ACC 241 Exam 2 questions with
verified answers
3 common approaches to assign overhead costs to products - correct answer ✔✔ 1. Plantwide
overhead rate
2. Departmental overhad rate
3. Activity-based costing
Plantwide overhead rate - correct answer ✔✔ a single overhead rate that a company uses to
allocate all of its manufacturing overhead costs to products or cost objects. It is most commonly
used in smaller entities with simple cost structures.
Departmental overhead rate - correct answer ✔✔ different predetermined overhead rate in
each product department
Activity-based costing - correct answer ✔✔ a costing methodology that identifies activities in an
organization and assigns the cost of each activity with resources to all products and services
according to the actual consumption by each.
activity - correct answer ✔✔ an event that causes the assumption of overhead resources
examples of activities - correct answer ✔✔ setting up machines, admitting patients into a
hospital, scheduling production, proffering blood test at a clinic, billing customers, etc.
activity cost pool - correct answer ✔✔ "cost bucket" in which costs related to a particular
activity measure are accumulated
, activity measure - correct answer ✔✔ expresses how much of the activity is carried out and it is
used as the allocation base for assigning overhead costs to products and services
activity rate - correct answer ✔✔ overhead rate in an activity based cost system
unit-level activities - correct answer ✔✔ performed each time a unit is produced ex. providing
power to run processing equipment EX. Matching hours, DLH, Units produced
batch-level activities - correct answer ✔✔ tasks that are performed each time a batch is
processed ex. processing purchase orders, setting up equipment, packing shipments to
customers EX. purchase orders processed, productions orders processed, numbers of setups,
pounds of materials handled
product-level activities - correct answer ✔✔ relate to specific products and typically must be
carried out regardless or how many batches or units of the product are manufactured ex.
testing new products, designing products EX. hours of testing time, number of part types, hours
of design time
facility-level activities - correct answer ✔✔ activities that are carried out regardless of which
products are produced, how many batches are run, and how many units are made ex. factory
management salaries, insurance, property tax EX. Direct labor hours
under activity based costing the manufacturing overhead costs are allocated into products in a
two stage process. Describe the 2 stage process - correct answer ✔✔ 1st stage: overhead costs
are assigned to the activity cost pools.
2nd stage: The costs in the activity cost pools re allocated to products using activity rates and
activity measures.
predetermined overhead rate - correct answer ✔✔ POH= Estimated total MOH/ Estimated total
amount of the allocation base
verified answers
3 common approaches to assign overhead costs to products - correct answer ✔✔ 1. Plantwide
overhead rate
2. Departmental overhad rate
3. Activity-based costing
Plantwide overhead rate - correct answer ✔✔ a single overhead rate that a company uses to
allocate all of its manufacturing overhead costs to products or cost objects. It is most commonly
used in smaller entities with simple cost structures.
Departmental overhead rate - correct answer ✔✔ different predetermined overhead rate in
each product department
Activity-based costing - correct answer ✔✔ a costing methodology that identifies activities in an
organization and assigns the cost of each activity with resources to all products and services
according to the actual consumption by each.
activity - correct answer ✔✔ an event that causes the assumption of overhead resources
examples of activities - correct answer ✔✔ setting up machines, admitting patients into a
hospital, scheduling production, proffering blood test at a clinic, billing customers, etc.
activity cost pool - correct answer ✔✔ "cost bucket" in which costs related to a particular
activity measure are accumulated
, activity measure - correct answer ✔✔ expresses how much of the activity is carried out and it is
used as the allocation base for assigning overhead costs to products and services
activity rate - correct answer ✔✔ overhead rate in an activity based cost system
unit-level activities - correct answer ✔✔ performed each time a unit is produced ex. providing
power to run processing equipment EX. Matching hours, DLH, Units produced
batch-level activities - correct answer ✔✔ tasks that are performed each time a batch is
processed ex. processing purchase orders, setting up equipment, packing shipments to
customers EX. purchase orders processed, productions orders processed, numbers of setups,
pounds of materials handled
product-level activities - correct answer ✔✔ relate to specific products and typically must be
carried out regardless or how many batches or units of the product are manufactured ex.
testing new products, designing products EX. hours of testing time, number of part types, hours
of design time
facility-level activities - correct answer ✔✔ activities that are carried out regardless of which
products are produced, how many batches are run, and how many units are made ex. factory
management salaries, insurance, property tax EX. Direct labor hours
under activity based costing the manufacturing overhead costs are allocated into products in a
two stage process. Describe the 2 stage process - correct answer ✔✔ 1st stage: overhead costs
are assigned to the activity cost pools.
2nd stage: The costs in the activity cost pools re allocated to products using activity rates and
activity measures.
predetermined overhead rate - correct answer ✔✔ POH= Estimated total MOH/ Estimated total
amount of the allocation base
