Cost Accounting

Ratcliff Company
Ratcliff Company produces two products from a joint process: X and Z. Joint processing costs
for this production cycle are P8,000.
Disposal
Sales price cost per Further Final sale
per yard at yard at processing price per
Yards split-off split-off per yard yard
X 1,500 P6.00 P3.50 P1.00 P 7.50
Z 2,200 9.00 5.00 3.00 11.25
If X and Z are processed further, no disposal costs will be incurred or such costs will be borne
by the buyer.
36. Refer to Ratcliff Company. Using a physical measure, what amount of joint
processing cost is allocated to X (round to the nearest peso)?
a. P4,000
b. P4,757
c. P5,500
d. P3,243
37. Refer to Ratcliff Company. Using a physical measure, what amount of joint
processing cost is allocated to Z (round to the nearest peso)?
a. P4,000
b. P3,243
c. P5,500
d. P4,757
38. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint
processing cost is allocated to X (round to the nearest peso)?
a. P5,500
b. P2,500
c. P4,000
d. P3,243
39. Refer to Ratcliff Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Z (round to the nearest peso)?
a. P5,500
b. P4,000
c. P2,500
d. P4,757
40. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of
joint processing cost is allocated to X (round to the nearest peso)?
a. P4,000
b. P5,610
c. P2,390
d. P5,500
41. Refer to Ratcliff Company. Using net realizable value at split-off, what amount of
joint processing cost is allocated to Z (round to the nearest peso)?
a. P5,500
b. P4,000
c. P2,390
d. P5,610
42. Refer to Ratcliff Company. Using approximated net realizable value at split-off,
what amount of joint processing cost is allocated to X (round to the nearest peso)?
a. P3,090
b. P5,204
c. P4,000
d. P2,390
43. Refer to Ratcliff Company. Using approximated net realizable value at split-off,
what amount of joint processing cost is allocated to Z (round to the nearest peso)?
a. P2,796
b. P4,910
c. P4,000
d. P2,390
44. Refer to Ratcliff Company. Which products would be processed further?
a. only X
b. only Z
c. both X and Z
d. neither X or Z
Gordon Company
Gordon Company produces three products: A, B, and C from the same process. Joint costs for
this production run are P2,100.
Disposal
Sales price cost per Further Final
per lb. at lb. at processing sales price
Pounds split-off split-off per pound per pound
A 800 P6.50 P3.00 P2.00 P 7.50
B 1,100 8.25 4.20 3.00 10.00
C 1,500 8.00 4.00 3.50 10.50
If the products are processed further, Gordon Company will incur the following disposal costs
upon sale: A, P3.00; B, P2.00; and C, P1.00.
45. Refer to Gordon Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product A (round to the nearest peso)?
a. P700
b. P679
c. P927
d. P494
46. Refer to Gordon Company. Using a physical measurement method, what amount
of joint processing cost is allocated to Product B (round to the nearest peso)?
a. P494
b. P679
c. P927
d. P700
47. Refer to Gordon Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Product B (round to the nearest peso)?
a. P700
b. P416
c. P725
d. P959
48. Refer to Gordon Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Product C (round to the nearest peso)?
a. P959
b. P725
c. P700
d. P416
49. Refer to Gordon Company. Using net realizable value at split-off, what amount of
joint processing cost is allocated to Product A (round to the nearest peso)?
a. P706
b. P951
c. P700
d. P444
50. Refer to Gordon Company. Using net realizable value at split-off, what amount of
joint processing cost is allocated to Product C (round to the nearest peso)?
a. P706
b. P951
c. P444
d. P700
Sabrina Company
Sabrina Company is placing an ad in the local paper to advertise its products. The ad will run for
one week at a total cost of P5,500. Sabrina Company has four categories of products as
follows:
% of floor space Expected sales

occupied value
Hardware 20% P35,000
Hand Tools 15 15,000
Lawn Furniture 45 64,500
Light Fixtures 20 25,500
51. Refer to Sabrina Company. What amount of advertising cost should be allocated
to hardware, assuming Sabrina allocates based on percent of floor space occupied?
a. P1,375
b. P1,100
c. P2,475
d. P 825
52. Refer to Sabrina Company. Assume that Sabrina decides to allocate based on
expected sales value. What amount of advertising cost should be allocated to light fixtures
(round to the nearest peso)?
a. P1,375
b. P589
c. P1,002
d. P2,534
Versatile Company
Versatile Company produces four solvents from the same process: C, D, E, and G. Joint
product costs are P9,000. (Round all answers to the nearest peso.)
Disposal Final
Sales price cost Further sales
per barrel per barrel processing price
Barrels at split-off at split-off costs per barrel
C 750 P10.00 P6.50 P2.00 P13.50
D 1,000 8.00 4.00 2.50 10.00
E 1,400 11.00 7.00 4.00 15.50
G 2,000 15.00 9.50 4.50 19.50
If Versatile sells the products after further processing, the following disposal costs will be
incurred: C, P2.50; D, P1.00; E, P3.50; G, P6.00.
53. Refer to Versatile Company. Using a physical measurement method, what

