Reference no: EM13919309
What is the principal reason that direct labor hours is no longer an effective base for allocating indirect costs in many modern manufacturing companies?
Movement from full-time to part-time workers
Automation
Changes in generally accepted accounting principles
Workers are not as productive as they were in the past
10.
Costs incurred to avoid nonconforming products are:
prevention costs.
voluntary costs.
failure costs.
appraisal costs.
11. The Tangier Company is considering eliminating the following product line:
What amount of cost is avoidable if Tangier outsources production of this product?
12.
A product-level activity center would likely include all of the following costs except:
packaging design costs.
legal fees to obtain and protect patents.
engineering development costs.
materials handling costs.
13.
Keene Company allocates overhead on the basis of direct labor hours. It allocates overhead costs of $8,000 to two different jobs as follows:
Job 1: (10 hours) = $4,000; Job 2: (10 hours) = $4,000
The production process for Job 2 was then automated. Now Job 2 requires only two hours of direct labor but four hours of mechanical processing. As a result, total overhead increased to $12,000. How much overhead cost will be assigned to Job 1 after automation?
$4,000
$2,000
$6,000
$10,000
14.
Which type of cost drivers is most appropriate for most automated processes?
All of these answers are correct.
Direct labor-based drivers
Activity-based drivers
Volume-based drivers
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