Question 1

Why is using multiple predetermined overhead allocation rates more accurate than using a single plantwide allocation rate?

Accepted Answer

The allocation process is the same,except there are multiple cost pools and multiple allocation bases.Having more than one allocation rate more accurately reflects the way products actually use a company's resources.

Question 2

Fill in the blanks:
-
Direct materials cost and direct labor cost can be ________ ________ to products.Manufacturing overhead costs are ________ in cost pools and then ________ to products.

Accepted Answer

easily traced ,accumulated ,allocated .

Question 3

Powers,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $25,750.Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 31 & \$ 45 \
\hline \text { Direct labor cost per unit } & \$ 52 & \$ 65 \
\hline \text { Number of units } & 500 & 350 \
\hline
\end{array}$$ Calculate the amount of overhead to be allocated to Satchels,if the actual units produced and direct labor costs equal the estimated amounts.(Round any percentages to two decimal places and your final answer to the nearest dollar. )
A)$495
B)$13,733
C)$12,017
D)$22,750

Accepted Answer

C

Question 4

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have different allocation bases.

Accepted Answer

This statement is true. Multiple predetermined overhead allocation rates with different allocation bases can provide a more accurate allocation of overhead costs to products or services that have varying levels of overhead cost drivers.

Question 5

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

Accepted Answer

Companies calculate the predetermined overhead rate before the beginning of the accounting period using estimates of overhead costs, not actual values.

Question 6

When a manufacturer changes from using a single plantwide predetermined overhead rate to multiple predetermined overhead allocation rates,the product unit cost may be more accurate.

Accepted Answer

Multiple predetermined overhead allocation rates allows for more accurate allocation of overhead costs to specific products or processes, leading to more accurate product unit costs.

Question 7

A furniture corporation manufactures two models of furniture-Standard and Deluxe.The total estimated manufacturing overhead costs are $64,300.The following estimates are available: $$\begin{array} { | l | r | r | } 
\hline & \text { Standard } & \text { Deluxe } \
\hline \text { Direct materials cost per unit } & \$ 240 & \$ 280 \
\hline \text { Direct labor cost per unit } & \$ 120 & \$ 135 \
\hline \text { Number of units } & 250 & 500 \
\hline
\end{array}$$ The company uses direct labor costs as the base to allocate manufacturing overhead.Calculate the predetermined overhead rate.(Round your answer to two decimal places. )
A)32.15%
B)33.84%
C)190.52%
D)65.95%

Accepted Answer

The answer of A furniture corporation manufactures two models of...

Question 8

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Accepted Answer

This statement is true as the predetermined overhead allocation rate is calculated at the beginning of the accounting period and is used to allocate overhead costs to products or services based on a specific allocation base (such as direct labor hours or machine hours).

Question 9

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Accepted Answer

Direct material costs and direct labor costs can be easily traced to products, making them direct costs that are not allocated but rather directly assigned to specific products.

Question 10

Which of the following statements is true?
A)Indirect costs must be allocated based on a single plant wide rate.
B)Manufacturing overhead costs are accumulated in cost pools and then assigned to products.
C)Managers cannot wait until the end of the accounting period for product cost information.
D)Managers can choose to wait until the end of the accounting period to allocate manufacturing overhead costs.

Accepted Answer

The answer of Which of the following statements is true?
A)Indirect...

Question 11

Brisbane,Inc. ,a leading manufacturer of car spare parts,divided its manufacturing process into two
Departments - Production and Packing.The estimated overhead costs for the Production and Packing
departments amounted to $14,000,000 and $20,000,000,respectively.The company produces two types of parts - Part 1 and Part 2.The total estimated labor hours for the year were 40,000,and estimated machine hours were 35,000.The Production department is mechanized,whereas the Packing department is labor oriented.Calculate the amount of manufacturing overhead costs allocated to Part 1.
 $$\begin{array} { | l | r | r | } 
\hline & \text { Production } & \text { Packing } \
\hline & \text { Machine hours } & \text { Labor hours } \
\hline \text { Part 1 } & 10,000 & 30,000 \
\hline \text { Part 2 } & \underline { 25,000 } & \underline { 10,000 } \
\hline & \underline { 35,000 } & \underline { 40,000 } \
\hline
\end{array}$$

Accepted Answer

The answer of Brisbane,Inc. ,a leading manufacturer of car spare...

Question 12

Modiste,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $24,000.Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 33 & \$ 43 \
\hline \text { Direct labor cost per unit } & \$ 50 & \$ 61 \
\hline \text { Number of units } & 530 & 380 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate.(Round your answer to two decimal places. )
A)90.57%
B)48.31%
C)96.58%
D)1.36%

Accepted Answer

The answer of Modiste,Inc.manufactures two kinds of bags-totes and satchels.The...

Question 13

In selecting machine usage as the primary cost driver for the Production Department,management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.

Accepted Answer

Management believes that there is a direct relationship between machine usage (measured in machine hours) and the amount of overhead costs incurred, which suggests that machine usage is a valid cost driver for the Production Department.

Question 14

Oscar,Inc. ,a manufacturer of gift articles,uses a single plantwide rate to allocate indirect costs with machine hours as the allocation base.Estimated overhead costs for the year are $5,000,000.Estimated machine hours are 40,000.During the year,the actual machine hours used were 45,000.Calculate the predetermined overhead allocation rate.(Round your answer to the nearest dollar. )
A)$111
B)$91
C)$125
D)$63

Accepted Answer

C)
Calculation of single plantwide allocation rate:
 11ea86d6_8345_9456_92b6_f334dc3c8a78_TB2804_00

Question 15

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

Accepted Answer

Using multiple predetermined overhead rates involves using different rates for different departments or activities, not a single allocation base. This approach is more refined than using a single plantwide rate and allows for more accurate allocation of overhead costs based on the specific activities or departments.