amount of joint processing cost is allocated to Product D?
a. P1,748
b. P2,447
c. P1,311
d. P3,495

amount of joint processing cost is allocated to Product E?
a. P3,495
b. P2,447
c. P1,748
d. P1,311

amount of joint processing cost is allocated to Product C?
a. P3,495
b. P2,447
c. P1,748
d. P1,311

amount of joint processing cost is allocated to Product G?
a. P3,495
b. P2,447
c. P1,748
d. P1,311
57. Refer to Versatile Company. Using sales value at split-off, what amount of joint
processing cost is allocated to Product D?
a. P4,433
b. P2,276
c. P1,108
d. P1,182
processing cost is allocated to Product C?
a. P4,433
b. P2,276
c. P1,108
d. P1,182
processing cost is allocated to Product G?
a. P4,433
b. P1,182
c. P1,108
d. P2,276
processing cost is allocated to Product E?
a. P4,433
b. P1,182
c. P1,108
d. P2,276
61. Refer to Versatile Company. Using net realizable value at split-off, what amount
of joint processing cost is allocated to Product C?
a. P1,550
b. P1,017
c. P4,263
d. P2,170
of joint processing cost is allocated to Product D?
a. P1,550
b. P1,017
c. P4,263
d. P2,170
of joint processing cost is allocated to Product E?
a. P1,017
b. P1,550
c. P2,170
d. P4,263
of joint processing cost is allocated to Product G?
a. P1,017
b. P1,550
c. P2,170
d. P4,263
Uniflo Company
Uniflo Company produces three products from the same process that has joint processing costs
of P4,100. Products R, S, and T are produced in the following quantities: 250 gallons, 400
gallons, and 750 gallons. Uniflo Company also incurred advertising costs of P60,000. The ad
was used to run sales for all three products. The three products occupy floor space in the
following ratio: 5:4:9. (Round all answers to the nearest peso.)
65. Refer to Uniflo Company. Using gallons as the physical measurement, what
amount of joint processing cost is allocated to Product R?
a. P2,196
b. P1,171
c. P1,367
d. P732
amount of joint processing cost is allocated to Product S?
a. P2,196
b. P1,171
c. P1,367
d. P732
amount of joint processing cost is allocated to Product T?
a. P2,196
b. P732
c. P1,367
d. P1,171
68. Refer to Uniflo Company. Assume that Uniflo chooses to allocate its advertising
cost among the three products. What amount of advertising cost is allocated to Product R using
the floor space ratio?
a. P30,000
b. P17,806
c. P1,139
d. P16,667
cost among the three products. What amount of advertising cost is allocated to Product S using
a. P911
b. P14,244
c. P13,333
d. P30,000
cost among the three products. What amount of advertising cost is allocated to Product T using
a. P911
b. P14,244
c. P13,333
d. P30,000
71. Courtney Company manufactures products A and B from a joint process. Sales
value at split-off was P700,000 for 10,000 units of A, and P300,000 for 15,000 units of B. Using
the sales value at split-off approach, joint costs properly allocated to A were P140,000. Total
joint costs were
a. P 98,000.
b. P200,000.
c. P233,333.
d. P350,000.
Whalen Company manufactures products X and Y from a joint process that also yields a by-
product, Z. Revenue from sales of Z is treated as a reduction of joint costs. Additional
information is as follows:
Products
X Y Z Total
Units produced 20,000 20,000 10,000 50,000
Joint costs ? ? ? P262,000
Sales value at
split-off P300,000 P150,000 P10,000 P460,000
Joint costs were allocated using the sales value at split-off approach.
72. Refer to Whalen Company. The joint costs allocated to product X were
a. P 84,000
b. P100,800.
c. P150,000.
d. P168,000.
73. Refer to Whalen Company. The joint costs allocated to product Y were
a. P 84,000
b. P100,800.
c. P150,000.
d. P168,000.
74. In joint-product costing and analysis, which of the following costs is relevant in the
decision when a product should be sold to maximize profits?
a. Separable costs after the split-off point
b. Joint costs to the split-off point
c. Sales salaries for the production period
d. Costs of raw materials purchased for the joint process.
Tropical Company
Tropical Company manufactures three products in a joint process which costs P25,000. Each
product can be sold at split-off or processed further and then sold. 10,000 units of each product
are manufactured. The following information is available for the three products:
Sales Value Separable
Product at Split-off Processing Sales Value
Costs after Split- at Completion
off
A P12 P9 P21
B 10 4 17
C 15 6 19
75. Refer to Tropical Company. If Product A is processed beyond the split-off point,
profit will:
a. increase by P210,000
b. increase by P120,000
c. increase by P 90,000
d. remain unchanged
76. Refer to Tropical Company. To maximize profits, which products should Tropical
process further?
a. Product A only
b. Product B only
c. Product C only
d. Products A, B, and C
JOINT AND BY-PRODUCT COSTING
Answer Section
MULTIPLE CHOICE
1. ANS: B PTS: 1 DIF: Easy OBJ: 11-1
2. ANS: A PTS: 1 DIF: Easy OBJ: 11-1
3. ANS: C PTS: 1 DIF: Easy OBJ: 11-1
5. ANS: D PTS: 1 DIF: Easy OBJ: 11-1

