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Acc650 Module 3 - Week 3 Quiz Activity-Based Costing

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1. Activity-based costing systems:
a. use a single, volume-based cost driver. assign overhead to products based on the products' relative usage of direct labor. often reveal products that were under- or over-costed by traditional costing systems. typically use fewer cost drivers than more traditional costing systems. have a tendency to distort product costs.
2. Burgoon uses an economic order quantity model and has determined an optimal order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and holding costs are $4 per unit. The reorder point is: 25 packages. 50 packages. 100 packages. 203 packages. 225 packages.

1. Feinstein, Inc., an appliance manufacturer, is developing a new line of ovens that uses controlled-laser technology. The research and testing costs associated with the new ovens is said to arise from a: unit-level activity. batch-level activity. product-sustaining activity. facility-level activity. competitive-level activity.
2. Burgoon uses an economic order quantity model and has determined an optimal order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, and holding costs are $4 per unit. The reorder point is: 25 packages. 50 packages. 100 packages. 203 packages. 225 packages.
3. St. James, Inc., currently uses traditional costing procedures, applying $800,000 of overhead to products Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and…...

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