ACCT 245 EXAM 1 QUESTIONS WITH
VERIFIED ANSWERS
\.Activity-based costing is most suited to manufacturing processes that are labor
intensive. This statement is - ANSWERS✔-false
\.Activity-based cost systems usually employ a companywide allocation base such
as direct labor hours. This statement is - ANSWERS✔-false
\.Which of the following is not a volume based cost driver that can be used to
allocate manufacturing overhead costs? - ANSWERS✔-number of setups
\.Westmorland makes ink that it uses in ball point pens. The Company produces
two colors of ink. One is blue; the other is red. Ink is made in batches with setup
costs being $2,000 per batch. Demand for blue ink is significantly stronger than for
red ink. During the most recent week, the company made 2 batches of ink, one
blue the other red. It requires 1 hour of labor to make a gallon of ink regardless of
color. There were 300 hours of labor used to make the blue ink and the 100 hours
of labor used to make the red ink. Under these circumstances - ANSWERS✔-the
total setup cost should be allocated equally between the red and blue ink.
\.Westmorland makes ink that it uses in ball point pens. The Company produces
two colors of ink. One is blue the other is red. Ink is made in batches with setup
, costs being $2,000 per batch. Demand for blue ink is significantly stronger than for
red ink. During the most recent week, the company made 2 batches of ink, one
blue the other red. It requires 1 hour of labor to make a gallon of ink regardless of
color. There were 300 hours of labor used to make the blue ink and the 100 hours
of labor used to make the red ink. If the Company uses a single company wide
overhead rate based on labor hours, the amount of setup cost allocated to the -
ANSWERS✔-blue ink is $3,000 and red ink is $1,000.
\.Westmorland makes ink that it uses in ball point pens. The Company produces
two colors of ink. One is blue the other is red. Ink is made in batches with setup
costs being $2,000 per batch. Demand for blue ink is significantly stronger than for
red ink. During the most recent week, the company made 2 batches of ink, one
blue the other red. It requires 1 hour of labor to make a gallon of ink regardless of
color. There were 300 hours of labor used to make the blue ink and the 100 hours
of labor used to make the red ink. If the Company uses activity-based costing and
allocates the setup cost on the basis of the number of batches, the setup cost
allocated to the - ANSWERS✔-blue ink is $2,000 and red ink is $2,000.
\.Which of the following is not classified as an activity center in a typical activity-
based costing system?
Facility-level activity center.
Product-level activity center.
Unit-level activity center.
Labor-level activity center. - ANSWERS✔-Labor-level activity center.
VERIFIED ANSWERS
\.Activity-based costing is most suited to manufacturing processes that are labor
intensive. This statement is - ANSWERS✔-false
\.Activity-based cost systems usually employ a companywide allocation base such
as direct labor hours. This statement is - ANSWERS✔-false
\.Which of the following is not a volume based cost driver that can be used to
allocate manufacturing overhead costs? - ANSWERS✔-number of setups
\.Westmorland makes ink that it uses in ball point pens. The Company produces
two colors of ink. One is blue; the other is red. Ink is made in batches with setup
costs being $2,000 per batch. Demand for blue ink is significantly stronger than for
red ink. During the most recent week, the company made 2 batches of ink, one
blue the other red. It requires 1 hour of labor to make a gallon of ink regardless of
color. There were 300 hours of labor used to make the blue ink and the 100 hours
of labor used to make the red ink. Under these circumstances - ANSWERS✔-the
total setup cost should be allocated equally between the red and blue ink.
\.Westmorland makes ink that it uses in ball point pens. The Company produces
two colors of ink. One is blue the other is red. Ink is made in batches with setup
, costs being $2,000 per batch. Demand for blue ink is significantly stronger than for
red ink. During the most recent week, the company made 2 batches of ink, one
blue the other red. It requires 1 hour of labor to make a gallon of ink regardless of
color. There were 300 hours of labor used to make the blue ink and the 100 hours
of labor used to make the red ink. If the Company uses a single company wide
overhead rate based on labor hours, the amount of setup cost allocated to the -
ANSWERS✔-blue ink is $3,000 and red ink is $1,000.
\.Westmorland makes ink that it uses in ball point pens. The Company produces
two colors of ink. One is blue the other is red. Ink is made in batches with setup
costs being $2,000 per batch. Demand for blue ink is significantly stronger than for
red ink. During the most recent week, the company made 2 batches of ink, one
blue the other red. It requires 1 hour of labor to make a gallon of ink regardless of
color. There were 300 hours of labor used to make the blue ink and the 100 hours
of labor used to make the red ink. If the Company uses activity-based costing and
allocates the setup cost on the basis of the number of batches, the setup cost
allocated to the - ANSWERS✔-blue ink is $2,000 and red ink is $2,000.
\.Which of the following is not classified as an activity center in a typical activity-
based costing system?
Facility-level activity center.
Product-level activity center.
Unit-level activity center.
Labor-level activity center. - ANSWERS✔-Labor-level activity center.