18. ANS: C PTS: 1 DIF: Moderate OBJ: 11-5

36. ANS: D
1,500/3,700 * P8,000 = P3,243
PTS: 1 DIF: Easy OBJ: 11-4
37. ANS: D
2,200/3,700 * P8,000 =
P4,757
38. ANS: B
Sales
Yards price Total
at Split-
off
X 1,500 P6.00 P 9,000
Y 2,200 P9.00 P19,800
P28,800
P(9,000/28,800) * P8,000 = P2,500
39. ANS: A
Sales
Yards price Total
at Split-
off
X 1,500 P6.00 P 9,000
Y 2,200 P9.00 P19,800
P28,800
P(19,800/28,800) * P8,000 = P5,500
40. ANS: C
Sales Disposal NRV/
Yards price Cost/Yard Splitoff Total NRV
at Split-
off
X 1,500 P6.00 P3.50 P2.50 P 3,750
Y 2,200 P9.00 P5.00 P4.00 P 8,800
P12,550
P(3,750/12,550) * P8,000 = P2,390
41. ANS: D
Sales Disposal NRV/
Yards price Cost/Yard Splitoff Total NRV
at Split-
off
X 1,500 P6.00 P3.50 P2.50 P 3,750
Y 2,200 P9.00 P5.00 P4.00 P 8,800
P12,550
P(8,800/12,550) * P8,000 = P5,610
42. ANS: A
Separate
Final Cost per Net Sales Approximated
Yards Sales Yard Price NRV
Price
X 1,500 P 7.50 P4.50 P3.00 P 4,500
Y 2,200 P11.25 P8.50 P3.25 P 7,150
P11,650
P(4,500/11,650) * P8,000 = P3,090
43. ANS: B
Separate
Final Cost per Net Sales Approximated
Yards Sales Yard Price NRV
Price
X 1,500 P 7.50 P4.50 P3.00 P 4,500
Y 2,200 P11.25 P8.50 P3.25 P 7,150
P11,650
P(7,150/11,650) * P8,000 = P4,910
44. ANS: A
Incremental Incremental Net

Yards Revenues Costs Difference
X 1,500 P 1.50 P1.00 P 0.50
Y 2,200 P 2.25 P3.00 P(0.75)
45. ANS: D
(800/3,400) * P2,100 = P494

46. ANS: B
(1,100/3,400) * P2,100 = P679
47. ANS: C
Sales
Yards price Total
at Split-
off
X 800 P6.50 P 5,200
Y 1,100 P8.25 P 9,075
Z 1,500 P8.00 P12,000
P26,275
P(9,075/26,275) * P2,100 = P725
PTS: 1 DIF: Moderate OBJ: 11-4
48. ANS: A
Sales
Yards price Total
at Split-
off
X 800 P6.50 P 5,200
Y 1,100 P8.25 P 9,075
Z 1,500 P8.00 P12,000
P26,275
P(12,000/26,275) * P2,100 = P959
49. ANS: D
Net
Disposal Realizable
Sales Costs at Value at
Yards price Split-Off Splitoff Total
at Split-
off
X 800 P6.50 P3.00 P3.50 P 2,800
Y 1,100 P8.25 P4.20 P4.05 P 4,455
Z 1,500 P8.00 P4.00 P4.00 P 6,000
P13,255
P(2,800/13,255) * P2,100 = P444

