Acme Company manufactures numerous product lines and applies manufacturing overhead using an activity -based costing system. With respect to batch - level costs, the cost per batch: O Increases as the number of units in the batch increases. • Increases as the number of units in the batch decreases. O Decreases as the total number of batches decreases. O Remains the same as the number of units in the batch increases. O Increases as the total number of batches decreases.

Acme Company manufactures numerous product lines and applies manufacturing overhead using an activity -based costing system. With respect to batch - level costs, the cost per batch: O Increases as the number of units in the batch increases. • Increases as the number of units in the batch decreases. O Decreases as the total number of batches decreases. O Remains the same as the number of units in the batch increases. O Increases as the total number of batches decreases.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 1P: The cost behavior patterns below are lettered A through H. The vertical axes of the graphs represent...

See similar textbooks

Similar questions

Activity-based costing systems: A. use a single predetermined overhead rate based on machine hours instead of on direct labor B. frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product C. limit the number of cost pools D. always result in an increase of at least one products selling price
Please explain the statement below thoroughly with examples. (Ture or False) "In activity-based costing, the manufacturing overhead cost per unit will depend partially on the number of units in a batch."
The component of per-unit costs that remains constant as the production level varies is: a. product cost b. fixed factory overhead c. variable factory overhead d. general and administrative expenses
The graphs below represent cost behavior patterns that might occur in a company’s cost structure. The vertical axis represents total cost, and the horizontal axis represents activity output Required:For each of the following situations, choose the graph from the group a–1 that best illustrates the cost pattern involved. Also, for each situation, identify the driver that measures activity output.1. The cost of power when a fixed fee of $500 per month is charged plus an additional charge of $0.12 per kilowatt-hour used.2. Commissions paid to sales representatives. Commissions are paid at the rate of 5 percent of sales made up to total annual sales of $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased in excess of 3,000 units.4. The cost of surgical gloves, which are purchased in increments of 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition…
Activity-Based Costing Both plantwide and departmental rates rely on unit-level drivers to assign overhead to products. However, not all overhead is caused by or related to units produced. Setup costs, for example, are incurred each time a batch is produced and a batch may consist of 1,000 units or 10,000 units. Setup costs tend to increase as batches increase—not as units produced increase. There are other factors, called non-unit drivers, which better measure the demand that products place on non-unit overhead activities. If non-unit overhead resources are a significant portion of total overhead, then using only unit-based drivers to assign overhead may create distorted product costs. Distorted product costs will not occur provided that products consume the non-unit overhead activities in (THE SAME PROPORTION/ DIFFERENT PROPORTIONS) as the unit-level activities. Product cost distortion requires that product diversity, which means simply that products consume overhead activities in…
The graphs below represent cost behavior patterns that might occur in acompany's cost structure. The vertical axis represents total cost, and thehorizontal axis represents activity output. Required:For each of the following situations, choose the graph from the group a-1 that best illustrates the cost pattern involved. Also, for each situation,identify the driver that measures activity output. 1. The cost of power when a fixed fee of $500 per month is chargedplus an additional charge of $0.12 per kilowatt-hour used2. Commissions paid to sales representatives. Commissions arepaid at the rate of 5 percent of sales made up to total annual salesof $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased inexcess of 3,000 units.4. The cost of surgical gloves, which are purchased in incrementsof 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition at a…
(i) Select a suitable cost driver for each item of overhead expenses and calculate thecost per unit of cost driver.(ii) Using the concept of Activity Based Costing, compute the factory cost per unit ofeach product.
When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs: Select one: 2. the unit product costs of both high and low volume products typically increase. O b.the unit product costs of both high and low volume products typically decrease. Oc the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase. O d. the unit product costs of high volume products typically increase and the unit product costs of low volume.products typically decrease. Oe. None of the given answer
Compute cost per equivalent unit of production for both direct materials and conversion. For the first column under "cost per equivalent unit of production" the options are: costs added this period, costs of beginning work in process, costs of ending work in process, costs transfered out. The rest of the empty spaces are numbers
In Traditional product costing systems, the measure of product activity is usually some volume based cost driver, like direct labor hours. True or False?
What challenges might managers at Neuro Instruments encounter in achieving the target cost? How might they overcome these challenges?
Computing Equivalent Units, FIFO and Weighted Average Cost Methods Assume each of the following conditions concerning the data given: All materials are added at the beginning of the process. All materials are added at the end of the process. (Note that this would have to be a department subsequent to the first department for all materials to be added at the end of the process, but ignore that fact for purposes of this solution.) Half of the materials are added at the beginning of the process, and the balance of the materials is added when the units are three-fourths completed. In all cases, labor and factory overhead are added evenly throughout the process.