111. Shaver Co. manufactures a variety of electric razors for men and women. The company’s
plant is partially automated. Listed below is cost driver information used in the product-costing
system:
Overhead Cost Pool Budgeted Overhead Cost Budgeted Cost Driver
Level Cost Driver
Machinery depreciation/maintenance $168,640 27,200 Machine
hours
Factory depreciation/utilities/insurance 127,840 27,200 Machine
hours
Product design 554,400 38,500 Hours in design
Material handling 1,078,000 134,750 Pounds of raw materials
In addition, Shaver expects to spend $514,368 for 8,037 direct labor-hours. Two current product
orders had the following requirements:
Men’s Razors Women’s Razors
Units produced and sold 20,000 26,000
Direct labor hours 30 40
Pounds of raw materials 860 750
Hours in design 20 23
Machine hours 65 50
Using ABC, how much product-level overhead is assigned to the current order for Men’s Razors?
112. Shaver Co. manufactures a variety of electric razors for men and women. The company’s
plant is partially automated. Listed below is cost driver information used in the product-costing
system:
Overhead Cost Pool Budgeted Overhead Cost Budgeted Cost Driver
Level Cost Driver
Machinery depreciation/maintenance $168,640 27,200 Machine
hours
Factory depreciation/utilities/insurance 127,840 27,200 Machine
hours
Product design 554,400 38,500 Hours in design
Material handling 1,078,000 134,750 Pounds of raw materials
In addition, Shaver expects to spend $514,368 for 8,037 direct labor-hours. Two current product
orders had the following requirements:
Men’s Razors Women’s Razors
Units produced and sold 20,000 26,000
Direct labor hours 30 40
Pounds of raw materials 860 750
Hours in design 20 23
Machine hours 65 50
Using ABC, how much product-level overhead is assigned to the current order for Women’s
Razors?
113. Shaver Co. manufactures a variety of electric razors for men and women. The company’s
plant is partially automated. Listed below is cost driver information used in the product-costing
system:
Overhead Cost Pool Budgeted Overhead Cost Budgeted Cost Driver
Level Cost Driver
Machinery depreciation/maintenance $168,640 27,200 Machine
hours
Factory depreciation/utilities/insurance 127,840 27,200 Machine
hours
Product design 554,400 38,500 Hours in design
Material handling 1,078,000 134,750 Pounds of raw materials
In addition, Shaver expects to spend $514,368 for 8,037 direct labor-hours. Two current product
orders had the following requirements:
Men’s Razors Women’s Razors
Units produced and sold 20,000 26,000
Direct labor hours 30 40
Pounds of raw materials 860 750
Hours in design 20 23
Machine hours 65 50
Using ABC, how much batch-level overhead is assigned to the current order for Women’s Razors
based on pounds of raw materials?
114. Wang Company has established the following overhead cost pools and cost drivers for
the month of May:
Cost Pool Overhead Costs Cost Driver Levels
Purchase orders $30,000 50 orders
Machine setups 50,000 100 setups
Electricity 10,000 10,000 kilowatt hours
The following information pertains to the actual consumption of activity resources for two
sample jobs completed during May.
Job M1 Job M2
Number of units produced 500 1,000
Number of purchase orders 15 10
Number of setups 20 10
Number of kilowatt hours 500 1,000
What is the activity-based overhead rate per purchase order?
115. Wang Company has established the following overhead cost pools and cost drivers for
the month of May:
Cost Pool Overhead Costs Cost Driver Levels
Purchase orders $30,000 50 orders
Machine setups 50,000 100 setups
Electricity 10,000 10,000 kilowatt hours
The following information pertains to the actual consumption of activity resources for two
sample jobs completed during May.
Job M1 Job M2
Number of units produced 500 1,000
Number of purchase orders 15 10
Number of setups 20 10
Number of kilowatt hours 500 1,000
Using ABC, what is the overhead cost per unit produced for Job M2?
