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Ryan fabrication allocated manufacturing overhead to each job using departmental overhead rates

Accounting

  1. Ryan fabrication allocated manufacturing overhead to each job using departmental overhead rates. Ryan's operations are divided into a metal casting department and a metal finishing department. The casting department uses a departmental overhead rate of $52 per machine hour, while the finishing department uses a departmental overhead rate of $28 per direct labor hour. Job A216 used the following direct labor hours and machine hours in the two departments:

    Casting Finishing
    Direct labor 5 12
    Machine 4 3

    The cost for direct labor is $32 per direct labor hour and the cost of the direct materials used by job A216 is $1,800.

    How much manufacturing overhead would be allocated to job A216 using the departmental overhead rates?
    (a) $454
    (b) $1,360
    (c) $596
    (d) $544
  2. A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is
    (a) appraisal costs
    (b) prevention costs
    (c) value engineering
    (d) activity based costing
  3. The use of which of the following costing systems is most likely to reduce cost distortion to a minimum?
    (a) activity based costing
    (b) departmental overhead allocation rates
    (c) traditional costing system
    (d) plantwide overhead rate
  4. Research and development would most likely be classified as a ____ cost
    (a) product level
    (b) batch level
    (c) facility level
    (d) unit level
  5. Indications that a product cost system needs revision include:
    (a) the company uses a single-allocation-base system developed long ago
    (b) employees do not believe the cost numbers are accurate
    (c) managers lose bids they expected to win and win bids they expected to lose
    (d) all of the above
  6. Four basic steps are used in an ABC system. List the proper order of these steps.
    (a) identify the primary activities and estimate a total cost pool for each
    (b) allocate the costs to the cost object using the activity cost allocation rates
    (c) select an allocation base for each activiyt
    (d) calculate an activity cost allocation rate for each activity
  7. When calculating a departmental overhead rate, what should the numerator be?
    (a) total estimated amount of the departmental allocation base
    (b) actual quantity of the departmental allocation base used by the job
    (c) total estimated departmental overhead cost pool
    (d) total estimated amount of manufacturing overhead for the factory
  8. Non-value added activities are
    (a) also called waste activities
    (a) activities that neither enhance the customer's image of the product or service nor provide a competitive advantage
    (c) activities that could be reduced or removed from the process with no ill effect on the end product or service
    (d) all of the above
  9. Beartowne Enterprises

    Total manufacturing costs for part 002 is
    (a) $10,000
    (b) $18,750
    (c) $4,000
    (d) $12,750
  10. Kramer company manufacturer coffee tables and uses an activity costing system to allocate all manufacturing conversion costs. Each coffee table consists of 15 separate parts totaling $125 in direct materials, and requires 2 hours of machine time to produce.

    Materials handling (#of parts) $1.75 per part
    Machining (machine hrs) $2 per machine hour
    Assembling (# of parts) $.50 per part
    Packaging (# of finished units) $2.75 per finished unit

    What is the total manufacturing cost per chair?
    (a) $40.50
    (b) $165.50
    (c) $30
    (d) $162.75

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