Question :
21.An example of an indirect cost that could be traced : 1416276
21.An example of an indirect cost that could be traced directly to individual jobs by examining invoices is:
a.Office rent.
b.Telephone and fax charges.
c.Depreciation expense on office machines.
d.Office supplies.
22.The practice of assigning costs evenly to jobs using a single overhead rate when different jobs actually consume resources in different proportions is sometimes called:
a.Smooth costing.
b.Process costing.
c.Activities-based costing.
d.Peanut-butter costing.
23.Consider the budget information for Bert and Ernie Design firm:
Professional labor$1,000,000
Administrative labor200,000
Lease expense50,000
Design equipment depreciation25,000
Samples and books10,000
Utilities20,000
Professional hours100,000 hours
Number of rooms redone2,000 rooms
Bert and Ernie decide there are two cost pools, design support, which is assigned to jobs based on the number of rooms redone, and facilities costs, which is assigned to jobs based on the number of professional labor hours. The design support cost pool includes design equipment depreciation and samples and books. The lease expense and utilities are considered facilities costs.
What is the budgeted rate per cost driver for design support?
a.$17.50
b.$35.00
c.$.35
d.$.70
24.Consider the budget information for Bert and Ernie Design firm:
Professional labor$1,000,000
Administrative labor200,000
Lease expense50,000
Design equipment depreciation25,000
Samples and books10,000
Utilities20,000
Professional hours100,000 hours
Number of rooms redone2,000 rooms
Bert and Ernie decide there are two cost pools, design support, which is assigned to jobs based on the number of rooms redone, and facilities costs, which is assigned to jobs based on the number of professional labor hours. The design support cost pool includes design equipment depreciation and samples and books. The lease expense and utilities are considered facilities costs.
What is the budgeted rate per cost driver for facilities costs?
a.$17.50
b.$1.05
c.$.70
d.$37.50
25.Sanborn Architectural Designs Inc. has three partners that each earn $80,000 per year, and three associates that earn $58,000 per year. Each partner and associate has 2,000 billable hours per year. Using an activity-based costing approach, if a partner worked 10 hours on a project, the amount of labor cost that should be billed to the project is:
a.$200.
b.$320.
c.$400.
d.$500.
26.Lawrence and Louis Law Firm uses activity-based costing to determine the costs of its cases. Information about costs follow:
Cost Pool Budgeted CostsBudgeted Cost Driver Budgeted Rate
Legal support
$1,500,000$2,000,000 professional labor cost$.75 / professional labor dollar
Secretarial support
800,000
4,000 partner labor hours$200 / partner labor hour
Facilities
600,00012,000 professional labor hours$50 / professional labor hour
The Laurel case required 60 professional hours, 20 of which were partner hours, and labor costs totaled $10,000. How much overhead was assigned to the Laurel case?
a.$13,500
b.$14,000
c.$6,500
d.$14,500
27.Hunter and Quinn Collision Repair uses activity-based costing to determine the costs of its cases. Information about costs follow:
Cost Pool Budgeted CostsBudgeted Cost Driver
Paint shop operations and clean up
$300,000
750 paint jobs
Machine costs120,0001,500 machine hours
Facilities80,0002,000 labor hours
Seth’s car was repaired after he was involved in a rear-end collision. The repair involved 3 hours of machine time, 5 hours of labor at $30 per hour, and the rear of the car was repainted. How much overhead was assigned to Seth’s repair job?
a.$2,000
b.$941
c.$990
d.$840
28.Lawrence and Louis Law Firm uses activity-based costing to determine the costs of its cases. Information about costs follow:
Cost Pool Budgeted CostsBudgeted Cost Driver Budgeted Rate
Legal support
$1,500,000$2,000,000 professional labor cost$.75 / professional labor dollar
Secretarial support
800,000
4,000 partner labor hours$200 / partner labor hour
Facilities
600,00012,000 professional labor hours$50 / professional labor hour
The Laurel case required 60 professional hours, 20 of which were partner hours, and labor costs totaled $10,000. If direct costs relating to the case were $1,000, what were the total costs of the Laurel case?
a.$23,000
b.$25,500
c.$21,500
d.$15,500
29.Sanborn Architectural Designs Inc. has three partners that each earn $80,000 per year, and three associates that earn $58,000 per year. Each partner and associate has 2,000 billable hours per year. Using a simplified approach, if a partner worked 10 hours on a project, the amount of labor cost that should be billed to the project is:
a.$350.
b.$200.
c.$320.
d.$345.
30.Natasha's Interior Designs has support staff for its professional designers. The two professionals work a total of 1,800 hours each and make $45,000 each per year. The total support budget is $90,000, of which $60,000 is professional support, and $30,000 is general office overhead. A job requiring 30 professional hours should be billed how much for overhead if a simplified costing approach is used and hours are the cost driver?
a.$25
b.$30
c.$600
d.$750
3,600 hrs.
