Question

10) Janitorial service is an example of an activity at which of the following levels?
a) Unit-level activity
b) Product-level activity
c) Batch-level activity
d) Facility-level activity

11) Which of the following statements is true with regard to activity-based costing
(ABC) rates?
a) The basis of ABC is that activities are what causes costs to be incurred.
b) ABC is another way to refer to a multiple departmental rate costing.
c) There is one stage (step) to ABC.
d) ABC is simpler and less expensive to implement than other traditional methods of
allocating overhead costs.

12) In a process costing system, the number of Work in Process Inventory accounts is equal to what amount?
a) the number of products produced
b) the number of production departments
c) the number used in a job costing system
d) cannot be determined without additional information

13) Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?
a)Plant wide and departmental
b)Plant wide and activity-based
c)Departmental and activity-based
d)Cost pool overhead rate and plant wide

14)Wong Corporation had 25,000 units completed and transferred out, and 8,000 units that were 35% complete. The equivalent units total
a)22,200
b)27,800
c)25,000
d)33,000

Answer 1

Solution 10:

Janitorial service are related to commericial property cleaning including professional offices. These services includes manintenance services or property management services. Therefore Janitorial services is an example of facility level activity.

Option D is right choice.

Solution 11:

The basis of activity based costing is that activities are what causes cost to be incurred. Hence option A is right choice.

Solution 12:

In process costing number of WIP accounts will be equal to number of processes/department.

Hence In a process costing system, the number of Work in Process Inventory accounts is equal to the number of production departments. Hence Option B is right choice.

Solution 13:

In plant wide overhead allocation method, only overhead rate is used for overhead application. In department overhead allocation method and activity based allocation method, more than one overhead rates are used for overhead allocation.

Therefore Option C is right choice.

Solution 14:

Equivalent units in WIP = 8000*35% = 2800 units

Equivalent units completed and transferred out = 25000 units

Total equivalent units = 2800 + 25000 = 27800 units

Option B is the right choice.