Do you think that it is costly to convert from a
traditional overhead cost allocation basis to
activity-based costing such as that used by Cold
Stone Creamery?
1. Yes
2. No
50%
1
50%
2
Is it more complex for a company such as Cold
Stone Creamery to allocate its overhead costs
using activity-based costing?
1. Yes
2. No
50%
1
50%
2
Do you think that it makes sense for the price that
is to be paid for a product to be reflective of the
activities involved in making the product for the
consumer?
1. Yes
2. No
50%
1
50%
2
Do you think that product cost distortions that
result from improper factory overhead allocations
to products occur frequently in companies?
1. Yes
2. No
50%
1
50%
2
Do you think that companies use the same
decision criteria in selecting which method to
use for allocating factory overhead?
1. Yes
2. No
50%
1
50%
2
Under the single plantwide factory overhead rate
method, all of the factory overhead is allocated to
all the products using only one rate.
1. True
2. False
50%
1
50%
2
The greatest disadvantage of the single
plantwide overhead rate method is that it is
complex and expensive to apply in practice.
1. True
2. False
50%
1
50%
2
A company will never use different allocation
bases for different departments.
1. True
2. False
50%
1
50%
2
The single plantwide factory overhead rate
distorts product cost by averaging high and
low factory overhead costs.
1. True
2. False
50%
1
50%
2
Differences in production department factory
overhead rates will rarely lead to distorted
product costs.
1. True
2. False
50%
1
50%
2
Incorrect factory overhead cost allocations may
result in overcosting some product costs while
undercosting other product costs.
1. True
2. False
50%
1
50%
2
Service companies have a need to determine the
cost of services in order to make pricing,
promoting, and other decisions with regard to
service offering.
1. True
2. False
50%
1
50%
2
Which of the following is not a factory
overhead allocation approach?
1.
2.
3.
4.
Single plantwide
factory overhead rate
method
Multiple plantwide
factory overhead rate
method
Multiple production
department factory
overhead rate method
Activity-based costing
method
25%
1
25%
2
25%
3
25%
4
Accurate product costs support
management decisions for all of the
following except
25%
25%
25%
25%
1. determining product
mix
2. establishing product
price
3. determining whether
or not to emphasize
a product line
4. determining market
segmentation
1
2
3
4
Which of the following methods uses different
rates for each production department to allocate
factory overhead to products?
1.
2.
3.
4.
Single plantwide
factory overhead rate
method
Multiple plantwide
factory overhead rate
method
Multiple production
department factory
overhead rate method
Activity-based costing
method
25%
1
25%
2
25%
3
25%
4
Which of the following approaches allocates
overhead most accurately?
1.
2.
3.
4.
Activity-based costing
(ABC)
Single plantwide
factory overhead rate
method
Multiple plantwide
factory overhead rate
method
Multiple production
department factory
overhead rate method
25%
1
25%
2
25%
3
25%
4
Under activity-based costing, activity rates
are determined by
1.
2.
3.
4.
dividing the total estimated
activity base by the
budgeted activity cost pool
dividing the budgeted
activity cost pool by the
total estimated activity
base
dividing the actual activity
cost pool by the total
estimated activity base
dividing the actual activity
cost pool by the total
actual activity base
25%
1
25%
2
25%
3
25%
4
The production factory overhead rates used in the multiple
production department rate method are determined by
which of the following formulas?
1.
2.
3.
4.
Budgeted production department
factory overhead divided by the
actual allocation base for each
department
Actual production department
factory overhead divided by the
budgeted allocation base for
each department
Budgeted production department
factory overhead divided by the
budgeted allocation base for
each department
Actual production department
factory overhead divided by the
actual allocation base for each
department
25%
1
25%
2
25%
3
25%
4
The single plantwide factory overhead rate is
calculated with which of the following equations?
1.
2.
3.
4.
Budgeted production
department factory overhead
divided by the budgeted
allocation base for each
department
Total budgeted factory
overhead cost divided by total
budgeted plantwide allocation
base
Total actual factory overhead
cost divided by total budgeted
plantwide allocation base
Total actual factory overhead
cost divided by total actual
plantwide allocation base
25%
1
25%
2
25%
3
25%
4
In using the activity-based costing approach,
factory overhead costs are initially
accounted for in the
25%
25%
25%
25%
1. activity cost pools
2. production
departments
3. actual product
costing
4. activity cost base
1
2
3
4
Selling and administrative expenses may be
allocated by accountants in preparing which
of the following reports for management?
25%
25%
25%
25%
1. Financial statements
2. Profitability reports
3. Cost of quality
reports
4. Activity analysis
reports
1
2
3
4
Which of the following are forms
of segmentation?
25%
1.
2.
3.
4.
25%
25%
25%
Demographic
Geographic
Psychographic
All of these
responses
1
2
3
4