41 managers and accountants collect most of the cost information that goes into thei 4302297
41) Managers and accountants collect most of the cost information that goes into their systems through
41) ______ A) an information databank. B) time surveys. C) source documents. D) computer programs. E) interviewing workers.
42) A machine shop has direct materials cost of $1,800,000 direct labour of $4,200,000 (direct labour rate is $50 per hour) and budgeted indirect manufacturing costs of $850,000. Management believes that indirect manufacturing costs increase with direct labour hours.
What is the budgeted indirect manufacturing cost rate?
42) ______ A) $10.12 B) $4.94 C) $2.33 D) $2.12 E) $17.00
43) A local financial consulting firm employs 30 full-time employees. The budgeted compensation per employee is $50,000. The annual maximum chargeable time to each client is 1,000 hours. Clients always receive their full amount of time. All labour costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.
Any other costs are included in a single indirect-cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $1,050,000, and the firm expects to have 60 clients during the coming year.
What is the budgeted indirect-cost rate per hour?
43) ______ A) $10.00 per hour B) $17.50 per hour C) $1,050.00 per hour D) $50.00 per hour E) $35.00 per hour
44) A local financial consulting firm employs 30 full-time staff. The budgeted compensation per employee is $50,000, for 2,000 hours. All direct labour costs are charged to clients.
Any other costs are included in a single indirect-cost pool, allocated according to labour-hours. Actual indirect costs were $750,000. Budgeted indirect costs for the year are $525,000 and the firm expects to have 60 clients during the coming year.
What is the total cost of a job which took 27 hours, using normal costing?
44) ______ A) $911.25 B) $27,337.50 C) $1,012.50 D) $30,375.00 E) $50,000.00
45) A company employs 25 full-time staff. The company spent $75,000 in advertising in the year (this amount is a constant amount, spent each year). Budgeted indirect manufacturing costs total $250,000 and the direct labour rate is $15 per hour. Budgeted labour hours were 500,000, and actual labour hours were 524,000. Actual indirect overhead was $274,600.
What are the actual and normal indirect-cost rates respectively?
45) ______ A) $0.55 and $0.48 B) $0.65 and $0.67 C) $0.67 and $0.65 D) $0.50 and $0.52 E) $0.52 and $0.50
46) Fixed indirect costs remain constant at $150,000 per month. During high-output months variable indirect costs are $120,000, and during low-output months variable costs are $60,000. What are the respective high and low indirect cost rates if budgeted professional labour-hours are 6,000 for high-output months and 2,000 for low-output months?
46) ______ A) $45.00 per hour, $105.00 per hour B) $31.25 per hour, $87.50 per hour C) $45.00 per hour, $95.00 per hour D) $59.00 per hour, $105.00 per hour E) $56.20 per hour, $105.00 per hour
47) The main advantage of using budgeted cost rates rather than actual cost rates is
47) ______ A) budgeted indirect-cost rates are known prior to the inception of a new job. B) budgeted costs allow managers to have cost information on a timely basis. C) budgeted rates are just as accurate and require less effort D) budgeted costs may be subject to short-run fluctuations. E) actual indirect-cost rates are affected by work done on other jobs.
48) Which of the following statements about normal costing is TRUE?
48) ______ A) Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate. B) Direct costs and indirect costs are traced using budgeted rates. C) Direct costs and indirect costs are allocated using an actual rate. D) Direct costs are traced using a budgeted rate, and indirect costs are allocated using an actual rate. E) Direct costs are traced by using the actual direct-cost rate times the budgeted quantity of the direct costs input.
49) Which of the following is NOT part of the step-by-step approach to computing the budgeted indirect cost allocation rate?
49) ______ A) identify costs associated with the direct cost pool B) divide the total quantity of the cost allocation base into the total costs in the indirect cost period C) identify the costs which are not part of the direct cost pool D) select the cost allocation base E) estimate the cost items for the budgeted period
Use the information below to answer the following question(s).
A dental office is in the process of changing their costing system. Their system currently uses a single direct-cost pool (professional labour) and a single indirect-cost pool (staff support). The direct categories in the new, refined costing system include:
1.Professional partner labour. Average total annual compensation of the two partners is $100,000 each, and each partner has 2,000 hours of budgeted billable time.
2.Dental assistant labour. Average total annual compensation of the four assistants is $22,500 each, and each assistant has 2,000 hours of budgeted billable time.
3.Office staff. Average total annual compensation of the two staff members is $15,000 each, and each has 2,000 hours of budgeted billable time.
The indirect category in the new refined costing system includes professional liability insurance. The budgeted indirect amount is $200,000, and the allocation base is budgeted professional labour hours. The dentist and dental assistants are considered professional labour hours.
50) What is the budgeted indirect-cost rate per unit of the allocation base for the professional liability insurance?
50) ______ A) $16.67 B) $1.67 C) $100.00 D) $29.10 E) $26.67