50. ANS: B
Net
Disposal Realizable
Sales Costs at Value at
Yards price Split-Off Splitoff Total
at Split-
off
X 800 P6.50 P3.00 P3.50 P 2,800
Y 1,100 P8.25 P4.20 P4.05 P 4,455
Z 1,500 P8.00 P4.00 P4.00 P 6,000
P13,255
P(6,000/13,255) * P2,100 = P951
51. ANS: B
P5,500 * 0.20 = P1,100
52. ANS: C
P(25,500/140,000) * P5,500 = P1,002
Smelly Perfume Company manufactures and distributes
several different products. The company
currently uses a plantwide allocation method for allocating
overhead at a rate of $7 per direct labor hour.
Cindy is the department manager of Department C which
produces Products J and P. Department C has
$16,200 in traceable overhead. Diane is the department
manager of Department D which manufactures
Product X. Department D has $11,100 in traceable overhead.
The product costs (per case of 24 bottles)
and other information are as follows:
If Smelly changes its allocation basis to machine hours, what
is the total product cost per case for Product
P?
A. $163.50.
B. $144.00.
C. $138.15.
D. $117.15.
D. $117.15.

J?
A. $161.50.
B. $169.30.
C. $182.44.
D. $183.36.
B. $169.30.

X?
A. $80.48.
B. $79.50.
C. $74.00.
D. $75.17.
A. $80.48.

If Smelly changes its overhead allocation to departmental
rates, what is the product cost per case for
Product X assuming Departments C and D use direct labor
hours and machine hours as their respective
allocation bases?
A. $79.50.
B. $80.48.
C. $74.00.
D. $78.50.
D. $78.50.

Product J assuming Departments C and D use direct labor
allocation bases?
A. $169.30.
B. $161.50.
C. $166.00.
D. $182.44.
C. $166.00.

Product P assuming Departments C and D use direct labor
allocation bases?
A. $117.15.
B. $163.50.
C. $121.50.
D. $138.15.
C. $121.50.

Department D has recently purchased and installed new
computerized equipment for Product X. This
equipment will increase the overhead costs by $2,700 and
decrease labor costs (due to time savings) in
Department D by $3.00 per case. Machine hours will not
change. If Smelly uses a plantwide rate based on
direct labor hours, what is the revised product cost per case
for Product X?
A. $82.50.
B. $74.00.
C. $79.50.
D. $69.50.
D. $69.50.

direct labor hours, what is the revised product cost per case
for Product J?
A. $175.33.
B. $161.50.
C. $169.30.
D. $183.36.
A. $175.33.
machine hours, what is the revised product cost per case for
Product X?
A. $74.00.
B. $82.50.
C. $69.50.
D. $79.50.
B. $82.50.

machine hours, what is the revised product cost per case for
Product J?
A. $161.50.
B. $169.30.
C. $172.00.
D. $183.36.
C. $172.00.

change. If Smelly uses departmental rates, what
are the product costs per case for Product X assuming
Departments C and D use direct labor hours and
machine hours as their respective allocation bases?
A. $80.00.
B. $74.00.
C. $69.50.
D. $79.50.
A. $80.00.

change. If Smelly uses departmental rates, what
are the product costs per case for Product J assuming
Departments C and D use direct labor hours and
machine hours as their respective allocation bases?
A. $161.50.
B. $169.30.
C. $171.45.
D. $183.36.
C. $171.45.
RS Company manufactures and distributes two products, R

and S. Overhead costs are currently allocated
using the number of units produced as the allocation base.
The controller has recommended changing to
an activity-based costing (ABC) system. She has collected
the following information:
What is the total overhead allocated to Product R using the
current system?
A. $113,600.
B. $130,000.
C. $146,400.
D. $160,000.
D. $160,000.

What is the total overhead per unit allocated to Product R
using activity-based costing (ABC)?
A. $2.60.
B. $2.27.
C. $2.00.
D. $1.83.
D. $1.83.
What is the total overhead allocated to Product S using the
current system?
A. $113,600.
B. $100,000.
C. $146,400.
D. $160,000.
B. $100,000.

What is the total overhead per unit allocated to Product S
using activity-based costing (ABC)?
A. $2.60.
B. $2.27.
C. $2.00.
D. $1.83.
B. $2.27.
Terri Martin, CPA provides bookkeeping and tax services to

her clients. She charges a fee of $60 per
hour for bookkeeping and $90 per hour for tax services.
Martin estimates the following costs for the
upcoming year:
Operating profits declined last year and Ms. Martin has
decided to use activity-based costing (ABC)
procedures to evaluate her hourly fees. She gathered the
following information from last year's records:
What is the total cost allocated to the bookkeeping services
using activity-based costing?
A. $24,000.
B. $33,000.
C. $35,000.
D. $44,000.
B. $33,000.

upcoming year:
Martin wants her hourly fees for the tax services to be 160%
of their activity-based costs. What is the fee
per hour for tax services in the upcoming year?
A. $70.40.
B. $88.00.
C. $110.00.
D. $118.40.
C. $110.00.

