1.Which of the following is an internal failure cost?

rev: 03_12_2014_QC_46491

Depreciation on testing equipment

Warranty replacement costs

Costs to rework defective units

Engineering and design costs

2. Rocoe Company produces a variety of garden tools in a highly automated manufacturing facility. The costs and cost drivers associated with four activity cost pools are given below:

Production of 10,000 units of a hand-held tiller required 1,000 labor hours, 80 setups, and consumed 25% of the product sustaining activities. Assuming the company uses activity-based costing, how much total overhead will be allocated to this tool?

3.Benitez Company makes wicker and wooden slat picnic baskets. It requires approximately 1 hour of labor to make one basket of either type. Wicker baskets are produced in batches of 100 units and require 0.5 machine hours per basket. Wooden slat baskets are produced in batches of 50 units and require 0.75 machine hours per basket. Setup is required for each batch. During the most recent accounting period, the company made 8,000 wicker baskets and 2,000 wooden slat baskets. Setup costs amounted to $24,000 for the baskets produced during the period. If activity-based costing is used to allocate overhead costs to the two products, the amount of setup cost assigned to the wicker baskets will be:

4. Valpar Company produces several lines of laundry hampers. The factory is highly automated and uses an activity-based costing system to allocate overhead costs to its various products. During the upcoming period the company expects to produce 72,000 units. The costs and cost drivers associated with four activity cost pools are given below:

Production of 20,000 units of its popular foldable hamper required 3,000 labor hours, 75 setups, and consumed one-third of the product sustaining activities. What amount of unit-level costs will be allocated to the product?

5.

Which of the following costs is likely to be driven by machine usage?

Factory rent

Factory utilities

Factory insurance

Depreciation on factory building

6.

Which of the following activity costs should usually be ignored when making a decision regarding whether to eliminate a product?

Batch-level costs

Facility-level costs

Product-level costs

Unit-level costs

7.

Which of the following is an activity-based cost driver?

Material cost

All of these answers are correct.

Number of machine setups

Machine hours

8. The Farber Company recorded the following costs of quality during the current period:

Which choice below represents the correct amount of prevention and appraisal costs?

Choice A

Choice D

Choice C

Choice B