Question 16

A furniture manufacturer has decided that its use of a single plantwide predetermined overhead allocation rate is no longer accurate.In making the transition to using multiple predetermined overhead allocation rates,which of the following statements is incorrect?
A)In selecting machine usage as the primary cost driver for the Production Department,management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.
B)Management must analyze the expected overhead costs and separate them into a cost pool for each department.
C)The allocation process changes because there are now multiple cost pools and multiple allocation bases.
D)The use of multiple predetermined overhead allocation rates is more complex,but it may be more accurate.

Accepted Answer

The answer of A furniture manufacturer has decided that its...

Question 17

Moonrays,Inc.manufactures both normal and premium tube lights.The company allocates manufacturing overhead using a single plantwide rate with machine hours as the allocation base.Estimated overhead costs for the year are $108,000.Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Normal } & \text { Premium } \
\hline \text { Machine hours (MHr) } & 29,000 & 48,000 \
\hline \text { Direct materials } & \$ 58,000 & \$ 440,000 \
\hline
\end{array}$$ Calculate the predetermined overhead allocation rate.(Round your answer to the nearest cent. )
A)$3.72 per direct labor hour
B)$1.40 per machine hour
C)$2.25 per machine hour
D)$0.22 per direct labor hour

Accepted Answer

The predetermined overhead allocation rate is calculated by dividing the total estimated overhead costs by the total estimated machine hours. Total machine hours = 29,000 + 48,000 = 77,000. Therefore, $108,000 / 77,000 MHr = $1.40 per machine hour.

Question 18

Manufacturing overhead costs,which are also known as indirect costs,cannot be cost-effectively traced to products.

Accepted Answer

Manufacturing overhead costs, such as rent, utilities, and depreciation, are indirect costs that cannot be easily traced to individual products because they are incurred for the production process as a whole, rather than for specific products. Therefore, they are allocated to products using a predetermined overhead rate or another allocation method.

Question 19

Bag Ladies,Inc.manufactures two kinds of bags-totes and satchels.The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base.Estimated overhead costs for the year are $25,500.Additional estimated information is given below. $$\begin{array} { | l | r | r | } 
\hline & \text { Totes } & \text { Satchels } \
\hline \text { Direct materials cost per unit } & \$ 34 & \$ 40 \
\hline \text { Direct labor cost per unit } & \$ 54 & \$ 64 \
\hline \text { Number of units } & 530 & 390 \
\hline
\end{array}$$ Calculate the amount of overhead to be allocated to Totes.(Round any percentages to two decimal places and your final answer to the nearest dollar. )
A)$472
B)$347
C)$11,878
D)$13,620

Accepted Answer

The answer of Bag Ladies,Inc.manufactures two kinds of bags-totes and...

Question 20

A radial tire manufacturer produces products in two departments-Divisions A and B.The company uses separate predetermined overhead allocation rates for each department to allocate its overhead.Divisions A and B have estimated manufacturing overhead costs of $160,000 and $340,000,respectively.Division A uses machine hours as the allocation base,and Division B uses direct labor hours as the allocation base.The total estimated machine hours were 31,000,and direct labor hours were 22,000 for the year.Calculate the departmental predetermined overhead allocation rates.(Round your answer to the nearest cent. )
A)Division A-$5.16,Division B-$15.45
B)Division A-$15.45,Division B-$5.16
C)Division A-$7.27,Division B-$10.97
D)Division A-$10.97,Division B-$7.27

Accepted Answer

A)Calculation of department predetermined overhead allocation rates:
 11ea86d6_8346_7eb9_92b6_e3af4bb2f25d_TB2804_00

Quiz 19: Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Why is using multiple predetermined overhead allocation rates more accurate than using a single plantwide allocation rate?

Fill in the blanks: - Direct materials cost and direct labor cost can be to products.Manufacturing overhead costs are in cost pools and then to products.

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have different allocation bases.

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

When a manufacturer changes from using a single plantwide predetermined overhead rate to multiple predetermined overhead allocation rates,the product unit cost may be more accurate.

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Which of the following statements is true?

In selecting machine usage as the primary cost driver for the Production Department,management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

A furniture manufacturer has decided that its use of a single plantwide predetermined overhead allocation rate is no longer accurate.In making the transition to using multiple predetermined overhead allocation rates,which of the following statements is incorrect?

Manufacturing overhead costs,which are also known as indirect costs,cannot be cost-effectively traced to products.

Quiz 19: Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Why is using multiple predetermined overhead allocation rates more accurate than using a single plantwide allocation rate?

Fill in the blanks: - Direct materials cost and direct labor cost can be ________ ________ to products.Manufacturing overhead costs are ________ in cost pools and then ________ to products.

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have different allocation bases.

Companies calculate the predetermined overhead rate at the beginning of an accounting period using the actual values of overhead costs.

When a manufacturer changes from using a single plantwide predetermined overhead rate to multiple predetermined overhead allocation rates,the product unit cost may be more accurate.

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period.

Direct material costs and direct labor costs cannot be easily traced to products.Therefore,they are allocated to products.

Which of the following statements is true?

In selecting machine usage as the primary cost driver for the Production Department,management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.

A modification of the overhead allocation method which uses a single plantwide rate,is to use multiple predetermined overhead allocation rates that have a single allocation base.

A furniture manufacturer has decided that its use of a single plantwide predetermined overhead allocation rate is no longer accurate.In making the transition to using multiple predetermined overhead allocation rates,which of the following statements is incorrect?

Manufacturing overhead costs,which are also known as indirect costs,cannot be cost-effectively traced to products.

Fill in the blanks: - Direct materials cost and direct labor cost can be to products.Manufacturing overhead costs are in cost pools and then to products.