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:
3-204
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
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
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?
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:
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:
3-214
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
If the company allocates all of its overhead based on direct labor-hours using its traditional
costing method, the predetermined overhead rate would be closest to:
3-216
120. 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
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 R4 would be closest to:
3-218
121. 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
The unit product cost of Product N4 under the company’s traditional costing method in which all
overhead is allocated on the basis of direct labor-hours is closest to:
3-220
122. 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
The activity rate for the Labor-Related activity cost pool under activity-based costing is closest
to: