ACCT 311 Ch. 9 Test Questions and Answers Already Passed Latest Update

ACCT 311 Ch. 9 Test Questions and Answers Already Passed Latest Update When a company uses only one rate to allocate overhead costs, the accounting system treats all overhead as if the costs were ______. - Answers Variable The process that begins by attempting to increase price to meet reported product costs, losing market, reporting higher costs, and so on until out if business is the _______ ___________. - Answers Death Spiral True or false: A death spiral can only occur when a company has decreasing demand. - Answers False The basic approach in product costing is to allocate costs in the cost pools to individual cost ______. - Answers objects If budgeted overhead cost is $250,000 and budgeted direct labor cost is $400,000 then the overhead rate equals: - Answers 62.5% of direct labor cost When a company uses one allocation base, it gives the appearance that when a company drops a segment, all overhead costs will (increase/decrease) - Answers Decrease The plantwide allocation method uses ______. - Answers one cost pool for the entire plant one rate The process where a company attempts to recover costs by increasing price for a product with decreasing demand describes the ______ _______ - Answers Death spiral Which of the following is NOT a typical allocation base companies use when calculating a single plantwide rate? - Answers purchase orders Select all that apply Examples of a company experiencing a death spiral include ______. - Answers increasing a product's price when the product is experiencing a decrease in demand a major customer no longer purchasing a product causing a company to increase the product's price The major difference between department allocation and plantwide allocation is the number of ________ ________used to allocate overhead costs. - Answers cost pools or cost activites Costs are assigned to individual cost objects (products or services) using appropriate cost allocation _______or_______ - Answers bases, drivers If multiple products use the manufacturing facilities in many different ways, the ________ allocation method is the best choice to allocate overhead costs. - Answers department Given budgeted overhead cost of $250,000 and budgeted machine-hours of 125,000, the overhead rate is $______ per machine-hour. - Answers 2 The method that first assigns costs to activities and then assigns them to products based on the product's consumption of activities is _______-_______ _______ . - Answers Activity-Based Costing (ABC) The term _______ refers to an entire factory, store, or hospital. - Answers plant or plantwide The cause of an activity cost is called a(n) _______ _______ - Answers cost driver When a nonmanufacturing organization uses a single overhead rate to allocate indirect costs, it is called a(n) _______ allocation. - Answers plantwide When overhead is allocated using the department allocation method, there is one cost pool per ______. - Answers department When managers analyze a product's activities, they often uncover many ______-______ steps or activities that can be eliminated. - Answers nonvalue - added When choosing to use more complex allocation methods, the incremental costs of additional information must be justified by an increase ______ in from the improved decisions - Answers benefits Which of the following statements is false? - Answers Finding a cost driver that is causally related to the cost being allocated is easier with plantwide allocation. The two-stage product costing method that assigns costs first to activities and then to the products based on each product's use of activities is called ______. - Answers activity-based costing True or false: When using activity-based costing, the predetermined overhead rate applies to any type of indirect cost. - Answers True Activity-based costing assigns costs to products by multiplying the cost driver rate by the _________ of cost driver units consumed by the product - Answers volume To assign overhead costs to a product, multiply the cost driver rates by the number of units of the cost ______. - Answers driver in each product Analyzing processes to uncover nonvalue-added steps that can be eliminated is a component