upcoming year:
Martin cannot change the hourly fee for the bookkeeping
services because of the number of competing
firms in the area. If Martin wants to earn $60,000 pre-tax in
the upcoming year, how much will she
charge per hour for tax services?
A. $74.
B. $90.
C. $95.
D. $106.
C. $95.

upcoming year:
A major client has requested bookkeeping services. However,
Martin is already billing 100% of her
capacity (i.e., 2,000 hours per year) and would need to shift
100 hours from her tax services to meet this
client's request. What is the minimum fee per hour that Martin
could charge this client for bookkeeping
services and be no worse off than last year?
A. $48.75.
B. $60.00.
C. $81.25.
D. $90.00.
D. $90.00.
Zela Company is preparing its annual profit plan. As part of its

analysis of the profitability of individual
products, the controller estimates the amount of overhead
that should be allocated to the individual
product lines from the information provided below. (CMA
based)
Budgeted material handling costs: $50,000
Under a traditional costing system that allocates overhead on
the basis of direct labor hours, the materials
handling costs allocated to one unit of wall mirrors would be:
A. $1,000.
B. $500.
C. $2,000.
D. $5,000.
B. $500.

based)
Under a traditional costing system that allocates overhead on
the basis of direct labor hours, the materials
handling costs allocated to one unit of specialty windows
would be:
A. $1,500.
B. $500.
C. $2,000.
D. $5,000.
A. $1,500.

based)
Under an activity-based costing (ABC) system, the materials
handling costs allocated to one unit of wall
mirrors would be:
A. $625.00.
B. $312.50.
C. $833.33.
D. $1,000.00.
B. $312.50.

based)
Under an activity-based costing (ABC) system, the materials
handling costs allocated to one unit of
specialty windows would be:
A. $1,875.00.
B. $937.50.
C. $312.50.
D. $1,500.00.
A. $1,875.00.
The LMN Company recently switched to activity-based

costing (ABC) from the department allocation
method. The department method allocated overhead costs at
a rate of $60 per machine hour. The cost
accountant for Department XZ has gathered the following
data:
During April, LMN purchased and used $100,000 of direct
materials at $20 per ton. There were eight (8)
production runs using a total of 12,000 machine hours in
April. The manager of Department XZ needed
12 inspections. Actual overhead costs totaled $820,000 for
the month.
How much overhead costs were applied to the Work-in-
Process Inventory during April using activitybased
costing?
A. $536,000.
B. $720,000.
C. $736,000.
D. $820,000.
C. $736,000.
The LMN Company recently switched to activity-based

costing (ABC) from the department allocation
method. The department method allocated overhead costs at
a rate of $60 per machine hour. The cost
accountant for Department XZ has gathered the following
data:
During April, LMN purchased and used $100,000 of direct
materials at $20 per ton. There were eight (8)
production runs using a total of 12,000 machine hours in
April. The manager of Department XZ needed
12 inspections. Actual overhead costs totaled $820,000 for
the month.
How much overhead costs were applied to the Work-in-
Process Inventory during April using traditional
costing?
A. $536,000.
B. $720,000.
C. $736,000.
D. $820,000.
B. $720,000.
The Muskego National Bank is considering either a bankwide

overhead rate or department overhead rates
to allocate $250,000 of indirect costs. The bankwide rate
could be based on either direct labor hours
(DLH) or the number of loans processed. The departmental
rates would be based on direct labor hours
for Consumer Loans and a dual rate based on direct labor
hours and the number of loans processed for
Commercial Loans. The following information was gathered
for the upcoming period:
If Muskego uses a bankwide rate based on direct labor hours,
what would be the indirect costs allocated
to the Consumer Department?
A. $100,000.
B. $150,000.
C. $250,000.
D. $350,000.
B. $150,000.

If Muskego uses a bankwide rate based on direct labor hours,
what would be the indirect costs allocated
to the Commercial Department?
A. $100,000.
B. $150,000.
C. $250,000.
D. $350,000.
A. $100,000.

If Muskego uses a bankwide rate based on the number of
loans processed, what would be the total costs
for the Commercial Department?
A. $50,000.
B. $150,000.
C. $200,000.
D. $250,000.
C. $200,000.

