107) A company allocates $7.50 overhead to products based on the number of direct labor hours
worked. The company uses a plantwide overhead rate with direct labor hours as the allocation
base. Given the amounts below, how many direct labor hours does the company expect in
department 2?
Estimated:
Department 1
Department 2
Manufacturing overhead costs
$
74,358
$
49,572
Direct labor hours
6,610
DLH
?
DLH
Machine hours
700
MH
800
MH
A) 9,914 DLH
B) 6,612 DLH
C) 3,109 DLH
D) 7,454 DLH
E) 16,254 DLH
108) Gray Company uses a plantwide overhead rate with machine hours as the allocation base.
Use the following information to solve for the amount of machine hours estimated per unit of
product Q.
Direct material cost per unit of Q
$
Total estimated manufacturing overhead
$
Total cost per unit of Q
$
Total estimated machine hours
MH
Direct labor cost per unit of Q
$
A) 50 MH per unit of Q.
B) 0.50 MH per unit of Q.
C) 0.75 MH per unit of Q.
D) 17.5 MH per unit of Q.
E) 30 MH per unit of Q.
109) Gold Company uses a plantwide overhead rate with machine hours as the allocation base.
Use the following information to solve for the amount of machine hours estimated per unit of
product RST.
Direct material cost per unit of RST
$
15
Total estimated manufacturing overhead
$
300,000
Total cost per unit of RST
$
80
Total estimated machine hours
150,000
MH
Direct labor cost per unit of RST
$
23
A) 21 MH per unit of RST.
B) 2 MH per unit of RST.
C) 20 MH per unit of RST.
D) 37.5 MH per unit of RST.
E) 38 MH per unit of RST.
110) Bond Company uses a plantwide overhead rate with direct labor hours as the allocation
base. Use the following information to solve for the amount of direct labor hours estimated per
unit of product G2.
Direct material cost per unit of G2
$
Total estimated manufacturing overhead
$
Total cost per unit of G2
$
Total estimated direct labor hours
DLH
Direct labor cost per unit of G2
$
A) 1.75 DLH per unit of G2.
B) 6.14 DLH per unit of G2.
C) 9.3 DLH per unit of G2.
D) 0.66 DLH per unit of G2.
E) 11.25 DLH per unit of G2.
111) Kamper Company sells two products Big Z and Little Z. Current direct material and direct
labor costs are detailed below. Next year, the company wishes to use a plantwide overhead rate
with direct labor hours as its allocation base. Next year’s overhead is estimated to be $475,000.
The direct labor and direct materials costs are estimated to be consistent with the current year.
Direct labor costs $20 per hour and the company expects to manufacture 32,000 units of Big Z
and 9,000 units of Little Z next year.
Direct
Material
per Unit
Direct
Labor Dollars
per Unit
Big Z
$
6
$
17
Little Z
$
12
$
8
What are total estimated direct labor hours for this next year?
A) 30,800 total DLH.
B) 616,000 total DLH.
C) 300,000 total DLH.
D) 1,025,000 total DLH.
E) 916,000 total DLH.
112) Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct
material and direct labor costs are detailed below. Next year the company wishes to use a
plantwide overhead rate with direct labor hours as its allocation base. Next year’s overhead is
estimated to be $338,250. The direct labor and direct materials costs are estimated to be
consistent with the current year. Direct labor costs $28 per hour and the company expects to
manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.
Direct
Material
per Unit
Direct
Labor Dollars
per Unit
CC1
$
37.10
$
22.40
CC2
$
25.20
$
15.40
Compute the plantwide overhead rate for next year.
A) $28.00 per DLH.
B) $37.80 per DLH.
C) $1.35 per DLH.
D) $5.00 per DLH.
E) $0.20 per DLH.
[The following information applies to the questions displayed below.]
Aztec Industries produces bread which goes through two operations, mixing and baking, before
it is ready to be packaged. Next year’s expected costs and activities are shown below.
Mixing
Baking
Direct labor hours
400,000
DLH
DLH
Machine hours
800,000
MH
MH
Overhead costs
$
600,000
$
113) Compute Aztec’s departmental overhead rate for the mixing department based on direct
labor hours.
A) $1.50 per DLH.
B) $5.00 per DLH.
C) $0.75 per DLH.
D) $0.50 per DLH.
E) $2.08 per DLH.
114) Compute Aztec’s departmental overhead rate for the mixing department based on machine
hours.
A) $1.50 per MH.
B) $5.00 per MH.
C) $0.75 per MH.
D) $0.50 per MH.
E) $2.08 per MH.
115) Compute Aztec’s departmental overhead rate for the baking department based on direct
labor hours.
