BMGT 221 cid 9 Friday Exam Simulation cid 9 Chap 4 Section MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question Industries uses departmental overhead rates to allocate its manufacturing overhead to cid 9 1 cid 9 C jobs The company has two departments Assembly and Sanding The Assembly Department uses a departmental overhead rate of 20 per machine hour while the Sanding Department uses a departmental overhead rate of 15 per direct labor hour Job 542 used the following direct labor hours and machine hours in the two departments Actual results Direct labor hours used Machine hours used Assembly Department 4 9 Sanding Department 3 5 tO cid 9 L S iS cid 9 The cost for direct labor is 25 per direct labor hour and the cost of the direct materials used by Job 542 is 1 200 How much manufacturing overhead would be allocated to Job 542 using the departmental overhead rates A 175 cid 9 B 245 cid 9 225 D 125 JZ Green Bags Company manufactures cloth grocery bags to be sold to grocery stores and other cid 9 retailers Green Bags Company sells the bags in cases of 1 000 bags The bags come in three sizes Large Medium and Small Currently Green Bags Company uses a single plantwide overhead rate to allocate its 7 141 100 of annual manufacturing overhead Of this amount 1 875 000 is associated with the Large Bag line 2 992 500 is associated with the Medium Bag line and 2 273 000 is associated with the Small Bag line Green Bags Company is currently running a total of 37 000 machine hours 12 500 in the Large Bag line 13 300 in the Medium Bag line and 11 200 in the Small Bag line Green Bags Company uses machine hours as the cost driver for manufacturing overhead costs 2 The departmental manufacturing overhead rate for the Small Bag line would be closest to A 225 00 per machine hour C 150 00 per machine hour 203 00 per machine hour D 193 00 per machine hour Ea 7 19 tD oywtIAcJ ttD cid 9 Z 131 oDD e v btw cid 9 11 ZOO cid 9 S M J 0LJ Vve c2 73 ooO 2 0 0 cid 9 cid 9 cid 9 cid 9 the following statements does NOT describe an ABC system cid 9 3 C A ABC systems can create more accurate product costs B ABC systems are more complex and costly than traditional costing systems ABC systems may only be used by service companies D ABC systems are used in both manufacturing and nonmanufacturing companies ittinger Company manufactures cuckoo clocks and uses an activity based costing system to cid 9 allocate all manufacturing conversion costs Each cuckoo clock consists of 10 separate parts totaling 120 in direct materials and requires 2 0 hours of machine time to produce Additional information follows 4 Activity Materials handling Machining Assembling Packaging Allocation Base Number of parts Machine hours Number of parts INumber of finished units Cost Allocation Rate 1 25 per part 2 50 per machine hour 0 50 per part 1 50 per finished unit ox ac What is the cost of machining per cuckoo clock A 25 00 cid 9 B 3 00 cid 9 C 10 50 cid 9 5 00 5 Sparrow Manufacturing manufactures small parts and uses an activity based costing system cid 9 5 VU 13 Activity Materials Assembling Packaging Est Indirect Activity Costs Allocation base Cost allocation rate 70 000 Material moves 240 000 Direct labor 2 00 move 8 00 dir labor hour AweV C cid 9 O200 hours 80 000 of finished units 0 80 finished unit The following parts were produced in October with the following information Part Produced Moves Materials Costs 2 500 7 000 11 2501 Dir Labor Hrs 200 300 1 0t9 800 1 500 2 200 2 500 3 500 4 500 A B C Total manufacturing costs for part A is 0 5 cid 9 B 7 700 cid 9 C 3 200 cid 9 OS 0 0 t7 A 1A Wrhe process of reevaluating activities to reduce costs while satisfying customers needs is 6 A referred to as value engineering cid 9 C design engineering cid 9 Zsystem that focuses on activities as the fundamental cost object and uses the costs for these 7 P activities to compile indirect costs of goods and services is B total engineering D developmental engineering A value engineering cid 9 C prevention costs B appraisal costs 1 D activity based costing of the following pertains to a lean production system cid 9 8 4 A It will produce goods in smaller batches than a traditional production system will require higher inventory levels than a traditional production system 11wi11 have like machines grouped together Jff will require longer set up times than a traditional system i he costs incurred when poor quality goods or services are detected and corrected before 9 A delivery to customers are called Ointernal failure costs cid 9 C appraisal costs cid 9 B external failure costs D prevention costs JO costof warranty work is an example of a n 10 A appraisal cost cid 9 C prevention cost cid 9 Dexternal failure cost D internal failure cost cid 9
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