MULTIPLE CHOICE QUESTIONS

1. Activity-based costing first assigns cost to

a. Products b. Overhead
c. Activities
d. Departments
2. The first step in applying the activity-based costing method is
a. Identifying the Cost Drivers
b. Computing a Cost Rate per Cost Driver
c. Identifying the Activities that Consume Resources
d. Assigning Cots to Products
3. In activity-based costing, the criteria used in selecting cost drivers which is
deal is
a. Benefits received
c. Fairness
b. Causal relation
d. Reasonableness
4. In choosing the cost pool, the simplest allocation method is
a. Plant wide allocation
c. Activity center allocation
b. Departmental allocation
d. Traditional approach
5. Whenever a cost cannot be linked to the product directly, the criteria to be
selected in identifying the cost driver is
a. Benefits received
c. Cause and effect
b. Causal relation
d. Reasonableness
6. Which of the following is not a cost driver?
a. Materials Handling
c. Computer Time
b. Purchase Orders
d. Number of times sold
7. Which of the following is not an activity in activity-based costing?
a. Materials Handling
c. Quality Inspection
b. Number of Trips
d. Advertising
8. Activity-based costing can be applied to
a. Plant activities
c. Marketing activities
b. Administrative activities
d. All of these
9. The proponents of activity-based costing argue that it is not an extension of
departamental allocation methods. Which is not a goo argument?
a. It changes the way managers do their jobs.
b. People manage activities, not cost
c. It focuses attention on the things management can be more efficient.
d. It provides a more detailed information.
10.In deciding which cost pools should managers used, plant wide,
departmental, or activity center, the criteria that managers should choose is
a. Causal relation b. Cost Benefit
c. Reasonableness d. Benefits
received
11.Gen Company manufactures Model and Model B. Production and cost data
show the following:
Model A
Model B
Units produced

100

200

Material moves

10

40

Direct labor hours per unit

Material handling costs total P200,000. Under Activity-based costing, the

material handling costs allocated to each unit of Model B would be:

a. P400

b. P667

c. P800

d. P1,000

12.Capitol Manufacturing produces three products. Production and cost data show
the following: Production and cost data show the following
Model X
Units produced
Direct Labor hours

Model Y

1,000

3,000

2,000

Number of inspections

Model Z
6000

1,000
20

2000
30

50

Inspection costs totaled P100,000. Activity-based costing, the inspections costs

allocated to each unit of Model X would be
a. P10.00

b. P20,00

c. P30.00

d. P50.00

13. Refer to No. 12 using Activity-based costing the inspection costs allocated to
each unit of Model Z would be:
a. P6.67

b. P8.33

c. P10.00

d. P20.00

14. Refer to No. 12 using direct labor hours as allocation base, the inspection costs
allocated to each unit of Model Y would be
a. P6.67

b. P10.00

c. P20.00

d. P30.00

15. Samba Manufacturing produces three products. Production and cost data show
the following:
Model A
Units produced

Model B

2,000

Model C

6,000

12,000

Direct labor hours

4,000

2,000

4,000

Number of set-ups

100

150

250

The consumption ratios for the number of set-ups would be

a. 40% - 20% - 40%
b. 20% - 30% - 50%

c. 10% - 30% - 60%

d. 33 1/3% - 33 1/3% - 33 1/3%

16. Refer to no. 15, the consumption ratios for direct labor hours would be:
a. P40% - 20% - 40%

c. 10% - 30% - 60%

b. P20% - 30% - 50%

d. 33 1/3% - 33 1/3% - 33 1/3%

17. Winner Company produces three products. Production and cost data show the
following:
Model A
Units produced

2,000

Model B
6,000

Model C
12,000

Direct Labor hours

4,000

2,000

4,000

Number of set-ups

100

150

250

Number of shipments

200

225

275

Engineering change orders

15

10

Overhead costs include set-ups P90,000; shipping costs P140,000; and engineering
costs P180,000. What would be the per unit overhead cost for Model A, if activitybased costing were used?
a. P20.50

b. P74,00

c. P82.00

d. P100,000

18. Refer to No. 17, what would be he per unit overhead cost for Model C, if activity
based costing were used?
a. P10.83

b. P32.50

c. P45.00

d. P50.00

19. Kola Company manufactures Model X and Model Y. Production and cost data
show the following
Model X

Model Y

Units produced

10,000

Material Moves

100

Testing time

250

Direct labor hours per unit

2,000
40

125
1

The controller has determined that total overhead to be P960,000. Of this P280,000
related to material moves; P300,000 relates to testing and the remainder is related
to labor time.
What would be the per unit overhead cost allocated to Model X, if activity-based
costing were used?
a. P80.00

b. P59.00

c. P48.00

d. P24.00

20. Refer to No 19, what would be the per unit overhead cost allocated for Model X,
if activity-based costing were used?
a. P31.67

b. P82.18

c. P185.00

d. P150.00