A) $1.50 per DLH
B) $5.00 per DLH
C) $0.75 per DLH
D) $0.50 per DLH
E) $2.08 per DLH
116) Compute Aztec’s departmental overhead rate for the baking department based on machine
hours.
A) $1.50 per MH
B) $5.00 per MH
C) $0.75 per MH
D) $0.50 per MH
E) $2.08 per MH
[The following information applies to the questions displayed below.]
Angle Max Industries produces a product which goes through two operations, Assembly and
Finishing, before it is ready to be shipped. Next year’s expected costs and activities are shown
below.
Assembly
Finishing
Direct labor hours
100,000
DLH
DLH
Machine hours
300,000
MH
MH
Overhead costs
$
300,000
$
117) Assume that the Assembly Department allocates overhead based on machine hours, and the
Finishing Department allocates overhead based on direct labor hours. How much total overhead
will be assigned to a product that requires 1 direct labor hour and 2.5 machine hours in the
Assembly Department, and 3.5 direct labor hours and 0.5 machine hours in the Finishing
Department?
A) $13.00.
B) $10.50.
C) $2.50.
D) $11.00.
E) $7.50.
118) Assume that Angle Max Industries allocates overhead using a plantwide overhead rate
based on machine hours. How much total overhead will be assigned to a product that requires 1
direct labor hour and 2.5 machine hours in the Assembly Department, and 3.5 direct labor hours
and 0.5 machine hours in the Finishing Department?
A) $7.50.
B) $13.00.
C) $10.50.
D) $6.00.
E) $11.00.
[The following information applies to the questions displayed below.]
Tarnish Industries produces miniature models of farm equipment. These collectibles are in great
demand. It takes two operations, molding and finishing, to complete the miniatures. Next year’s
expected activities are shown in the following table:
Molding
Finishing
Direct labor hours
75,000
DLH
DLH
Machine hours
98,000
MH
MH
119) Tarnish Industries uses departmental overhead rates and is planning on a $2 per direct labor
hour overhead rate for the molding department. Compute the estimated manufacturing overhead
cost for the molding department given the information shown in the table.
A) $225,000
B) $196,000
C) $150,000
D) $321,000
E) $471,000
120) Tarnish Industries uses departmental overhead rates and is planning on a $1.80 per direct
labor hour overhead rate for the finishing department. Compute the estimated manufacturing
overhead cost for the finishing department given the information shown in the table.
A) $41,667
B) $288,900
C) $256,800
D) $146,700
E) $323,100
121) Tarnish Industries uses departmental overhead rates and is planning on a $2 per machine
hour overhead rate for the molding department. Compute the estimated manufacturing overhead
cost for the molding department given the information shown in the table.
A) $195,000
B) $196,000
C) $163,000
D) $321,000
E) $471,000
122) Tarnish Industries uses departmental overhead rates and is planning on a $4.10 per machine
hour overhead rate for the finishing department. Compute the estimated manufacturing overhead
cost for the finishing department given the information shown in the table.
A) $307,500
B) $658,050
C) $401,800
D) $334,150
E) $735,950
[The following information applies to the questions displayed below.]
Wall Nuts, Inc. produces paneling that requires two processes, A and B, to complete. Oak is the
best-selling of all the many types of paneling produced. Information related to the 40,000 units
of oak paneling produced annually is shown in the following table:
Direct materials
$
380,000
Direct labor
Department A (6,000 DLH × $25 per DLH)
$
150,000
Department B (35,125 DLH × $16 per DLH)
$
562,000
Machine Hours
Department A
24,000
MH
Department B
32,000
MH
Wall Nuts’ total expected overhead costs and related overhead data are shown below.
Department A
Department B
Direct labor hours
67,000
DLH
170,000
DLH
Machine hours
100,000
MH
80,000
MH
Manufacturing overhead costs
$
450,000
$
600,000
123) Use the data for Wall Nuts, Inc. to compute departmental overhead rates based on machine
hours in Department A and machine hours in Department B.
A) $4.50 per MH in Dept. A; $4.50 per MH in Dept. B.
B) $7.50 per MH in Dept. A; $7.50 per MH in Dept. B.
C) $4.50 per MH in Dept. A; $7.50 per MH in Dept. B.
D) $2.70 per MH in Dept. A; $6.00 per MH in Dept. B.
E) $0.60 per MH in Dept. A; $0.80 per MH in Dept. B.
124) Use the data for Wall Nuts, Inc. to compute the dollar amount of overhead applied to each
unit of oak paneling, assuming the company uses departmental overhead rates based on machine
hours in Department A and machine hours in Department B.
A) $8.70
B) $1.40
C) $14.40
D) $26.25
E) $41.00
125) Use the above data for Wall Nuts, Inc. to compute the total manufacturing cost per unit of
oak paneling assuming the company uses departmental overhead rates based on machine hours in
Department A and machine hours in Department B.
