QUESTIONS:  a Company manufactures clocks & uses an activity-based costing system. Each clock consists of 10 separate parts totaling $120 in direct materials, & requires 2.0 hours of machine time to produce.
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $1.25 per part
Machining Machine hours $2.50 per machine hour
Assembling Number of parts $0.50 per part

Packaging Number of finished units $1.50 per finished unit

5.  What is the cost of materials handling per cuckoo clock?
A.  $3.00   B.  $5.00
C.  $4.50   D.  $12.50

6.  What is the total manufacturing cost per cuckoo clock?
A.  $142.50  B.  $  24.00
C.  $144.00  D.  $  25.00

10.  Four basic steps are used in an ABC system.  List the proper order of these steps, which are currently scrambled below:
a. Identify the primary activities & estimate a total cost pool for each.
b. Allocate the costs to the cost object using the activity cost allocation rates.
c. Select an allocation base for each activity.
d. Calculate an activity cost allocation rate for each activity.
A. a, c, d, b B. c, a, b, d
C. b, a, c, d D. a, d, c, b

1.  Which of the following statements is TRUE with respect to total variable costs?
A. They will remain the same as production levels change within the relevant rang
B. They will decrease as production increases within the relevant range.
C. They will decrease as production decreases within the relevant range.
D. They will increase as production decreases within the relevant range.

2.  Which of the following equations represents the total mixed cost?
A.  y = vx + f  B.  y = vx
C.  y = f   D.  y = v + f

3. YouCall offers a calling plan that charges $2.00 per month plus $0.05 per minute of call time.  Under this plan, what is your monthly cost if you talk for a total of 100 minutes?
A.  $7.00   B.  $5.00
C.  $3.00   D.  $2.00

4. The following graph indicates which type of cost behavior?

A. Fixed   B. Mixed  C.  Step D. Variable

5.  Total costs for Watson & Company at 100,000 units are $350,000, while total fixed costs are $150,000.  The total variable costs at a level of 200,000 units would be:
A.  $700,000. B.  $175,000.
C.  $400,000. D.  $300,000.

6.  Harbor Manufacturing is trying to predict the cost associated with producing its anchors.  At a production level of 4,000 anchors, Harbor Manufacturing’s average cost per anchor is $50.00.   If $20,000 of the costs are fixed, & the plant manager uses the cost equation to predict total costs, her forecast for 5,000 anchors will be:
A. $  50,000.  B. $245,000.
C. $250,000.  D. $200,000.

7.  Using account analysis, what type of cost is the rental of a space at $2,000 per month?
A. Fixed  B. Mixed
C. Step  D. Variable


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