Question: The most preferable allocation base is one that meets the criteria of: Fairness Cause and effect Correct! Benefits received Ability to bear Question 2 A
The most preferable allocation base is one that meets the criteria of:
Fairness
Cause and effect Correct!
Benefits received
Ability to bear
Question 2
A company allocates its corporate overhead to the divisions based on division sales (i.e., a division with 20% of the total company sales is allocated 20% of the corporate overhead). This is an example of:
Fairness
Cause and effect
Benefits received
Ability to bear Correct!
Question 3
A company allocates its human resources department to the divisions based on the number of employees in the division (i.e., a division with 25% of the total company employees is allocated 25% of the human resources cost). This is an example of:
Fairness
Cause and effect
Benefits received Correct!
Ability to bear
Question 4
Setup cost is generally treated as
Unit level
Batch level Correct!
Product level
Organization sustaining
Question 5
The cost of providing audited financial statements to the Securities and Exchange Commission is generally treated as:
Unit level
Batch level
Product level
Organization sustaining Correct!
Question 6
10 / 10 pts
Depreciation computed using the units of output/units of production method is generally treated as:
Unit level Correct!
Batch level
Product level
Organization sustaining
Question 7
Design cost is generally treated as:
Unit level
Batch level
Product level Correct!
Organization sustaining
Question 8
0 / 10 pts
Overhead costs are allocated to product cost objects in an activity-based cost system in the following manner:
Overhead costs are assigned to activities, then costs are assigned to products. Correct!
Overhead costs are assigned to departments, then costs are assigned to products.
Overhead costs are assigned to activities, then costs are assigned to departments before assigning to products.
Overhead costs are traced directly to products making assigning them unnecessary.
None of the above.
Question 9
10 / 10 pts
A company has fixed manufacturing overhead of $200,000 that needs to be allocated to the product cost object. The overhead has been separated into multiple pools, each with its own allocation base, as shown in the following table.
| Activity Center | Amount (a) | Activity Driver Quantities A (b) | Activity Driver Quantities B (c) | Description of Driver |
| Move raw materials | $ 75,000 | 2,000 | 3,000 | lbs. moved |
| Setup machines | 100,000 | 200 | 300 | # of setups |
| Run machines | 25,000 | 6,000 | 4,000 | machine hours |
| Totals | $200,000 |
Using activity-based costing, the overhead rate for running the machines is:
$4.167 for product A and $6.25 for Product B
$75
$200
$2.50 - Correct!
None of the above
Question 10
10 / 10 pts
A company has fixed manufacturing overhead of $200,000 that needs to be allocated to the product cost object. The overhead has been separated into multiple pools, each with its own allocation base, as shown in the following table.
| Activity Center | Amount (a) | Activity Driver Quantities A (b) | Activity Driver Quantities B (c) | Description of Driver |
| Move raw materials | $ 75,000 | 2,000 | 3,000 | lbs. moved |
| Setup machines | 100,000 | 200 | 300 | # of setups |
| Run machines | 25,000 | 6,000 | 4,000 | machine hours |
| Totals | $200,000 |
Assuming the overhead rate for moving materials is $12 per pound moved, the allocation of move materials overhead to product B would be:
$24,000
$36,000- Correct!
$60,000
$87,600
None of the Above
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