A) $8.70
B) $18.20
C) $21.95
D) $27.30
E) $36.00
126) Aurora Corporation produces outdoor security lighting products. All products go through
three processes before completion. Use the expected overhead costs and related data shown
below to compute departmental overhead rates based on machine hours in Department A1A;
based on direct labor hours in Department B2B; and machine hours in Department C3C.
Department A1A
Department B2B
Department C3C
Direct labor hours
90,000
DLH
80,000
DLH
72,000
DLH
Machine hours
54,000
MH
32,000
MH
54,000
MH
Manufacturing overhead
costs
$
540,000
$
160,000
$
216,000
A) Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $4 per MH.
B) Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $3 per MH.
C) Dept. A: $10 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.
D) Dept. A: $6 per MH; Dept B: $5 per DLH; Dept C: $4 per MH.
E) Dept. A: $10 per MH; Dept B: $2 per DLH; Dept C: $3 per MH.
127) Consider the following activities that take place in a veterinary clinic.
(a) Cleaning cages.
(b) Heating and air conditioning the clinic.
(c) Sending blood work to a lab.
(d) Dispensing medicine.
Which of the following statements is true?
A) Service entities cannot use ABC for overhead allocation.
B) Cleaning cages is a facility level activity.
C) Dispensing medicine is a facility level activity.
D) Heating and air conditioning the clinic is a facility level activity.
E) Sending blood work to a lab is a facility level activity.
128) Consider the following activities that take place in a medical clinic.
(a) Cleaning exam rooms.
(b) Heating and air conditioning the clinic.
(c) Sending blood work to a lab.
(d) Dispensing medicine.
Which of the following statements is true?
A) Cleaning rooms and heating the clinic are both unit level activities.
B) Sending blood work to the lab is a batch level activity.
C) Sending blood work and dispensing medicine are both batch level activities.
D) Cleaning rooms and dispensing medication are both product or service level activities.
E) Heating the clinic and dispensing medication are both batch level activities.
129) All of the following are examples of facility sustaining costs except:
A) Costs of cleaning the workplace.
B) Costs of custodial work.
C) Costs of personnel support.
D) Costs of sampling product quality.
E) Costs of employee recreational facilities.
130) A company uses activity-based costing to determine the costs of its three products: A, B,
and C. The budgeted cost and activity for each of the company’s three activity cost pools are
shown in the following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
70,000
6,000
9,000
20,000
Activity 2
$
45,000
7,000
15,000
8,000
Activity 3
$
82,000
2,500
1,000
1,625
Which of the following statements is true regarding this company’s activity rates?
A) The activity rate under the activity-based costing system for Activity 2 is $2.00.
B) The activity rate under the activity-based costing system for Activity 2 is $16.00.
C) The activity rate under the activity-based costing system for Activity 2 is $1.50.
D) The activity rate under the activity-based costing system for Activity 2 is $19.50.
E) The activity rate under the activity-based costing system for Activity 2 is $2.81.
131) A company uses activity-based costing to determine the costs of its three products: A, B,
and C. The budgeted cost and activity for each of the company’s three activity cost pools are
shown in the following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
70,000
6,000
9,000
20,000
Activity 2
$
45,000
7,000
15,000
8,000
Activity 3
$
82,000
2,500
1,000
1,625
What are the activity rates for the three activities under activity-based costing?
A) (1) $2.00; (2) $3.00; (3) $3.50.
B) (1) $3.50; (2) $1.50; (3) $32,80.
C) (1) $3.50; (2) $3.00; (3) $16.00.
D) (1) $2.00; (2) $1.50; (3) $16.00.
E) (1) $2.00; (2) $1.50; (3) $32.80.
132) A company uses activity-based costing to determine the costs of its three products: A, B,
and C. The budgeted cost and activity for each of the company’s three activity cost pools are
shown in the following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$
70,000
6,000
9,000
20,000
Activity 2
$
45,000
7,000
15,000
8,000
Activity 3
$
82,000
2,500
1,000
1,625
How much overhead will be assigned to Product B using activity-based costing?
A) $56,500
B) $78,000
C) $62,500
D) $197,000
E) $70,000
133) A company has two products: A and B. It uses activity-based costing and has prepared the
following analysis showing budgeted cost and activity for each of its three activity cost pools:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Activity 1
$
87,000
3,000
2,800
Activity 2
$
62,000
4,500
5,500
Activity 3
$
93,000
2,500
5,250
Annual production and sales level of Product A is 34,300 units, and the annual production and
sales level of Product B is 69,550 units. What is the approximate overhead cost per unit of
Product B under activity-based costing?
A) $3.00
B) $2.00
C) $10.28
D) $15.00
E) $2.33