If Muskego uses a bankwide rate based on the number of
loans processed, what would be the total costs
for the Consumer Department?
A. $50,000.
B. $150,000.
C. $200,000.
D. $400,000.
D. $400,000.
Management estimates that it costs $500 to analyze and

close a commercial loan. This amount has been
included in the $250,000 of indirect costs. How much of the
$250,000 indirect costs should be allocated
to the Commercial Department?
A. $40,000.
B. $50,000.
C. $90,000.
D. $120,000.
C. $90,000.

close a commercial loan. This amount has been
included in the $250,000 of indirect costs. How much of the
$250,000 indirect costs should be allocated
to the Consumer Department?
A. $50,000.
B. $90,000.
C. $160,000.
D. $200,000.
C. $160,000.

close a commercial loan. What is the overhead
rate if Muskego allocates the remaining indirect costs using
direct labor hours?
A. $14.00 per hour.
B. $16.67 per hour.
C. $1,000 per loan.
D. $500 per loan.
A. $14.00 per hour.
Multiple (departmental) manufacturing overhead rates are

considered preferable to a single (plantwide)
overhead rate when: (CMA adapted)
A. manufacturing is limited to a single product flowing through
identical departments in a fixed sequence.
B. various products are manufactured that do not pass
through the same departments or use the same
manufacturing techniques.
C. individual cost drivers cannot accurately be determined
with respect to cause-and-effect relationships.
D. the single or plantwide rate is related to several identified
cost drivers.
B. various products are manufactured that do not pass through

the same departments or use the same
manufacturing techniques.
What is the typical effect on the numbers of cost pools and

cost assignment bases when an activity-based
costing (ABC) system replaces a traditional costing system?
(CPA adapted)
A. Option a
B. Option b
C. Option c
D. Option d
D. Option d increase, increase
Which of the following would be a reasonable basis for

assigning the materials handling costs to the units
produced in an activity-based costing (ABC) system?
A. Number of production runs per year.
B. Number of components per completed unit.
C. Amount of time required to produce one unit.
D. Amount of overhead applied to each completed unit.
B. Number of components per completed unit.
Companies using activity-based costing (ABC) have learned

that costs are a function of:
A. volume and activities.
B. time and complexity.
C. volume and time.
D. resources and time.
E. volume and resources.
A. volume and activities.
A company has identified the following overhead costs and

cost drivers for the coming year: (CIA
adapted)
Budgeted direct labor cost was $100,000 and budgeted direct
material cost was $280,000. The following
information was collected on three jobs that were completed
during the year:
If the company uses activity-based costing (ABC), how much
overhead cost should be assigned to Job
101?
A. $1,300.
B. $2,000.
C. $5,000.
D. $5,600.
A. $1,300.

adapted)
during the year:
If the company uses activity-based costing (ABC), what is the
cost of each unit of Job 102?
A. $340.
B. $392.
C. $440.
D. $520.
A. $340.

adapted)
during the year:
overhead cost should be assigned to Job
103?
A. $1,300.
B. $2,000.
C. $5,000.
D. $5,600.
B. $2,000.

adapted)
during the year:
The company prices its products at 140% of cost. If the
company uses activity-based costing (ABC), the
price of each unit of Job 103 would be
A. $98.
B. $100.
C. $116.
D. $140.
A. $98.
adapted)
during the year:
If the company uses traditional costing and allocates
overhead using direct labor cost, how much
overhead cost should be assigned to Job 101?
A. $1,300.
B. $2,000.
C. $5,000.
D. $5,600.
D. $5,600.

adapted)
during the year:
overhead using direct labor cost, what is the cost of
each unit of Job 102?
A. $340.
B. $392.
C. $440.
D. $520.
B. $392.
Scottso Enterprises has identified the following overhead

costs and cost drivers for the coming year:
during the month:
overhead cost should be assigned to Job A-
15?
A. $2,120.
B. $11,200.
C. $1,600.
D. $2,050.
A. $2,120.

during the month:
overhead cost should be assigned to Job B-
32?
A. $4,200.
B. $2,600.
C. $2,960.
D. $3,480.
C. $2,960.

during the month:
If the company uses activity-based costing (ABC), what is the
cost of each unit of Job A-28?
A. $320.00.
B. $30.40.
C. $187.40.
D. $350.40.
D. $350.40.

during the month:
The company prices its products at 150% of cost. If the
company uses activity-based costing (ABC), the
price of each unit of Job B-32 would be:
A. $96.53.
B. $144.80.
C. $130.00.
D. $226.53.
B. $144.80.

during the month:
overhead using direct materials cost, how much
overhead cost should be assigned to Job A-15?
A. $10,500.
B. $11,200.
C. $2,800.
D. $2,050.
A. $10,500.

during the month:
overhead using direct materials cost, what is the cost
of each unit of Job A-28?
A. $196.00.
B. $516.00.
C. $364.50.
D. $352.00.
B. $516.00.
Addy Company makes two products: Product A and Product

