activities in an activity$-$based costing system, batch$-$level activities should be combined with unit$-$level activities whenever possible.

T

True

F

False

Question $2$

In the second$-$stage allocation in activity$-$based costing, activity rates are used to apply overhead costs to products and customers.

T

True

F

False

Question $3$

Mayeux Corporation uses an activity$-$based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity$-$based costing system

Costs:

Wages and Salaries $$320,000$

Depreciation $$160,000$

Utilities $$240,000$

Total $$720,000$

Distribution of resource consumption:

Activity Cost Pools

Assembly

Setting Up

Other

Total

Wages and salaries

$50\%$

$40\%$

$10\%$

$100\%$

Depreciation

$10\%$

$55\%$

$35\%$

$100\%$

Utilities

$15\%$

$50\%$

$35\%$

$100\%$

How much cost, in total, would be allocated in the first$-$stage allocation to the Setting Up activity cost pool?

$$348,000$

$$336,000$

$$360,000$

$$288,000$

Question $4$

Parts administration is an example of a:

Unit$-$level activity.

Organization$-$sustaining.

Product$-$level activity.

Batch$-$level activity.

Question $5$

Production order processing is an example of a

Unit$-$level activity.

Batch$-$level activity.

Organization$-$sustaining activity.

Product$-$level activity.

Question $6$

When a company implements activity$-$based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting in the high$-$volume products.

T

True

F

False

Question $7$

Which of the following would be classified as a product$-$level activity?

Operating a cafeteria for employees.

Setting up a machine for a batch of standard products.

Running the Human Resource department.

Advertising a product.

Question $8$

Organization$-$sustaining activities relate to specific customers and are not tied to any specific products.

T

True

F

False

Question $9$

In activity$-$based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:

the total activity for the activity cost pool.

the machine hours required by the product.

the direct labor$-$hours required by the product.

the total direct labor$-$hours for the activity cost pool.

Question $10$

Bippus Corporation manufactures two products: Product X$08$R and Product P$56$L$.$ The company uses a plantwide overhead rate based on direct labor$-$hours. It is considering implementing an activity$-$based costing $($ABC$)$ system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X$08$R and P$56$L$.$

Activity Cost Pool

Activity Measure

Total Cost

Total Activity

Machining

Machine$-$hours

$$247,000$

$13,000$ MHs

Machine setups

Number of setup

$$60,000$

$150$ setups

Product design

Number of products

$$56,000$

$2$ products

Order size

Direct labor$-$hour

$$260,000$

$10,000$ DLHs

Activity Measure

Product X$08$R

Product P$56$L

Machine$-$hours

$10,000$

$3,000$

Number of setups

$110$

$40$

Number of products

$1$

$1$

Direct labor$-$hours

$6,000$

$4,000$

Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product P$56$L$?$

$$373,800$

$$418,000$

$$311,500$

$$249,200$

Question $11$

Activity$-$based costing is a costing method that is designed to provide managers with product cost information for internal decision$-$making.

T

True

F

False

Question $12$

First$-$stage allocations in an ABC system should not be based on the opinions of employees about how costs should be distributed among activity cost pools.

T

True

F

False

Question $13$

In activity$-$based costing, as in traditional costing systems, manufacturing costs are not assigned to products.

T

True

F

False

Question $14$

Direct materials costs are usually excluded from the costs that are allocated to activity cost pools in an activity$-$bas