37
40
38) The Homer Corporation produces two products, and reports the following production and cost
information for the most recent accounting period.
Product A
Product B
Number of units produced
10,000 units
2,000 units
Direct labor @ $20 per direct labor hour
(DLH) 0.50 DLH per unit 2.00
DLH per
unit
Direct materials cost $ 2 per unit $ 30 per unit
Overhead costs: Total Cost
Activity
Driver Product A Product B
Machine setup $ 1,200.00 setups 5 setups 15 setups
Quality inspections 24,000.00 inspections 60 inspections 140 inspections
Total $ 25,200.00
Using direct labor hours as the basis for assigning overhead costs, the total product cost per unit for
Product A is:
A) $12.00 per unit
B) $13.40 per unit
C) $70.00 per unit
D) $14.00 per unit
E) $75.60 per unit
42
39) The Homer Corporation produces two products, and reports the following production and cost
information for the most recent accounting period.
Product A
Product B
Number of units produced
10,000 units
2,000 units
Direct labor @ $20 per direct labor hour
(DLH) 0.50 DLH per unit 2.00
DLH per
unit
Direct materials cost $ 2 per unit $ 30 per unit
Overhead costs: Total Cost
Activity
Driver Product A Product B
Machine setup $ 1,200.00 setups 5 setups 15 setups
Quality inspections 24,000.00 inspections 60 inspections 140 inspections
Total $ 25,200.00
Using direct labor hours as the basis for assigning overhead costs, the total product cost per unit for
Product B is:
A) $12.00 per unit
B) $75.60 per unit
C) $70.00 per unit
D) $14.00 per unit
E) $13.40 per unit
40) The Homer Corporation produces two products, and reports the following production and cost
information for the most recent accounting period.
Product A
Product B
Number of units produced
10,000 units
2,000 units
Direct labor @ $20 per direct labor hour
(DLH) 0.50 DLH per unit 2.00
DLH per
unit
Direct materials cost $ 2 per unit $ 30 per unit
Overhead costs: Total Cost
Activity
Driver Product A Product B
Machine setup $ 1,200.00 setups 5 setups 15 setups
Quality inspections 24,000.00 inspections 60 inspections 140 inspections
Total $ 25,200.00
Using activity-based costing for assigning overhead costs, the activity rate for machine setups is:
A) $60 per setup
B) $100 per setup
C) $120 per setup
D) $240 per setup
E) $80 per setup
46
41) The Homer Corporation produces two products, and reports the following production and cost
information for the most recent accounting period.
Product A
Product B
Number of units produced
10,000 units
2,000 units
Direct labor @ $20 per direct labor hour
(DLH) 0.50 DLH per unit 2.00
DLH per
unit
Direct materials cost $ 2 per unit $ 30 per unit
Overhead costs: Total Cost
Activity
Driver Product A Product B
Machine setup $ 1,200.00 setups 5 setups 15 setups
Quality inspections 24,000.00 inspections 60 inspections 140 inspections
Total $ 25,200.00
Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:
A) $60 per inspection
B) $80 per inspection
C) $120 per inspection
D) $240 per inspection
E) $100 per inspection
42) The Homer Corporation produces two products, and reports the following production and cost
information for the most recent accounting period.
Product A
Product B
Number of units produced
10,000 units
2,000 units
Direct labor @ $20 per direct labor hour
(DLH) 0.50 DLH per unit 2.00
DLH per
unit
Direct materials cost $ 2 per unit $ 30 per unit
Overhead costs: Total Cost
Activity
Driver Product A Product B
Machine setup $ 1,200.00 setups 5 setups 15 setups
Quality inspections
24,000.00
inspections
60 inspections 140 inspections
Total
$ 25,200.00
Using activity-based costing for assigning overhead costs, the total product cost per unit for Product
A is:
A) $78.85 per unit
B) $14.60 per unit
C) $13.40 per unit
D) $12.75 per unit
E) $75.60 per unit
43) The Homer Corporation produces two products, and reports the following production and cost
information for the most recent accounting period.
Product A
Product B
Number of units produced
10,000 units
2,000 units
Direct labor @ $20 per direct labor hour
(DLH) 0.50 DLH per unit 2.00
DLH per
unit
Direct materials cost $ 2 per unit $ 30 per unit
Overhead costs: Total Cost
Activity
Driver Product A Product B
Machine setup $ 1,200.00 setups 5 setups 15 setups
Quality inspections 24,000.00 inspections 60 inspections 140 inspections
Total $ 25,200.00
Using activity-based costing for assigning overhead costs, the total product cost per unit for Product
B is:
A) $78.85 per unit
B) $12.75 per unit
C) $75.60 per unit
D) $13.40 per unit
E) $14.60 per unit
53
Direct materials
Direct labor
Machine setup
44) Founder Consulting Corporation has its headquarters in Memphis and operates from three branch
offices in Nashville, Atlanta, and Louisville. Two of the company’s activity cost pools are
Administrative Service and Development Service. These costs are allocated to the three branch
offices using an activity-based costing system. Information for next year follows:
Activity Cost Pool
Activity Measure
Estimated Cost
Administrative service
% of time devoted to branch
$ 700,000
Development service
Computer time
$ 140,000
Estimated branch data for next year is as follows:
Nashville
Time to branch
60 %
Computer time
150,000 minutes
Atlanta
30 %
200,000 minutes
Louisville
10 %
50,000 minutes
Total
100 %
400,000 minutes
How much of the headquarters cost allocation should Nashville expect to receive next year?
A) $280,000 B) $472,500 C) $560,000 D) $504,000 E) $409,500
45) Founder Consulting Corporation has its headquarters in Memphis and operates from three branch
offices in Nashville, Atlanta, and Louisville. Two of the company’s activity cost pools are
Administrative Service and Development Service. These costs are allocated to the three branch
offices using an activity-based costing system. Information for next year follows:
Activity Cost Pool
Activity Measure
Estimated Cost
Administrative service
% of time devoted to branch
$ 700,000
Development service
Computer time
$ 140,000
Estimated branch data for next year is as follows:
Nashville
Time to branch
60 %
Computer time
150,000 minutes
Atlanta
30 %
200,000 minutes
Louisville
10 %
50,000 minutes
Total
100 %
400,000 minutes
How much of the headquarters cost allocation should Atlanta expect to receive next year?
A) $280,000 B) $560,000 C) $409,500 D) $472,500 E) $504,000
56
46) Kozlov Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool
Total Cost
Total Activity
Assembly
$ 942,480
66,000 machine hours
Processing orders
$ 85,050
1,800 orders
Inspection
$ 126,854
1,820 inspection hours
The company makes 430 units of product A21W a year, requiring a total of 690 machine-hours, 40
orders, and 10 inspection-hours per year. The product’s direct materials cost is $35.72 per unit and its
direct labor cost is $29.46 per unit. According to the activity-based costing system, the average cost
of product A21W is closest to:
A) $89.72 per unit
B) $65.18 per unit
C) $64.99 per unit
D) $92.49 per unit
E) $94.11 per unit