116. Orange, Inc. has identified the following cost drivers for its expected overhead costs for
the year:
Cost Pools Budgeted Cost Cost Driver Cost Driver Level
Setup $40,000 Number of setups 200
Ordering 20,000 Number of orders 1,000
Maintenance 50,000 Machine hours 5,000
Power 10,000 Kilowatt hours 10,000
Total direct labor hours budgeted = 2,000 hours.
The following data applies to Product X, one of the products completed during the year.
Direct materials $1,000
Direct labor $1,200
Units completed 100
Direct labor hours 40
Number of setups 4
Number of orders 8
Machine hours 50
Kilowatt hours 100
If a volume-based costing system based on direct labor hours to assign overhead is used, the
total overhead cost for Product X will be:
117. Orange, Inc. has identified the following cost drivers for its expected overhead costs for
the year:
Cost Pools Budgeted Cost Cost Driver Cost Driver Level
Setup $40,000 Number of setups 200
Ordering 20,000 Number of orders 1,000
Maintenance 50,000 Machine hours 5,000
Power 10,000 Kilowatt hours 10,000
Total direct labor hours budgeted = 2,000 hours.
The following data applies to Product X, one of the products completed during the year.
Direct materials $1,000
Direct labor $1,200
Units completed 100
Direct labor hours 40
Number of setups 4
Number of orders 8
Machine hours 50
Kilowatt hours 100
If the activity-based cost drivers are used to allocate overhead cost, the total overhead cost of
Product X will be:
118. Zeta Company is preparing its annual profit plan. As part of its analysis of the profitability
of individual products, the controller estimates the amount of manufacturing overhead that
should be assigned to each of the two product lines from the information given below.
Wall Mirrors Specialty Windows
Total units produced 25 25
Total number of material moves 5 15
Direct labor hours per unit 200 200
Budgeted material-handling costs are $50,000.
Under a costing system that allocates manufacturing overhead on the basis of direct labor hours,
the material-handling cost per wall mirror is:
119. Zeta Company is preparing its annual profit plan. As part of its analysis of the profitability
of individual products, the controller estimates the amount of manufacturing overhead that
should be assigned to each of the two product lines from the information given below.
Wall Mirrors Specialty Windows
Total units produced 25 25
Total number of material moves 5 15
Direct labor hours per unit 200 200
Budgeted material-handling costs are $50,000.
The material-handling cost per wall mirror under ABC is:
120. Pasternik Company produces and sells two products, Alpha and Zeta. The following
information is available relating to its setup activities:
Alpha Zeta
Units produced 250 20,000
Batch size (units) 10 500
Total direct labor hours 1,000 39,000
Cost per setup $2,000 $2,000
With a volume-based costing system that applies overhead based on direct labor hours, the
setup cost portion of overhead for each unit is (rounded to the nearest cent):
Alpha Zeta
A) $3.25 $3.25
B) $13.00 $6.34
C) $8.00 $0.10
D) $25.50 $25.50
E) $102.00 $49.73
121. Pasternik Company produces and sells two products, Alpha and Zeta. The following
information is available relating to its setup activities:
Alpha Zeta
Units produced 250 20,000
Batch size (units) 10 500
Total direct labor hours 1,000 39,000
Cost per setup $2,000 $2,000
Use of activity-based costing would allocate the following amounts of setup cost to each unit
(rounded to the nearest cent):
Alpha Zeta
A) $200.00 $4.00
B) $500.00 $1,025.64
C) $6.42 $6.50
D) $80.00 $50.00
E) $8.00 $0.10
122. Pasternik Company produces and sells two products, Alpha and Zeta. The following
information is available relating to its setup activities:
Alpha Zeta
Units produced 250 20,000
Batch size (units) 10 500
Total direct labor hours 1,000 39,000
Cost per setup $2,000 $2,000
Assume the cost per setup remains at $2,000 but that the batch size for product Alpha is
changed from 10 to 25 units per batch. Using activity-based and a volume-based overhead
costing that uses direct labor-hours to assign overhead, the amount of setup cost applied to each
unit of product Alpha would be (rounded to the nearest cent):
Activity Based Costing Volume Based Costing
A) $400.00 $9.00
B) $500.00 $8.00
C) $80.00 $10.00
D) $2.25 $4.50
E) None of these answer choices is correct.