CH5 quiz2

pdf

School

University of North Texas *

*We aren’t endorsed by this school

Course

5130

Subject

Accounting

Date

Jan 9, 2024

Type

pdf

Pages

8

Report

Uploaded by vnguyen3

11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 1/8 1. Award: 1 out of 1.00 point Score: 10/10 Points 100 % Skyline 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 $260,000 typically perform both tasks; other firm-wide overhead is expected to total $60,000. These costs are allocated as follows: Bouquet Production Delivery Other Wages and salaries 60% 30% 10% Other overhead 50% 40% 10% Skyline anticipates making 20,500 bouquets and 4,000 deliveries in the upcoming year. The cost of wages and salaries and other overhead that would be charged to each delivery is closest to: $25.50. $26.18. $32.62. $46.50. None of the answers is correct. Percentage of each type of labor that goes toward delivery activity ÷ Number of deliveries = [($260,000 × 30%) + ($60,000 × 40%)] ÷ 4,000 = $25.50 (rounded).
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 2/8 2. Award: 1 out of 1.00 point Carlin and Marley, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $282,000) 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: Staff Support $204,000 In-house computing charges 54,000 Miscellaneous office costs 24,000 Total $282,000 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 40% of the total client base, consumed 35% of the firm's computer hours, and accounted for 25% of the total client transactions. If Carlin and Marley switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would: decrease by $20,400. increase by $20,400. decrease by $48,600. change by an amount other than those listed. change, but the amount cannot be determined based on the information presented. Original: $282,000 × 45% = $126,900; New amount under ABC: [($204,000 × 40%) + ($54,000 × 35%) + ($24,000 × 25%)] = $81,600 + $18,900 + $6,000 = $106,500; $126,900 $106,500 = $20,400 decrease.
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 3/8 3. Award: 1 out of 1.00 point St. Vincent’s, Inc., currently uses traditional costing procedures, applying $803,000 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. Product Pool No.1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,230 40 2,325 Zeta 2,870 60 775 Pool Cost $ 161,000 $ 281,000 $ 361,000 The overhead cost allocated to Beta by using activity-based costing procedures would be: $240,900. $371,550. $431,450. $562,100. None of the answers is correct. (Total Pool Costs for No. 1 × Pool No. 1 Beta ratio to Total Pool Costs) + (Total Pool Costs for No. 2 × Pool No. 2 Beta ratio to Total Pool Costs) + (Total Pool Costs for No. 3 × Pool No. 3 Beta ratio to Total Pool Costs) = [($161,000 × 1,230/4,100) + ($281,000 × 40/100) + ($361,000 × 2,325/3,100)] = $48,300 + $112,400 + $270,750 = $431,450.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 4/8 4. Award: 1 out of 1.00 point Pound Industries’ customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 8,300 calls and incurred costs of $199,200. If 3,270 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: $199,200. $120,720. $78,480. $24. $0. Retail division Allocation = [(Total calls Wholesale calls) ÷ Total calls] × Total costs = [(8,300 3,270) ÷ 8,300] × $199,200 = $120,720.
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 5/8 5. Award: 1 out of 1.00 point St. Vincent’s, Inc., currently uses traditional costing procedures, applying $853,800 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. Product Pool No.1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,600 50 2,550 Zeta 3,100 55 830 Pool Cost $188,000 $294,000 $371,800 The overhead cost allocated to Beta by using traditional costing procedures would be: $290,655. $406,655. $494,655. $563,145. None of the answers is correct. Total Pool Cost = Sum of No. 1, 2, and 3 = $188,000 + $294,000 + $371,800 = $853,800; Overhead allocated to Beta = (Beta DLH ÷ Total DLH) × Total Pool Cost = (1,600 ÷ 4,700) × $853,800 = $290,655.
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 6/8 6. Award: 1 out of 1.00 point 7. Award: 1 out of 1.00 point Starwatch Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 520 revealed a traditionally-derived total cost of $1,623 and a selling price of $1,850 based on that figure. A newly computed activity-based total cost is $1,215. Which of the following statements is true? All other things being equal, Starwatch should consider increasing its sales price. Starwatch should increase the product's selling price to maintain the same markup percentage. Product no. 520 could be labeled as being overcosted by Starwatch’s traditional costing procedures. If product no. 520 is undercosted by traditional accounting procedures, then all of Starwatch’s other products must be undercosted as well. Generally speaking, the activity-based cost figure is "less accurate" than the traditionally- derived cost figure. Product no. 520 could be labeled as being overcosted by Starwatch's traditional costing procedures. Which of the following is most likely to be a cost driver for a packaging and shipping activity? Number of setups. Number of components. Hours of testing. Number of orders. Estimated product costs. Number of orders is most likely to be classified a cost driver for a packaging and shipping activity.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 7/8 8. Award: 1 out of 1.00 point 9. Award: 1 out of 1.00 point Consider the following statements: I. Product diversity creates costing problems because diverse products tend to utilize manufacturing activities in different ways. II. Overhead costs that are not incurred at the unit level create costing problems because such costs do not vary with traditional application bases such as direct labor hours or machine hours. III. Product diversity typically exists when a single product (e.g., a ballpoint pen) is made in different colors. Which of the above statements is (are) true? I only. II only. I and II. I and III. II and III. The only statement that is not true is the last one: Product diversity typically exists when a single product (e.g., a ballpoint pen) is made in different colors. Sleek, Inc. is a manufacturer that assigns cost using activity-based costing principles. Activities have been identified and classified as being either value-added or non-value-added as to each product. Which of the following activities used in Sleek’s production process is non-value-added? raw materials storage activity. heat treatment activity. drill press activity. molding activity. engineering design activity. Storage activity that does not contribute to customer satisfaction is a non-value-added activity.
11/2/23, 9:01 PM Assignment Print View https://ezto.mheducation.com/api/caa/activity/C15Print?jwt=eyJhbGciOiJSUzI1NiJ9.eyJlbnZpcm9ubWVudCI6InByb2QiLCJpc3MiOiJlenQiLCJwcmlud… 8/8 10. Award: 1 out of 1.00 point St. Vincent’s, 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. Product Pool No.1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,200 45 2,250 Zeta 2,800 55 750 Pool Cost $ 160,000 $ 280,000 $360,000 The overhead cost allocated to Zeta by using activity-based costing procedures would be: $240,000. $356,000. $444,000. $560,000. None of the answers is correct. (Total Pool Costs for No. 1 × Pool No. 1 Zeta ratio to Total Pool Costs) + (Total Pool Costs for No. 2 × Pool No. 2 Zeta ratio to Total Pool Costs) + (Total Pool Costs for No. 3 × Pool No. 3 Zeta ratio to Total Pool Costs) = [($160,000 × 2,800/4,000) + ($280,000 × 55/100) + ($360,000 × 750/3,000)] = $112,000 + $154,000 + $90,000 = $356,000.