Abc does not conform to gaap because it

1. An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: under activity-based costing the sum of all product costs does not equal the total costs of the company under activity-based costing manufacturing costs are assigned to products activity-based costing has not been approved by the United Nation's International Accounting Board activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours 2. The plant manager's salary is an example of a(n): Unit-level activity Batch-level activity Product-level activity Organization-sustaining activity 3. Grammer Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs: Costs: Wages and salaries $240,000 Depreciation 160,000 Occupancy 140,000 Total $540,000 The distribution of resource consumption across the three activity cost pools is given below: Activity Cost Pools Fabricating Order Processing Other Total Wages and salaries 30% 45% 25% 100% Depreciation 20% 35% 45% 100% Occupancy 5% 65% 30% 100% How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost pool? $135,000 $174,000 $162,000 $180,000 4. Poskey Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Wages and salaries Depreciation Utilities Total $400,000 160,000 100,000 $660,000 Distribution of resource consumption: Activity Cost Pools Assembly Setting Up Other Total Wages and salaries 40% 40% 20% 100% Depreciation 20% 35% 45% 100% Utilities 25% 55% 20% 100% How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool? $187,000 $264,000 $217,000 $165,000 5. Consider the following statements: I. A division's net operating income, after deducting both traceable and allocated common fixed costs, is negative. II. The division's avoidable fixed costs exceed its contribution margin. III. The division's traceable fixed costs plus its allocated common corporate costs exceed its contribution margin. Which of the above statements is a valid reason for eliminating the division? Only I Only II Only III Only I and II 6. Yehle Inc. regularly uses material Y51B and currently has in stock 460 liters of the material for which it paid $2,530 several weeks ago. If this were to be sold as is on the open market as surplus material, it would fetch $4.55 per liter. New stocks of the material can be purchased on the open market for $5.45 per liter, but it must be purchased in lots of 1,000 liters. You have been asked to determine the relevant cost of 720 liters of the material to be used in a job for a customer. The relevant cost of the 720 liters of material Y51B is: $3,924 $5,450 $3,510 $3,276 7. Tawstir Corporation has 800 obsolete personal computers that are carried in inventory at a total cost of $1,100,000. If these computers are upgraded at a total cost of $40,000, they can be sold for a total of $750,000. As an alternative, the computers can be sold in their present condition for $690,000. Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition? $86.50 $887.50 $912.50 $562.50 8. (Ignore income taxes in this problem.) Pro-Mate, Inc. is a producer of athletic equipment. The company is considering the purchase of a machine to produce baseball bats. The machine will cost $60,000 and have a 10-year useful life. The following annual revenues and expenses are projected: Sales $40,000 Less expenses: Out-of-pocket production costs $15,000 Selling expenses 9,000 Depreciation 6,000 30,000 Net operating income $10,000 The machine will have no salvage value.