ACC 560 Week 4 Quiz 2 (Chapter 4) Question 1 Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso’s total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Titanium Aluminum Total Cost Assembly 500 mach. hours 500 mach. hours $60,000 Inspections 350 150 $100,000 2,100 labor hours 1,900 labor hours Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much assembly cost is assigned to titanium racquets Question 2 Boswell Company manufactures two products, Regular and Supreme. Boswell’s overhead costs consist of machining, $3,000,000; and assembling, $1,500,000. Information on the two products is: Regular Supreme Direct labor hours 10,000 15,000 Machine hours 10,000 30,000 Number of parts 90,000 160,000 Overhead applied to Regular using activity-based costing is Question 3 Which best describes the flow of overhead costs in an activity-based costing system? Question 4 An activity-based overhead rate is computed as follows: Question 5 Estimated costs for activity cost pools and other item(s) are as follows: Machining $500,000 Assembling 200,000 Advertising 450,000 Inspecting and testing 175,000 Total estimated overhead is Question 6 The presence of any of the following factors would suggest a switch to ABC except when Question 7 Use of activity-based costing will result in the development of Question 8 An example of an activity cost pool is Question 9 Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true? (1) Direct labor constitutes a significant part of total product cost. (2) A high correlation exists between direct labor and changes in the amount of overhead costs. Question 10 An activity that has a direct cause-effect relationship with the resources consumed is a(n)
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