3-323
3-324
39.
Tesh, Inc., manufactures and sells two products: Product P9 and Product I9. 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 P9
200
7.0
1,400
Product I9
400
6.0
2,400
Total direct labor-
hours
3,800
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 P9
Product I9
Total
Labor-related
DLHs
$71,136
1,400
2,400
3,800
Machine setups
setups
42,880
300
200
500
General factory
MHs
406,620
4,200
3,900
8,100
$520,636
The activity rate for the Labor-Related activity cost pool under activity-based costing is
closest to:
3-325
3-326
40.
Data concerning three of the activity cost pools of Salcido LLC, a legal firm, have been
provided below:
Activity Cost Pools
Total Cost
Total Activity
Researching legal issues
$20,480
640
research hours
Meeting with clients
$1,182,239
7,253
meeting hours
Preparing documents
$91,840
5,740
documents
The activity rate for the Meeting With Clients activity cost pool is closest to:
3-327
41.
Gerula, Inc., manufactures and sells two products: Product Z9 and Product Q6. 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 Z9
Product Q6
Total
Labor-related
DLHs
$130,291
3,500
1,400
4,900
Production orders
orders
77,022
400
500
900
General factory
MHs
182,070
3,200
3,100
6,300
$389,383
The activity rate for the General Factory activity cost pool under activity-based costing is
closest to:
3-328
42.
Bewig, Inc., manufactures and sells two products: Product E8 and Product R4. 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
E8
Product
R4
Total
Labor-
related
DLHs
$201,717
4,800
4,500
9,300
Machine
setups
setups
69,020
400
300
700
General
factory
MHs
140,553
3,300
3,000
6,300
$411,290
The activity rate for the Machine Setups activity cost pool is closest to:
3-329
3-330
43.
Scarff, Inc., manufactures and sells two products: Product O6 and Product K2. 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 O6
400
6.0
2,400
Product K2
900
4.0
3,600
Total direct labor-
hours
6,000
The direct labor rate is $23.20 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product O6
$291.10
Product K2
$135.30
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 O6
Product K2
Total
Labor-related
DLHs
$136,380
2,400
3,600
6,000
3-331
Machine setups
setups
53,690
400
600
1,000
General factory
MHs
418,416
3,400
3,500
6,900
$608,486
3-332
44.
Millner Corporation has provided the following data from its activity-based costing
accounting system:
Activity Cost Pools
Total Cost
Total Activity
Designing products
$1,372,448
7,798
product design hours
Setting up batches
$33,300
740
batch set-ups
Assembling products
$126,160
6,640
assembly hours
The activity rate for the Designing Products activity cost pool is closest to:
3-333
45.
Nick Company has two products: A and B. The company uses activity-based costing. The
total cost and activity for each of the company’s three activity cost pools are as follows:
Estimated
Expected Activity
Activity Cost Pools
Overhead Cost
Product A
Product B
Total
Product design
$32,600
700
300
1000
Assembling
$17,600
600
200
800
Supporting customers
$52,500
400
100
500
The activity rate under the activity-based costing system for Supporting customers is
closest to:
3-334
46.
Jeanlouis, Inc., manufactures and sells two products: Product D0 and Product D5. 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 D0
Labor-related
DLHs
$313,743
3,600
Production orders
orders
70,264
300
General factory
MHs
253,555
4,300
$637,562
The total overhead applied to Product D5 under activity-based costing is closest to:
Labor-related
6,900
DLHs
$45.47
per DLH
Production orders
800
orders
$87.83
per order
General factory
8,500
MHs
$29.83
per MH
3-335
Computation of the overhead cost under activity-based costing.
3-336
47.
Wlodarczyk, Inc., manufactures and sells two products: Product J0 and Product Q9. 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 J0
500
5.0
2,500
Product Q9
900
7.0
6,300
Total direct labor-
hours
8,800
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 J0
Product Q9
Total
Labor-related
DLHs
$234,168
2,500
6,300
8,800
Machine setups
setups
13,800
300
200
500
General factory
MHs
112,423
3,100
3,000
6,100
$360,391
The overhead applied to each unit of Product J0 under activity-based costing is closest
to:
3-337
Computation of activity rates:
3-339
48.
Randolph, Inc., manufactures and sells two products: Product T5 and Product Y7. 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 T5
500
9.0
4,500
Product Y7
500
12.0
6,000
Total direct labor-
hours
10,500
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 T5
Product Y7
Total
Labor-related
DLHs
$510,405
4,500
6,000
10,500
Machine setups
setups
37,510
300
200
500
General factory
MHs
273,180
3,100
2,900
6,000
$821,095
The total overhead applied to Product Y7 under activity-based costing is closest to:
3-341
49.
Sill, Inc., manufactures and sells two products: Product V9 and Product B1. 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 V9
300
5.0
1,500
Product B1
800
3.0
2,400
Total direct labor-
hours
3,900
The direct labor rate is $27.40 per DLH. The direct materials cost per unit for each
product is given below:
Direct Materials Cost per Unit
Product V9
$176.90
Product B1
$262.80
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 V9
Product B1
Total
Labor-related
DLHs
$94,848
1,500
2,400
3,900
Machine setups
setups
36,990
300
200
500
General factory
MHs
62,408
3,000
2,800
5,800
$194,246
3-342
The unit product cost of Product V9 under activity-based costing is closest to: