16. Which best describes the flow of overhead costs in an activity based costing

Question

16. Which best describes the flow of overhead costs in an activity based costing system a Overhead costs direct labor cost or hours products b. Overhead costs products C. Overhead costs activity cost pools cost drivers products d. Overhead costs machine hours products 17. Sanborn Industries has the following overhead costs and cost drivers. Direat labor hours are estimated at 100,000 for the year Cost Driver Eat. Oxechead Coat Driver Aclivity 500 erders 450 selups 25,000 MH 000,000 parts 500 inspections $ 120,000 297,000 Ordering and Receiving Orders Machine Setup Machining Assembly Setups Machine hours 1,800,000 Parts Inspections 1,200,000 300,000 If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is a $960 b $12.00 c$15.00 d $34.17 18. One of Hartman Company's activity cost pools is inspecting, with estimated overhead of $140,000. Hartman produces throw rugs (700 inspections) and area rugs (1,300 inspections). How much of the inspecting cost pool should be assigned to throw rge a $49,000 b. $70,000 $75,384 d. $140,000 19 Which of the following factors would suggest a switch to activity-based costing? a. Product lines similar in volume and manufacturing complexity b. Overhead costs constitute a significant portion of total costs c The manufacturing process has been stable d Production managers use data provided by the existing system 20 Just-in-time processing a is based on a just-in-case philosophy b. results in a push approach c minimizes inventory storage and walting time. d all of these. Anincrease in the level of activity w and fixed costs 21, have the following effects on unit costs for variable a Increases b. Remains constant Remains constant Remains constant d. Remains constant 22 Nelson Manufacturing has the following data Variable costs are 60% of the unit seling price The contribution margin ratio is 40% The contribution margin per unit is $500 The fixed costs are $300,000 Which of the following does not express the break-even point? a $300,000 + 60x=x b. $300,000 40XX C. $300,000-S500 . X d.$300,000 40 X

Explanation / Answer

Which best describes the flow of overhead costs in an activity-based costing system?

Overhead costs activity cost pools cost drivers products

Activity cost accounting is to identify the activities performed in an organization and then assigning the cost to those activities.

Note:

*Activity cost pools – cost incurred for a particular activity

**Cost drivers – cost drivers are the one on basis of which cost get occurred. Like machine hours, labour hours etc.

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