B. Annual production and sales are 1,700
units of Product A and 1,100 units of Product B. The
company has traditionally used direct labor-hours as
the basis for applying all manufacturing overhead to products.
Product A requires 0.3 direct labor hours
per unit and Product B requires 0.6 direct labor hours per
unit. The total estimated overhead for next
period is $98,785.
The company is considering switching to an activity-based
costing system for the purpose of computing
unit product costs for external reports. The new activity-based
costing system would have three overhead
activity cost pools--Activity 1, Activity 2, and General Factory-
-with estimated overhead costs and
expected activity as follows:
(Note: The General Factory activity cost pool's costs are
allocated on the basis of direct labor hours.)
The predetermined overhead rate under the traditional
costing system is closest to:
A. $9.15.
B. $43.48.
C. $84.43.
D. $19.08.
C. $84.43.

period is $98,785.
The overhead cost per unit of Product B under the traditional
A. $50.66.
B. $5.49.
C. $26.09.
D. $11.45.
A. $50.66.

period is $98,785.
The predetermined overhead rate (i.e., activity rate) for
Activity 2 under the activity-based costing system
is closest to:
A. $9.15.
B. $51.99.
C. $86.93.
D. $10.23.
A. $9.15.

period is $98,785.
The overhead cost per unit of Product B under the activity-
based costing system is closest to:
A. $50.66.
B. $26.09.
C. $35.28.
D. $38.16.
D. $38.16.
Shininger Manufacturing Corporation has a traditional costing

system in which it applies manufacturing
overhead to its products using a predetermined overhead rate
based on direct labor-hours (DLHs). The
company has two products, G27U and W21K, about which it
has provided the following data:
The company's estimated total manufacturing overhead for
the year is $985,440 and the company's
estimated total direct labor-hours for the year is 24,000.
The company is considering using a variation of activity-
based costing to determine its unit product costs
for external reports. Data for this proposed activity-based
costing system appear below:
The manufacturing overhead that would be applied to a unit
of product G27U under the company's
traditional costing system is closest to:
A. $8.21.
B. $3.20.
C. $11.73.
D. $19.94.
A. $8.21.
Shininger Manufacturing Corporation has a traditional costing

company has two products, G27U and W21K, about which it
the year is $985,440 and the company's
of product W21K under the activity-based
A. $71.57.
B. $41.06.
C. $8.11.
D. $30.51.
D. $30.51.
Latting Manufacturing Corporation has a traditional costing

company has two products, T73C and R28K, about which it
the year is $1,526,700 and the company's
of product T73C under the company's
A. $18.38.
B. $28.56.
C. $10.18.
D. $4.80.
C. 10.18.
Latting Manufacturing Corporation has a traditional costing

company has two products, T73C and R28K, about which it
of product R28K under the activity-based
A. $81.42.
B. $65.02.
C. $146.44.
D. $12.22.
B. $65.02.
Scholes Manufacturing Corporation has a traditional costing

company has two products, L45Y and F91I, about which it
The unit product cost of product L45Y under the company's
A. $54.20.
B. $73.27.
C. $64.25.
D. $31.00.
B. $73.27.
Scholes Manufacturing Corporation has a traditional costing

company has two products, L45Y and F91I, about which it
The unit product cost of product F91I under the activity-based
A. $266.10.
B. $98.70.
C. $167.40.
D. $225.52.
C. $167.40.
Solum Manufacturing Corporation has a traditional costing

company has two products, V47Q and K41P, about which it
The unit product cost of product V47Q under the company's
A. $53.30.
B. $70.32.
C. $43.10.
D. $78.57.
B. $70.32.
Solum Manufacturing Corporation has a traditional costing

company has two products, V47Q and K41P, about which it
The unit product cost of product K41P under the activity-
based costing system is closest to:
A. $204.82.
B. $68.70.
C. $182.80.
D. $114.10.
B. $68.70.
Personnel administration is an example of a:

A. unit-level activity.
B. batch-level activity.
C. product-level activity.
D. organization-sustaining activity.
D. organization-sustaining activity.
Which of the following activities would be classified as a

batch-level activity?
A. Setting up equipment.
B. Designing a new product.
C. Training employees.
D. Milling a part required for the final product.
A. Setting up equipment.
Would the following activities at a manufacturer of canned

soup be best classified as unit-level, batchlevel,
product-level, or organization-sustaining activities?
A. Option a
B. Option b
C. Option c
D. Option d
D. Option d product, batch
Property taxes are an example of a cost that would be

considered to be:
A. Unit-level.
B. Batch-level.
C. Product-level.
D. Organization-sustaining.
D. Organization-sustaining.
Spendlove Corporation has provided the following data from

