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Return to Accounting: A Smart Approach 4e Student Resources
Chapter 11 Multiple-choice questions
Absorption and Activity-based Costing
*
not completed
.
Which definition best describes indirect costs?
Indirect costs are those costs which cannot be directly associated with a product or service. Although they are often fixed, this is not always the case. They should be controlled by departmental managers and include all costs that are not directly associated with a product or service.
Page reference:
189-190
Indirect costs are those costs which are not controlled directly by a manager.
correct
incorrect
Indirect costs are those costs which cannot be directly associated with a product or service.
correct
incorrect
Indirect costs are always fixed.
correct
incorrect
Indirect costs are always manufacturing overhead costs.
correct
incorrect
*
not completed
.
The management accounting technique that spreads indirect manufacturing costs fairly across the range of products is called:
Absorption costing.
correct
incorrect
Allocation costing.
correct
incorrect
Indirect costing.
correct
incorrect
Overhead costing.
correct
incorrect
*
not completed
.
What would happen to a blanket rate if production volumes were increased?
The fixed cost per unit of the product would increase.
correct
incorrect
The unit cost of a product would decrease.
correct
incorrect
The unit cost of a product would increase.
correct
incorrect
The direct cost per unit of a product would decrease.
correct
incorrect
*
not completed
.
A business absorbs overheads on a direct labour hourly basis, which were budgeted at 2,500 labour hours with overheads of £56,500. Actual results were 2,350 hours with actual overheads of £54,050. Calculate the over or under recovery.
£940 under recovery
correct
incorrect
£1,000 over recovery
correct
incorrect
£940 over recovery
correct
incorrect
£1,000 under recovery
correct
incorrect
*
not completed
.
A company had an under recovery of overheads of £200,000 with a budgeted overhead of £1,000,000. If its estimated overhead hours were 20,000 and its actual overhead hours were 22,000, calculate the actual overhead cost.
£800,000
correct
incorrect
£1,200,000
correct
incorrect
£900,000
correct
incorrect
£1,300,000
correct
incorrect
*
not completed
.
In absorption costing, what are the allocated costs?
The costs that can be directly associated with a department
correct
incorrect
Manufacturing costs, which need to be spread over production departments
correct
incorrect
Manufacturing costs, which need to be spread over products or services.
correct
incorrect
The costs that can be directly associated with a service department
correct
incorrect
*
not completed
.
What would be the most appropriate way of apportioning depreciation costs across different manufacturing departments in a business?
Floor space
correct
incorrect
Numbers of personnel
correct
incorrect
Value of buildings and equipment
correct
incorrect
Administration costs
correct
incorrect
*
not completed
.
A company manufactures high-quality china plates, which are hand-painted. It has a budgeted overhead of £20,000, taking 150 machine hours and 800 direct labour hours. Each plate uses £3 of direct materials, 0.25 labour hours at £10 per hour and 0.2 machine hours. What is the cost of a plate?
£32.17
correct
incorrect
£30.50
correct
incorrect
£10.50
correct
incorrect
£11.75
correct
incorrect
*
not completed
.
Which of the following factors is considered to have influenced the development of activity-based costing?
Increasing uniformity of products with sophisticated production technologies
correct
incorrect
Increase in direct costs as a proportion of total product costs
correct
incorrect
A very high proportion of high-volume products
correct
incorrect
Increase in overhead costs as a proportion of total product costs
correct
incorrect
*
not completed
.
Which of the following is
not
considered to be a benefit of activity-based costing?
More accurate product costs
correct
incorrect
Reduced complexity of calculating costs
correct
incorrect
Inclusion of non-manufacturing costs
correct
incorrect
More detailed understanding of what drives cost
correct
incorrect
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