ACG Exam 2 prep Actual Questions and
CORRECT Answers
Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which
of the following would probably be the most accurate measure of activity to use for allocating
the cost of inspecting the finished products at Guerra? - CORRECT
ANSWER Inspection time
In an activity-based costing system, activity rates are used to: - CORRECT
ANSWER debit Work In Process
In activity-based costing, the total overhead cost in an activity cost pool can be computed by:
- CORRECT ANSWER multiplying the total activity in the activity cost pool by the
activity rate for the activity cost pool.
In an activity-based costing system: - CORRECT ANSWER overhead can be either
overapplied or underapplied.
An activity-based costing system that is designed for internal decision-making will not
conform to generally accepted accounting principles because: - CORRECT
ANSWER under activity-based costing some manufacturing costs (i.e., the costs of idle
capacity and organization-sustaining costs) will not be assigned to products.
Purchase order processing is an example of a: - CORRECT ANSWER Batch-level
activity.
Which of the following would be classified as a product-level activity? - CORRECT
ANSWER Advertising a product.
Jasmine Company uses activity-based costing. The company has two products: A and B. The
annual production and sales of Product A is 10,000 units and of Product B is 4,000 units.
There are three activity cost pools, with estimated total cost and expected activity as follows:
, The cost per unit of Product A under activity-based costing is closest to: - CORRECT
ANSWER 9.70
Overhead allocation based solely on a single measure of volume such as direct labor-hours: -
CORRECT ANSWER could lead to an inaccurate product cost
Direct materials costs are usually excluded from the costs that are allocated to activity cost
pools in an activity-based costing system. - CORRECT ANSWER True
Variable manufacturing overhead costs are treated as product costs under both absorption and
variable costing. - CORRECT ANSWER True
How would the following costs be classified (product or period) under variable costing at a
retail clothing store?
Cost of purchasing clothing
Sales commissions
A)
Product
Product
B)
Product
Period
C)
Period
Product
D)
Period
Period - CORRECT ANSWER Choice B
CORRECT Answers
Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which
of the following would probably be the most accurate measure of activity to use for allocating
the cost of inspecting the finished products at Guerra? - CORRECT
ANSWER Inspection time
In an activity-based costing system, activity rates are used to: - CORRECT
ANSWER debit Work In Process
In activity-based costing, the total overhead cost in an activity cost pool can be computed by:
- CORRECT ANSWER multiplying the total activity in the activity cost pool by the
activity rate for the activity cost pool.
In an activity-based costing system: - CORRECT ANSWER overhead can be either
overapplied or underapplied.
An activity-based costing system that is designed for internal decision-making will not
conform to generally accepted accounting principles because: - CORRECT
ANSWER under activity-based costing some manufacturing costs (i.e., the costs of idle
capacity and organization-sustaining costs) will not be assigned to products.
Purchase order processing is an example of a: - CORRECT ANSWER Batch-level
activity.
Which of the following would be classified as a product-level activity? - CORRECT
ANSWER Advertising a product.
Jasmine Company uses activity-based costing. The company has two products: A and B. The
annual production and sales of Product A is 10,000 units and of Product B is 4,000 units.
There are three activity cost pools, with estimated total cost and expected activity as follows:
, The cost per unit of Product A under activity-based costing is closest to: - CORRECT
ANSWER 9.70
Overhead allocation based solely on a single measure of volume such as direct labor-hours: -
CORRECT ANSWER could lead to an inaccurate product cost
Direct materials costs are usually excluded from the costs that are allocated to activity cost
pools in an activity-based costing system. - CORRECT ANSWER True
Variable manufacturing overhead costs are treated as product costs under both absorption and
variable costing. - CORRECT ANSWER True
How would the following costs be classified (product or period) under variable costing at a
retail clothing store?
Cost of purchasing clothing
Sales commissions
A)
Product
Product
B)
Product
Period
C)
Period
Product
D)
Period
Period - CORRECT ANSWER Choice B
