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Question by Cynthia: Accounting questions. Please help.?
Question 1.
Montego Co. identifies the following activities that pertain to manufacturing overhead: materials handling, machine setups, factory machine maintenance, factory supervision, and quality control. For each activity, identify an appropriate cost driver.

A. Material hadling
B. Machine setup
C. Factory machine maintenance
D. Factory supervision
E. Quality control

*This is what I think the answers are:
A. Machine hours used
B. Number of setups
C. machine hours used
D. Direct hours used
E. ?

Question 2.
Quick Pix is a large film developing and processing center that serves 130 outlets in grocery stores, service stations, camera and photo shops, and drug stores in 16 nearby towns. Quick Pix operates 24 hours a day, 6 days a week. Classify each of the following activity costs of Quick Pix as either unit-level, batch-level, product-level, or facility-level. (The answer may include more than one level.)

A. Color printing materials
B. Photocopy paper
C. Depreciation of machinery
D. Setups for enlargements
E. Supervisor’s salary
F. Ordering materials
G. Pickup and delivery
H. Commission to dealers
I. Insurance on building
J. Loading developing machines

*This is what I think the answers are for Question 2.
A. Batch or Product-Level Activity
B. Batch or Product-Level Activity
C. Facility-Level Activity
D. Batch-Level Activity
E. Facility-Level Activity
F. Batch of Facility-Level Activity
G. Unit-Level Activity
H. ?
I. Facility-Level Activity
J. ?

Question 3.
Tool Time, Inc. operates 20 injection molding machines in the production of tool boxes of four different sizes, named the Apprentice, the Handyman, the Journeyman, and the Professional. Classify each of the following costs as unit-level, batch-level, product-level, or facility-level.

A. Depreciation on injection molding machines (I know its not facility or batch)
B. Changing dies on machines (I know its not unit or product)
C. Moving components to assembly department (I know its not unit or product)

Question 4.
Activity-based costing is most appropriate to use when labor costs are a ___________ proportion of total product costs and the manufacturing process is __________.
A. decreasing, complex.
B. increasing, complex.
C. small, uncomplicated.
D. large, uncomplicated.

*I really thought it was B but I got it wrong, then I thought it was d, but I still got it wrong. Now i’m confused.

Question 5.
Which of the following statements is false concerning the use of ABC in service industries?

A. In most service industries, a large portion of overhead costs are company-wide costs.
B. The notion regarding eliminating as many non-value-added activities as possible applies equally to manufacturers and service providers.
C. When using ABC for service industries, special methods must be used to identify cost pools and cost drivers due to the unique nature of the services offered.
D. All of the statements are true concerning the use of ABC in service industries.

Question 6.
Which of the following is a limitation of activity-based costing?

A. It does not lead to better management decisions.
B. It can only be used to improve product costing.
C.Only manufacturing companies can use it.
D. Arbitrary allocations of overhead costs may continue.

Best answer:

Answer by JKRB
(1) I don’t know if this is one of your options, but I believe that “units produced” should be the answer for (E) Quality control and possibly (A).
(2) (3) Sorry, I can’t be any help with these two.
(4) I believe this question wasn’t clear (I’ve found it happens a lot). I think it was supposed to have read “Activity-based costing is most appropriate to use when DIRECT labor costs are a ?. In which case, the answer would be (A).
(5) I’m not sure about (A), but both B and C are true. This would mean that (D) is correct.
(6) A, B, and C, are all false, so (D) is correct

Good luck

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