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Question 1 For its inspecting cost pool, Ellsworth, Inc

Accounting

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Question 1

For its inspecting cost pool, Ellsworth, Inc. expected overhead cost of $240000 and 4000 inspections. The actual overhead cost for that cost pool was $320000 for 5000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is

Question 2

Gant Accounting performs two types of services, Audit and Tax. Gant’s overhead costs consist of computer support, $246000; and legal support, $120000. Information on the two services is:
 

	Audit	Tax
Direct labor cost	$50000	$100000
CPU minutes	40000	10000
Legal hours used	200	800

Gant Accounting performs tax services for Cathy Lane. Direct labor cost is $1200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Lane job using activity-based costing?

Question 3

	Your answer is correct.

One of Matheny Company’s activity cost pools is inspecting, with estimated overhead of $80000. Matheny produces throw rugs (700 inspections) and area rugs (1300 inspections). How much of the inspecting cost pool should be assigned to throw rugs?

Question 4

	Your answer is correct.

Which of the following is a non-value-added activity?

Question 5

As compared to a low-volume product, a high-volume product

Question 6

	Your answer is correct.

An activity that has a direct cause-effect relationship with the resources consumed is a(n)

Question 7

	Your answer is correct.

Which would be an appropriate cost driver for the purchasing activity cost pool?

Question 8

	Your answer is correct.

All of the following statements are correct except that
 

the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company.

activity-based costing has been widely adopted in service industries.

the objective of installing ABC in service firms is different than it is in a manufacturing firm.

a larger proportion of overhead costs are company-wide costs in service industries.

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Question 9

	Your answer is correct.

Use of activity-based costing will result in the development of

Question 10

	Your answer is correct.

Boswell Company manufactures two products, Regular and Supreme. Boswell’s overhead costs consist of machining, $2600000; and assembling, $1300000. Information on the two products is:
 

	Regular	Supreme
Direct labor hours	10000	15000
Machine hours	10000	30000
Number of parts	90000	160000

Overhead applied to Regular using activity-based costing is