Which of the following is not typical of traditional costing systems? Use of multiple cost drivers to allocate overhead. Use of a single predetermined overhead rate. Use of direct labor hours or direct labor cost to assign overhead. Assumption of correlation between direct labor and incurrence of overhead cost.

You are watching: An activity based overhead rate is computed as follows


An activity that has a direct cause-effect relationship with the resources consumed is a(n)product activity.cost driver. overhead rate. cost pool.
The costs that are easiest to trace directly to products are direct materials and direct labor.direct labor and overhead. direct materials and overhead. none of the above; all three costs are equally easy to trace to the product.
Predetermined overhead rates in traditional costing are often based on multiple bases for job order costing and direct labor cost for process costing. direct labor cost for job order costing and machine hours for process costing.machine hours for job order costing and direct labor cost for process costing.multiple bases for both job order costing and process costing.
Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by increasing direct labor costs and increasing overhead costs. increasing direct labor costs and decreasing overhead costs. decreasing direct labor costs and decreasing overhead costs. decreasing direct labor costs and increasing overhead costs.
Ordering materials, setting up machines, assembling products, and inspecting products are examples of direct labor costs.nonmanufacturing activities. cost drivers.overhead cost pools.
The first step in activity-based costing is to identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.assign overhead costs to products, using overhead rates determined for each cost pool.compute the activity-based overhead rate per cost driver. identify the cost driver that has a strong correlation to the activity cost pool.
identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
The last step in activity-based costing is to compute the activity-based overhead rate per cost driver. identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. identify the cost driver that has a strong correlation to the activity cost pool.assign overhead costs to products, using overhead rates determined for each cost pool.
Which of the following is not an example of an activity cost pool?Machine hours Setting up machinesInspectingMachining
An example of an activity cost pool is number of inspections. number of setups. machine hours.setting up machines.
An example of a cost which would not be assigned to an overhead cost pool is freight-out. depreciation. supplies. indirect salaries.
Which would be an appropriate cost driver for the machining activity cost pool? Purchase orders Machine hours Inspections Machine setups
An activity-based overhead rate is computed as follows:estimated overhead divided by actual use of cost drivers. estimated overhead divided by estimated use of cost drivers. actual overhead divided by estimated use of cost drivers. actual overhead divided by actual use of cost drivers.
To use activity-based costing, it is necessary to know the expected use of cost drivers per activity. expected use of cost drivers per product. all of these. cost driver for each activity cost pool.
To assign overhead costs to each product, the companyassigns the cost of each activity cost pool in total to one product line. multiplies the activity-based overhead rates per cost driver by the number of cost drivers expected to be used per product.multiplies the overhead rate by the number of direct labor hours used on each product. multiplies the rate of cost drivers per estimated cost for the cost pool by the estimated cost for each cost pool.
multiplies the activity-based overhead rates per cost driver by the number of cost drivers expected to be used per product.
Assigning overhead using ABC will usually result in the same cost per unit for low volume products as does traditional costing. decrease the cost per unit for low volume products as compared to a traditional overhead allocation. increase the cost per unit for low volume products as compared to a traditional overhead allocation. provide less accurate cost per unit for low volume products than will traditional costing.

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increase the cost per unit for low volume products as compared to a traditional overhead allocation.
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