its activity-based costing system:
The company makes 430 units of product S78N a year,
requiring a total of 1,120 machine-hours, 40
orders, and 30 inspection-hours per year. The product's direct
materials cost is $49.81 per unit and its
direct labor cost is $12.34 per unit. The product sells for
$129.90 per unit.
According to the activity-based costing system, the product
margin for product S78N is:
A. $4,116.50.
B. $29,132.50.
C. $6,180.50.
D. $5,161.30.
A. $4,116.50.
Maccarone Corporation has provided the following data from

its activity-based costing system:
Data concerning one of the company's products, Product
A43V, appear below:
According to the activity-based costing system, the product
margin for product A43V is:
A. $2,891.90.
B. $5,931.30.
C. $11,917.50.
D. $2,236.90.
D. $2,236.90.
Reach Consulting Corporation has its headquarters in

Chicago and operates from three branch offices in
Portland, Dallas, and Miami. Two of the company's activity
cost pools are General Service and Research
Service. These costs are allocated to the three branch offices
using an activity-based costing system.
Information for next year follows:
Estimated branch data for next year is as follows:
How much of the headquarters cost allocation should Dallas
expect to receive next year?
A. $280,000.
B. $409,500.
C. $472,500.
D. $504,000.
C. $472,500.
Drewniak Corporation has provided the following data from its
activity-based costing system:
The company makes 430 units of product O37W a year,
requiring a total of 690 machine-hours, 40
orders, and 10 inspection-hours per year. The product's direct
materials cost is $35.72 per unit and its
direct labor cost is $29.46 per unit.
According to the activity-based costing system, the average
cost of product O37W is closest to:
A. $94.11 per unit.
B. $89.72 per unit.
C. $65.18 per unit.
D. $92.49 per unit.
A. $94.11 per unit.

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1. ANS: B PTS: 1 DIF: Easy OBJ: 11-1

2. ANS: A PTS: 1 DIF: Easy OBJ: 11-1

3. ANS: C PTS: 1 DIF: Easy OBJ: 11-1

4. ANS: B PTS: 1 DIF: Easy OBJ: 11-1

5. ANS: D PTS: 1 DIF: Easy OBJ: 11-1

6. ANS: A PTS: 1 DIF: Easy OBJ: 11-2

7. ANS: D PTS: 1 DIF: Easy OBJ: 11-4

8. ANS: D PTS: 1 DIF: Easy OBJ: 11-4

9. ANS: B PTS: 1 DIF: Easy OBJ: 11-4

11. ANS: B PTS: 1 DIF: Easy OBJ: 11-1

12. ANS: D PTS: 1 DIF: Easy OBJ: 11-1

13. ANS: C PTS: 1 DIF: Easy OBJ: 11-1

14. ANS: B PTS: 1 DIF: Easy OBJ: 11-1

15. ANS: A PTS: 1 DIF: Easy OBJ: 11-1

16. ANS: D PTS: 1 DIF: Easy OBJ: 11-3

17. ANS: B PTS: 1 DIF: Easy OBJ: 11-1

18. ANS: C PTS: 1 DIF: Moderate OBJ: 11-5

19. ANS: B PTS: 1 DIF: Easy OBJ: 11-5

20. ANS: C PTS: 1 DIF: Easy OBJ: 11-5

21. ANS: C PTS: 1 DIF: Easy OBJ: 11-5

22. ANS: D PTS: 1 DIF: Easy OBJ: 11-2

23. ANS: D PTS: 1 DIF: Easy OBJ: 11-3

24. ANS: D PTS: 1 DIF: Easy OBJ: 11-3

25. ANS: A PTS: 1 DIF: Easy OBJ: 11-3

26. ANS: C PTS: 1 DIF: Easy OBJ: 11-5

27. ANS: B PTS: 1 DIF: Easy OBJ: 11-5

28. ANS: B PTS: 1 DIF: Easy OBJ: 11-4

29. ANS: C PTS: 1 DIF: Easy OBJ: 11-4

30. ANS: B PTS: 1 DIF: Easy OBJ: 11-3

31. ANS: B PTS: 1 DIF: Easy OBJ: 11-3

32. ANS: C PTS: 1 DIF: Moderate OBJ: 11-4

33. ANS: C PTS: 1 DIF: Moderate OBJ: 11-5

34. ANS: C PTS: 1 DIF: Easy OBJ: 11-5

35. ANS: D PTS: 1 DIF: Easy OBJ: 11-5

PTS: 1 DIF: Easy OBJ: 11-4

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PTS: 1 DIF: Easy OBJ: 11-4

PTS: 1 DIF: Easy OBJ: 11-4

PTS: 1 DIF: Moderate OBJ: 11-4

PTS: 1 DIF: Moderate OBJ: 11-4

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