3-663
184.
Mellencamp, Inc., manufactures and sells two products: Product A3 and Product Y6. 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 A3
900
8.0
7,200
Product Y6
800
10.0
8,000
Total direct labor-
hours
15,200
The direct labor rate is $24.20 per DLH. The direct materials cost per unit is $146.60 for
Product A3 and $256.20 for Product Y6
.
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Expected Activity
Activity Cost Pools
Activity Measures
Product A3
Product Y6
Total
Labor-related
DLHs
7,200
8,000
15,200
Production orders
orders
400
300
700
General factory
MHs
3,800
3,900
7,700
The unit product cost of Product Y6 under the company’s traditional costing method in
which all overhead is allocated on the basis of direct labor-hours is closest to:
3-664
3-665
185.
Mellencamp, Inc., manufactures and sells two products: Product A3 and Product Y6. 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 A3
900
8.0
7,200
Product Y6
800
10.0
8,000
Total direct labor-
hours
15,200
The direct labor rate is $24.20 per DLH. The direct materials cost per unit is $146.60 for
Product A3 and $256.20 for Product Y6
.
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Expected Activity
Activity Cost Pools
Activity Measures
Product A3
Product Y6
Total
Labor-related
DLHs
7,200
8,000
15,200
Production orders
orders
400
300
700
General factory
MHs
3,800
3,900
7,700
The unit product cost of Product A3 under activity-based costing is closest to:
3-666
3-667
3-668
186.
Mellencamp, Inc., manufactures and sells two products: Product A3 and Product Y6. 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 A3
900
8.0
7,200
Product Y6
800
10.0
8,000
Total direct labor-
hours
15,200
The direct labor rate is $24.20 per DLH. The direct materials cost per unit is $146.60 for
Product A3 and $256.20 for Product Y6
.
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
A3
Product
Y6
Total
Labor-related
DLHs
$670,624
7,200
8,000
15,200
Production orders
orders
41,545
400
300
700
General factory
MHs
281,281
3,800
3,900
7,700
$993,450
The unit product cost of Product Y6 under activity-based costing is closest to:
3-669
3-670
3-671
187.
The controller of Hartis Company estimates the amount of materials handling overhead
cost that should be allocated to the company’s two products using the data that are given
below:
Wall Mirrors
Specialty Windows
Total expected units produced
8,000
7,000
Total expected material moves
300
900
Expected direct labor-hours per unit
5
7
The total materials handling cost for the year is expected to be $38,448.00.
If the materials handling cost is allocated on the basis of direct labor-hours, the total
materials handling cost allocated to the wall mirrors is closest to:
3-672
188.
The controller of Hartis Company estimates the amount of materials handling overhead
cost that should be allocated to the company’s two products using the data that are given
below:
Wall Mirrors
Specialty Windows
Total expected units produced
8,000
7,000
Total expected material moves
300
900
Expected direct labor-hours per unit
5
7
Wall Mirrors
Specialty Windows
Total expected material moves
The total materials handling cost for the year is expected to be $38,448.00.
If the materials handling cost is allocated on the basis of material moves, the total
materials handling cost allocated to the specialty windows is closest to:
3-673
Essay Questions
189.
Malan Corporation has provided the following data from its activity-based costing
accounting system:
Activity Cost Pools
Estimated Overhead Cost
Expected Activity
Designing products
$423,550
2,150
product design hours
Setting up batches
$30,150
670
batch set-ups
Assembling products
$118,920
9,910
assembly hours
Required:
Compute the activity rates for each of the three cost pools. Show your work!
3-675
190.
Data concerning three of Falkenstein Corporation’s activity cost pools appear below:
Activity Cost Pools
Estimated Overhead Cost
Expected Activity
Assembling products
$32,040
2,670
assembly hours
Designing products
$1,400,874
7,221
product design hours
Setting up batches
$25,380
540
batch set-ups
hour
Required:
Compute the activity rates for each of the three cost pools. Show your work!
3-677
3-678
191.
Joanette, Inc., manufactures and sells two products: Product A0 and Product Q0. 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 A0
700
9.0
6,300
Product Q0
900
7.0
6,300
Total direct labor-
hours
12,600
The direct labor rate is $18.90 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product A0
$194.70
Product Q0
$260.90
The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:
Expected Activity
Activity Cost Pools
Activity Measures
Product A0
Product Q0
Total
Labor-related
DLHs
6,300
6,300
12,600
Product testing
Tests
300
200
500
General factory
MHs
4,300
4,100
8,400
3-679
Required:
Determine the unit product cost of each product under the activity-based costing
method.
3-681
3-682
192.
Trezise, Inc., manufactures and sells two products: Product L7 and Product O3. 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 L7
400
6.0
2,400
Product O3
900
4.0
3,600
Total direct labor-
hours
6,000
The direct labor rate is $15.60 per DLH. The direct materials cost per unit is $257.70 for
Product L7 and $288.30 for Product O3.
The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:
Expected Activity
Activity Cost Pools
Activity Measures
Product L7
Product O3
Total
Labor-related
DLHs
2,400
3,600
6,000
Machine setups
Setups
400
300
700
General factory
MHs
3,400
3,100
6,500
Required:
In all computations involving dollars in the following requirements, round off your answer
to the nearest whole cent.
a. Compute the activity rates under the activity-based costing system.
b. Determine how much overhead would be assigned to each product under the activity-
based costing system.