ACCT 241 Week 7 Assignment Help 2

ACCT 241 Week 7 Assignment Help 2 | American University 

1.

 Required information

We will learn how activity-based costing differs from the traditional cost accounting methods. Activity-based costing estimates the costs of the resources consumed by cost objects, such as products and customers; cost objects generate activities that consume costly resources. Activities form the link between costs and cost objects. The first step in the implementation of activity-based costing includes defining the activities, activity cost pools, and activity measures. The number and definitions of the activity cost pools and activity measures used by companies vary considerably. We will also learn how to use time-driven activity-based costing to assign costs to cost objects and to analyze capacity.

Knowledge Check 01

Which of the following is an allocation base commonly used under the traditional methods for allocation of overhead costs?

·         Number of batches.

·         Direct labor-hours.

·         Indirect materials.

·         Number of customer orders. 

Knowledge Check 02

All of the following are differences between ABC and traditional absorption costing except ________.

·         ABC system may assign non manufacturing costs to products

·         ABC allocates all manufacturing costs to products

·         ABC system uses many cost pools

·         ABC system may exclude some manufacturing costs, such as organization-sustaining costs

 2.

Required information

We will learn how activity-based costing differs from the traditional cost accounting methods. Activity-based costing estimates the costs of the resources consumed by cost objects, such as products and customers; cost objects generate activities that consume costly resources. Activities form the link between costs and cost objects. The first step in the implementation of activity-based costing includes defining the activities, activity cost pools, and activity measures. The number and definitions of the activity cost pools and activity measures used by companies vary considerably. We will also learn how to use time-driven activity-based costing to assign costs to cost objects and to analyze capacity.

Knowledge Check 02

Match the term and the definition.

1. Activity-based costing estimates the costs of the resources consumed by _________.

2. Advertising is an example of a __________activity.

3. Activity-based costing accumulates costs for each __________.

3.

Required information

We will learn how activity-based costing differs from the traditional cost accounting methods. Activity-based costing estimates the costs of the resources consumed by cost objects, such as products and customers; cost objects generate activities that consume costly resources. Activities form the link between costs and cost objects. The first step in the implementation of activity-based costing includes defining the activities, activity cost pools, and activity measures. The number and definitions of the activity cost pools and activity measures used by companies vary considerably. We will also learn how to use time-driven activity-based costing to assign costs to cost objects and to analyze capacity.

Knowledge Check 01

Shipping orders to a grocery store would be considered a(n) ________.

·         unit-level activity

·         batch-level activity

·         product-level activity

·         customer-level activity

·         organization-sustaining activity 

4.

Required information

We will learn how activity-based costing differs from the traditional cost accounting methods. Activity-based costing estimates the costs of the resources consumed by cost objects, such as products and customers; cost objects generate activities that consume costly resources. Activities form the link between costs and cost objects. The first step in the implementation of activity-based costing includes defining the activities, activity cost pools, and activity measures. The number and definitions of the activity cost pools and activity measures used by companies vary considerably. We will also learn how to use time-driven activity-based costing to assign costs to cost objects and to analyze capacity.

Knowledge Check 01

Ordering materials, setting up machines, assembling products, and inspecting products are examples of ________.

·         cost drivers

·         cost pools

·         cost activity levels

5.

Required information

We will learn how an activity-based costing system divides the different types of overhead costs among the activity cost pools via an allocation process called first-stage allocation. The first-stage allocation in an ABC system is the process of assigning functionally organized overhead costs derived from a company's general ledger to the activity cost pools.

Knowledge Check 01

Which of the following costs would not be allocated using ABC?

·         Marketing.

·         Factory equipment depreciation.

·         Direct labor.

·         Factory utilities.

6.

Required information

We will learn how an activity-based costing system divides the different types of overhead costs among the activity cost pools via an allocation process called first-stage allocation. The first-stage allocation in an ABC system is the process of assigning functionally organized overhead costs derived from a company's general ledger to the activity cost pools.

Knowledge Check 01

First-stage allocation of overhead costs to each cost pool is accomplished using all of the following except________.

•                     employee interviews

•                     grouping batch and unit level activities

•                     percentages

7.

Required information

We will learn how an activity-based costing system divides the different types of overhead costs among the activity cost pools via an allocation process called first-stage allocation. The first-stage allocation in an ABC system is the process of assigning functionally organized overhead costs derived from a company's general ledger to the activity cost pools.

Knowledge Check 01

What is the amount of production overhead allocated to the assembling unit cost pool?

•        $20,000

•        $340,000

•        $800,000

•        $320,000

8.

