Reference: 05-07
Alam Company Uses Activity-Based Costing to Compute Product

question 58

Multiple Choice

Reference: 05-07
Alam Company uses activity-based costing to compute product costs for external reports. The company has three activity cost pools and applies overhead using predetermined overhead rates for each activity cost pool. Overapplied or underapplied overhead is closed to the Cost of Goods Sold account at the end of each year. Estimated costs and activities for the current year are presented below for the three activity cost pools: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline & \text { Estimated Overhead } \text { Cost } & \text { Expected Activity } \\\hline \text { Activity } 1 & \$ 29,328 & 1,200 \\\hline \text { Activity } 2 & \$ 30,024 & 2,400 \\\hline \text { Activity 3 } & \$ 65,142 & 2,200 \\\hline\end{array}\\\text { Actual costs and activities for the current year were as follows: }\\\begin{array} { | l | l | l | } \hline & \text { Actual Overhead Cost } & \text { Actual Activity } \\\hline \text { Activity } 1 & \$ 29,238 & 1,185 \\\hline \text { Activity } 2 & \$ 29,899 & 2,415 \\\hline \text { Activity } 3 & \$ 65,117 & 2,225 \\\hline\end{array}\end{array}$$
-The entry to the Cost of Goods Sold account at the end of the year was (round your final answer to nearest dollar value) :

• A)$1,173 debit.
• B)$801 debit.
• C)$1,173 credit.
• D)$801 credit.

Evaluate the economic trade-offs in financing and promotional offers.

Understand how to calculate the rate of return on various financial instruments and loans.

Interpret the difference between nominal and effective rates of interest.

Apply the concepts of time value of money to determine the value of annuities and bonds.

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Definitions:

Defense Mechanisms

Methods the unconscious mind uses to modify, reject, or alter reality in an effort to protect oneself from experiencing distress and inappropriate urges.

Moral Development

The process through which individuals develop proper attitudes and behaviors towards other people in society, based on social and cultural norms, laws, and personal beliefs.

B. F. Skinner

An American psychologist and behaviorist best known for his work in developing the theory of operant conditioning.

A. Maslow

Refers to Abraham Maslow, an American psychologist known for creating Maslow's hierarchy of needs, a theory in psychology regarding human motivation.