CBAD 202 Exam 2 questions with
verified answers
When using the high-low method, the "high" point should be chosen as the data point with the highest
cost (not the highest volume). - correct answer ✔✔False
Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The
company has two departments: Assembly and Sanding. The Assembly Department uses a departmental
overhead rate of $35 per machine hour, while the Sanding Department uses a departmental overhead
rate of $30 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the
two departments:
Actual results
AssemblyDepartment
SandingDepartment
Direct labor hours used
8
3
Machine hours used
8
6
The cost for direct labor is $20 per direct labor hour and the cost of the direct materials used by Job 603
is $1500.
How much manufacturing overhead would be allocated to Job 603 using the departmental overhead
rates?
Select one:
A. $370
B. $425
C. $220
, D. $300 - correct answer ✔✔A. $370
Assembly Dept. $35 x 8 machining hrs = $280
Sanding Dept. $30 x 3 direct hrs = $90
Total = $370
Cost distortion occurs when some products are overcosted while other products are undercosted by the
cost allocation system. - correct answer ✔✔True
Which of the following costs is an example of a fixed cost?
Select one:
A. Sales commissions
B. Salary of plant manager
C. Delivery costs
D. Direct materials - correct answer ✔✔B. Salary of Plant Manager
The contribution margin is equal to
Select one:
A. sales minus fixed expenses.
B. sales minus variable expenses.
C. sales minus cost of goods sold.
D. sales minus operating expenses. - correct answer ✔✔B. sales minus variable expenses.
Beaver Company manufactures coffee tables and uses an activity-based costing system to allocate all
manufacturing conversion costs. Each coffee tables consists of 20 separate parts totaling $270 in direct
materials, and requires 6.0 hours of machine time to produce. Additional information follows:
Activity
Allocation Base
Cost Allocation Rate
verified answers
When using the high-low method, the "high" point should be chosen as the data point with the highest
cost (not the highest volume). - correct answer ✔✔False
Lucas Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The
company has two departments: Assembly and Sanding. The Assembly Department uses a departmental
overhead rate of $35 per machine hour, while the Sanding Department uses a departmental overhead
rate of $30 per direct labor hour. Job 603 used the following direct labor hours and machine hours in the
two departments:
Actual results
AssemblyDepartment
SandingDepartment
Direct labor hours used
8
3
Machine hours used
8
6
The cost for direct labor is $20 per direct labor hour and the cost of the direct materials used by Job 603
is $1500.
How much manufacturing overhead would be allocated to Job 603 using the departmental overhead
rates?
Select one:
A. $370
B. $425
C. $220
, D. $300 - correct answer ✔✔A. $370
Assembly Dept. $35 x 8 machining hrs = $280
Sanding Dept. $30 x 3 direct hrs = $90
Total = $370
Cost distortion occurs when some products are overcosted while other products are undercosted by the
cost allocation system. - correct answer ✔✔True
Which of the following costs is an example of a fixed cost?
Select one:
A. Sales commissions
B. Salary of plant manager
C. Delivery costs
D. Direct materials - correct answer ✔✔B. Salary of Plant Manager
The contribution margin is equal to
Select one:
A. sales minus fixed expenses.
B. sales minus variable expenses.
C. sales minus cost of goods sold.
D. sales minus operating expenses. - correct answer ✔✔B. sales minus variable expenses.
Beaver Company manufactures coffee tables and uses an activity-based costing system to allocate all
manufacturing conversion costs. Each coffee tables consists of 20 separate parts totaling $270 in direct
materials, and requires 6.0 hours of machine time to produce. Additional information follows:
Activity
Allocation Base
Cost Allocation Rate
