3-483
3-484
112.
Aboud, Inc., manufactures and sells two products: Product Q6 and Product Z7. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product Q6
600
8.0
4,800
Product Z7
100
9.0
900
Total direct labor-
hours
5,700
The direct labor rate is $25.90 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product Q6
$156.50
Product Z7
$142.40
The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product Q6
Product Z7
Total
Labor-related
DLHs
$218,937
4,800
900
5,700
Machine setups
setups
9,408
400
300
700
General factory
MHs
199,969
3,700
4,000
7,700
$428,314
The activity rate for the General Factory activity cost pool under activity-based costing is
3-485
closest to:
3-486
113.
Aboud, Inc., manufactures and sells two products: Product Q6 and Product Z7. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product Q6
600
8.0
4,800
Product Z7
100
9.0
900
Total direct labor-
hours
5,700
The direct labor rate is $25.90 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product Q6
$156.50
Product Z7
$142.40
The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product Q6
Product Z7
Total
Labor-related
DLHs
$218,937
4,800
900
5,700
Machine setups
setups
9,408
400
300
700
General factory
MHs
199,969
3,700
4,000
7,700
$428,314
The total overhead applied to Product Q6 under activity-based costing is closest to:
3-488
3-489
114.
Aboud, Inc., manufactures and sells two products: Product Q6 and Product Z7. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product Q6
600
8.0
4,800
Product Z7
100
9.0
900
Total direct labor-
hours
5,700
The direct labor rate is $25.90 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product Q6
$156.50
Product Z7
$142.40
The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product Q6
Product Z7
Total
Labor-related
DLHs
$218,937
4,800
900
5,700
Machine setups
setups
9,408
400
300
700
General factory
MHs
199,969
3,700
4,000
7,700
$428,314
The total overhead applied to Product Z7 under activity-based costing is closest to:
3-491
3-492
115.
In the past, Hypochondriac Hospital allocated all of its overhead costs to patients based
on nursing time. Hypochondriac has decided to switch to an activity based costing system
using three activity cost pools. Information related to the new system is as follows:
Activity Cost Pools
Activity Measures
Estimated Overhead Cost
Expected Activity
Registration
Number of patients
$75,000
1,000 patients
Patient Care
Nursing time
$900,000
150,000 hours
Billing
Number of bills
$120,000
2,500 bills
Data concerning two patients follows:
Patient
Nursing time
Number of bills
Patient X
100 hours
2
Patient Y
60 hours
3
Under the new activity-based costing system, how much overhead cost would be
assigned to each patient?
Patient X
Patient Y
A)
$696
$504
B)
$723
$483
C)
$730
$438
D)
$771
$579
3-493
3-494
116.
In the past, Hypochondriac Hospital allocated all of its overhead costs to patients based
on nursing time. Hypochondriac has decided to switch to an activity based costing system
using three activity cost pools. Information related to the new system is as follows:
Activity Cost Pools
Activity Measures
Estimated Overhead Cost
Expected Activity
Registration
Number of patients
$75,000
1,000 patients
Patient Care
Nursing time
$900,000
150,000 hours
Billing
Number of bills
$120,000
2,500 bills
Data concerning two patients follows:
Patient
Nursing time
Number of bills
Patient X
100 hours
2
Patient Y
60 hours
3
Registration
Patient Care
Compared to the old system, which of the two patients X and Y will be charged more
overhead cost under the new activity-based costing system?
3-495
3-496
3-497
117.
Sepulvado, Inc., manufactures and sells two products: Product N7 and Product D4. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product N7
900
8.0
7,200
Product D4
400
7.0
2,800
Total direct labor-
hours
10,000
The direct labor rate is $15.50 per DLH. The direct materials cost per unit is $197.00 for
Product N7 and $290.50 for Product D4
.
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product N7
Product D4
Total
Labor-related
DLHs
$184,000
7,200
2,800
10,000
Production orders
orders
60,762
600
700
1,300
General factory
MHs
526,168
4,500
4,400
8,900
$770,930
If the company allocates all of its overhead based on direct labor-hours using its
traditional costing method, the overhead assigned to each unit of Product D4 would be
closest to:
3-498
3-499
118.
Sepulvado, Inc., manufactures and sells two products: Product N7 and Product D4. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product N7
900
8.0
7,200
Product D4
400
7.0
2,800
Total direct labor-
hours
10,000
The direct labor rate is $15.50 per DLH. The direct materials cost per unit is $197.00 for
Product N7 and $290.50 for Product D4
.
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product N7
Product D4
Total
Labor-related
DLHs
$184,000
7,200
2,800
10,000
Production orders
orders
60,762
600
700
1,300
General factory
MHs
526,168
4,500
4,400
8,900
$770,930
The overhead applied to each unit of Product D4 under activity-based costing is closest
to:
3-500
3-501
3-502
119.
Serva, Inc., manufactures and sells two products: Product R4 and Product N4. Data
concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:
Expected
Production
Direct Labor-Hours Per
Unit
Total Direct Labor-
Hours
Product R4
800
6.0
4,800
Product N4
300
3.0
900
Total direct labor-
hours
5,700
The direct labor rate is $24.70 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product R4
$202.10
Product N4
$289.90
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Estimated
Expected Activity
Activity Cost Pools
Activity Measures
Overhead Cost
Product R4
Product N4
Total
Labor-related
DLHs
$86,811
4,800
900
5,700
Machine setups
setups
29,000
400
600
1,000
General factory
MHs
122,520
3,100
2,900
6,000
$238,331