Required information

We will learn how to compute activity rates. An activity rate is computed for each cost pool by dividing the costs assigned to the cost pool by the measure of activity for the cost pool. Activity rates provide useful information to managers concerning the costs of performing overhead activities. A particularly high cost for an activity can trigger efforts to improve the way the activity is carried out in the organization.

Knowledge Check 01

The Beckham Company has the following information about their activity cost pools:

The activity rate for machine setups is ________.

·         $125,000

·         $0.04 per setup

·         $10 per setup

·         $25 per setup

9.

Required information

We will learn how to assign costs to a product using a second-stage allocation. We will also describe another example of second-stage allocation—assigning activity costs to customers.

Knowledge Check 01

In the first-stage allocation of overhead costs, products, customer orders and customers are examples of ________.

•        activity levels

•        activity rates

•        cost objects

•        cost pools

10.

Required information

We will learn how to assign costs to a product using a second-stage allocation. We will also describe another example of second-stage allocation—assigning activity costs to customers.

Knowledge Check 01

What is the total overhead cost assigned to Product A, if Product A used 100 setups, no special processing and 10,000 direct labor-hours?

·         $10,000

·         $1,000

·         $110,000

·         $100,000

11.

Required information

We will learn how to assign costs to a product using a second-stage allocation. We will also describe another example of second-stage allocation—assigning activity costs to customers.

Knowledge Check 01

Which of the following costs would not be allocated to products or customers?

·         Customer service

·         Other

·         Machine setup

·         Product design Explanation

12.

Required information

We will learn how to assign costs to a product using a second-stage allocation. We will also describe another example of second-stage allocation—assigning activity costs to customers.

Knowledge Check 01

The Princeville Company placed five (5) orders for Product 12B from Brookston Corporation. Brookston has the following information about Product 12B:

What is the overhead cost assigned to Princeville for their five (5) orders of Product 12B?

·         $480

·         $530

·         $2,650

·         $990

13.

Required information

We will learn about the two management reports prepared with ABC data. Product profitability reports help a company channel its resources to the most profitable growth opportunities. Customer profitability reports help identify customers or products that either drain or enhance profits.

Knowledge Check 01

Which of the following is not a management report that is normally prepared with ABC data?

·         Product profitability

·         Customer margins

·         Customer profitability

14.

Required information

We will learn about the two management reports prepared with ABC data. Product profitability reports help a company channel its resources to the most profitable growth opportunities. Customer profitability reports help identify customers or products that either drain or enhance profits.

Knowledge Check 01

What is the product margin of Product A?

•        $250,000

•        $140,000

•        $110,000

•        $390,000

15.

Required information

We will learn about the two management reports prepared with ABC data. Product profitability reports help a company channel its resources to the most profitable growth opportunities. Customer profitability reports help identify customers or products that either drain or enhance profits.

Knowledge Check 01

What is the customer margin for Denny Corporation? What conclusion can you draw from this information?

·         $(900), further analysis is required.

·         $5,850, this is a highly profitable customer.

·         $1,850, this is a marginally profitable customer.

·         $(3,900), the customer should be dropped immediately.

16.

Required information

In this learning objective we contrast traditional absorption costing with an alternative approach called activity-based absorption costing. Activity-based absorption costing assigns all manufacturing overhead costs to products based on the activities performed to make those products. We explain how this approach is used to allocate the company’s manufacturing overhead across the two products.

Knowledge Check 01

What type of predetermined overhead rate is used in activity-based absorption costing?

·         Multiple

·         A single

Knowledge Check 02

An activity measure is like a(n) ________.

·         allocation base

·         predetermined overhead rate 

Knowledge Check 03

Design work and engineering changes are examples of ________.

·         batch-level activities

·         product-level activities Correct

17.

Required information

In this learning objective we contrast traditional absorption costing with an alternative approach called activity-based absorption costing. Activity-based absorption costing assigns all manufacturing overhead costs to products based on the activities performed to make those products. We explain how this approach is used to allocate the company’s manufacturing overhead across the two products.

Simmons, Inc.’s traditional costing system uses a plantwide predetermined overhead rate based on direct labor-hours (DLHs). The company’s estimated total manufacturing overhead is $1,632,986 and estimated total direct labor-hours for the year is 30,220. Data about its only two products, A and B, as well as data pertaining to its proposed activity-based absorption costing system appears below.

Knowledge Check 01

When manufacturing overhead is applied to each unit of product B, what is the activity rate that will be used for the setting up machines (setup) activity cost pool?

·         $18.26

·         $223.00

·         $538.77

·         $660.06