Problem 1. Using activity-based systems, the stage of the management cycle that identifies actions that will reduce the full product or service cost is:
a. planning.
b. executing.
c. reviewing.
d. reporting.
Problem 2. Lasso Corp. budgeted $250,000 of overhead cost for 2001. Actual overhead costs for the year were $240,000. Lasso's plant-wide allocation base, machine hours, was budgeted at 50,000 hours. Actual machine hours were 40,000. Budgeted units to be produced are 100,000 units. Lasso's plant-wide factory overhead rate for 2001 is:
a. $1.25 per unit
b. $6.00 per machine hour
c. $6.25 per machine hour
d. $5.00 per machine hour
Problem 3. Hoskins Co. uses a plant-wide factory overhead rate based on direct labor hours. Overhead costs would be overcharged to which of the following departments?
a. A labor-intensive department.
b. A capital-intensive department.
c. A material-intensive department.
d. None of the above.
Problem 4. Using multiple department factory overhead rates instead of a single plant-wide factory overhead rate:
a. results in more accurate product costs.
b. results in distorted product costs.
c. is simpler and less costly.
d. applies overhead costs to all departments equally.
Problem 5. Using a plant-wide factory overhead rate distorts product cost when:
a. products require different ratios of allocation-base usage in each production department.
b. significant differences exist in the factory overhead rates used across different production departments.
c. both A and B exist
d. either A or B exist
Problem 6. Zinn Co. uses 3 machine hours and 1 direct labor hour to Produce Product X. It uses 4 machine hours and 8 direct labor hours to produce Product Y. Zinn's assembly and finishing Departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products?
a. Product X - $240; Product Y = $160.
b. Product X - $400; Product Y = $400.
c. Product X - $880; Product Y = $2,240.
d. product X - $720; Product Y = $1,280.