Acct 2102 Exam 3 Study Guide Questions wi
th Complete Solutions
CLAYTON STATE UNIVERSITY
ACCT 2102
EXAM 3 Study Guide (Chapters 17-19)
Chapter 17
1. Which of the following is not typical of traditional costing systems?
a. Use of a single predetermined overhead rate.
b. Use of direct labor hours or direct labor cost to assign overhead.
c. Assumption of correlation between direct labor and incurrence of overhead cost.
d. Use of multiple cost drivers to allocate overhead.
2. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
a. cost driver.
b. overhead rate.
c. cost pool.
d. product activity.
3. Which best describes the flow of overhead costs in an activity-based costing system?
a. Overhead costs direct labor cost or hours products
b. Overhead costs products
c. Overhead costs activity cost pools cost drivers products
d. Overhead costs machine hours products
4. Advances in computerized systems, technological innovation, global competition, and
automation have changed the manufacturing environment drastically by
a. increasing direct labor costs and increasing overhead costs.
b. increasing direct labor costs and decreasing overhead costs.
c. decreasing direct labor costs and decreasing overhead costs.
d. decreasing direct labor costs and increasing overhead costs.
5. Activity-based costing
a. allocates overhead to multiple activity cost pools, and it then assigns the activity cost
pools to products and services by means of cost drivers.
b. accumulates overhead in one cost pool, then assigns the overhead to products and
services by means of a cost driver.
c. assigns activity cost pools to products and services, then allocates overhead back to
the activity cost pools.
d. allocates overhead directly to products and services based on activity levels.
6. An ―Ordering and Receiving Materials‖ cost pool would most likely have as a cost driver:
a. machine hours.
b. number of setups.
c. number of purchase orders.
d. number of inspection tests.
, 7. Which of the following is not an example of an activity cost pool?
a. Setting up machines
b. Machining
c. Inspecting
d. Machine hours
8. An activity-based overhead rate is computed as follows:
a. actual overhead divided by actual use of cost drivers.
b. estimated overhead divided by actual use of cost drivers.
c. actual overhead divided by estimated use of cost drivers.
d. estimated overhead divided by estimated use of cost drivers.
9. As compared to a low-volume product, a high-volume product
a. usually requires less special handling.
b. is usually responsible for more overhead costs per unit.
c. requires relatively more machine setups.
d. requires use of direct labor hours as the primary cost driver to ensure proper
allocation of overhead.
10. Just-in-time processing
a. is based on a just-in-case philosophy.
b. results in a push approach.
c. minimizes inventory storage and waiting time.
d. all of these.
11. Estimated costs for activity cost pools and other item(s) are as follows:
Machining $500,000
Assembling 200,000
Advertising 450,000
Inspecting and testing 175,000
Total estimated overhead is
a. $700,000.
b. $875,000. (500000+200000+175000)
c. $1,150,000.
d. $1,325,000.
12. For its inspecting cost pool, Clayton, Inc. expected overhead cost of $200,000 and 4,000
inspections. The actual overhead cost for that cost pool was $240,000 for 5,000
inspections. The activity-based overhead rate used to assign the costs of the inspecting
cost pool to products is
a. $40 per inspection.
b. $48 per inspection.
c. $50 per inspection. ()
d. $60 per inspection.
13. One of Clayton Manufacturing’s activity cost pools is machine setups, with estimated
overhead of $180,000. Clayton produces sparklers (400 setups) and lighters (600
setups). How much of the machine setup cost pool should be assigned to sparklers?
a. $180,000
b. $72,000 (400+600=1000; 400/1000 = 40%; 40%*180000 = 72000)
c. $90,000
d. $108,000
th Complete Solutions
CLAYTON STATE UNIVERSITY
ACCT 2102
EXAM 3 Study Guide (Chapters 17-19)
Chapter 17
1. Which of the following is not typical of traditional costing systems?
a. Use of a single predetermined overhead rate.
b. Use of direct labor hours or direct labor cost to assign overhead.
c. Assumption of correlation between direct labor and incurrence of overhead cost.
d. Use of multiple cost drivers to allocate overhead.
2. An activity that has a direct cause-effect relationship with the resources consumed is a(n)
a. cost driver.
b. overhead rate.
c. cost pool.
d. product activity.
3. Which best describes the flow of overhead costs in an activity-based costing system?
a. Overhead costs direct labor cost or hours products
b. Overhead costs products
c. Overhead costs activity cost pools cost drivers products
d. Overhead costs machine hours products
4. Advances in computerized systems, technological innovation, global competition, and
automation have changed the manufacturing environment drastically by
a. increasing direct labor costs and increasing overhead costs.
b. increasing direct labor costs and decreasing overhead costs.
c. decreasing direct labor costs and decreasing overhead costs.
d. decreasing direct labor costs and increasing overhead costs.
5. Activity-based costing
a. allocates overhead to multiple activity cost pools, and it then assigns the activity cost
pools to products and services by means of cost drivers.
b. accumulates overhead in one cost pool, then assigns the overhead to products and
services by means of a cost driver.
c. assigns activity cost pools to products and services, then allocates overhead back to
the activity cost pools.
d. allocates overhead directly to products and services based on activity levels.
6. An ―Ordering and Receiving Materials‖ cost pool would most likely have as a cost driver:
a. machine hours.
b. number of setups.
c. number of purchase orders.
d. number of inspection tests.
, 7. Which of the following is not an example of an activity cost pool?
a. Setting up machines
b. Machining
c. Inspecting
d. Machine hours
8. An activity-based overhead rate is computed as follows:
a. actual overhead divided by actual use of cost drivers.
b. estimated overhead divided by actual use of cost drivers.
c. actual overhead divided by estimated use of cost drivers.
d. estimated overhead divided by estimated use of cost drivers.
9. As compared to a low-volume product, a high-volume product
a. usually requires less special handling.
b. is usually responsible for more overhead costs per unit.
c. requires relatively more machine setups.
d. requires use of direct labor hours as the primary cost driver to ensure proper
allocation of overhead.
10. Just-in-time processing
a. is based on a just-in-case philosophy.
b. results in a push approach.
c. minimizes inventory storage and waiting time.
d. all of these.
11. Estimated costs for activity cost pools and other item(s) are as follows:
Machining $500,000
Assembling 200,000
Advertising 450,000
Inspecting and testing 175,000
Total estimated overhead is
a. $700,000.
b. $875,000. (500000+200000+175000)
c. $1,150,000.
d. $1,325,000.
12. For its inspecting cost pool, Clayton, Inc. expected overhead cost of $200,000 and 4,000
inspections. The actual overhead cost for that cost pool was $240,000 for 5,000
inspections. The activity-based overhead rate used to assign the costs of the inspecting
cost pool to products is
a. $40 per inspection.
b. $48 per inspection.
c. $50 per inspection. ()
d. $60 per inspection.
13. One of Clayton Manufacturing’s activity cost pools is machine setups, with estimated
overhead of $180,000. Clayton produces sparklers (400 setups) and lighters (600
setups). How much of the machine setup cost pool should be assigned to sparklers?
a. $180,000
b. $72,000 (400+600=1000; 400/1000 = 40%; 40%*180000 = 72000)
c. $90,000
d. $108,000
