Chapter Four Review -- Accounting 102

The departmental overhead rate method uses a different overhead rate for each production department.

• True

• False

Activities are the cost objects of the second stage of ABC.

• True

• False

A cost pool is a collection of costs that are related to the same or similar activity.

• True

• False

A single cost pool is used when allocating overhead using the activity-based costing method.

• True

• False

Allocated overhead costs vary depending upon the allocation methods used.

• True

• False

Compared to the plantwide overhead rate method, the departmental overhead rate method usually results in more accurate overhead allocations.

• True

• False

The first step in using the departmental overhead rate method requires that overhead be traced to each of the company's departments.

• True

• False

Which types of overhead allocation methods result in the use of more than one overhead rate during the same time period?

• Activity-based costing and plantwide overhead rate method.

• Departmental overhead rate method and activity-based costing.

• Departmental overhead rate method and cost pool overhead rate method.

• Plantwide overhead rate method and departmental overhead rate method.

• Cost pool overhead rate method and plantwide overhead rate method.

Which of the following statements is true with regard to the departmental overhead rate method?

• A) It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments.

• B) It is the same as activity-based costing.

• C) It requires one overhead cost pool and one rate.

• D) It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

• E) Each department has the same rate for the same activity pool.

Which of the following statements is true?

• Dispensing medicine is a facility level activity.

• Cleaning cages is a facility level activity.

• Sending blood work to a lab is a facility level activity.

• Service entities cannot use ABC for overhead allocation.

• Heating and air conditioning the clinic is a facility level activity.