Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
181
184) Aresco Corporation manufactures two products: Product G51B and Product E48X. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates all of its manufacturing
overhead to four cost pools. The following additional information is available for the company as
a whole and for Products G51B and E48X.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$100,000
5,000
MHs
Machine setups
Number of setups
$300,000
500
setups
Product design
Number of products
$80,000
2
products
General factory
Direct labor-hours
$350,000
10,000
DLHs
Activity Measure
Product G51B
Product E48X
Machine-hours
2,000
3,000
Number of setups
270
230
Number of products
1
1
Direct labor-hours
3,000
7,000
Required:
a. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product G51B?
b. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product E48X?
c. Using the ABC system, what percentage of the total overhead cost is assigned to Product
G51B?
d. Using the ABC system, what percentage of the total overhead cost is assigned to Product
E48X?
185
185) Losser Corporation manufactures two products: Product L73Z and Product A79B. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates all of its manufacturing
overhead to four cost pools. The following additional information is available for the company as
a whole and for Products L73Z and A79B.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$144,000
9,000
MHs
Machine setups
Number of setups
$100,000
250
setups
Product design
Number of products
$52,000
2
products
General factory
Direct labor-hours
$280,000
10,000
DLHs
Activity Measure
Product L73Z
Product A79B
Machine-hours
5,000
4,000
Number of setups
100
150
Number of products
1
1
Direct labor-hours
3,000
7,000
Required:
a. Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product L73Z?
b. Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product A79B?
c. Using the ABC system, how much total manufacturing overhead cost would be assigned to
Product A79B?
d. Using the plantwide overhead rate, what percentage of the total overhead cost is allocated to
Product L73Z?
186) Moorman Corporation has an activity-based costing system with three activity cost pools—
Processing, Setting Up, and Other. The company's overhead costs consist of equipment
depreciation and indirect labor and are allocated to the cost pools in proportion to the activity
cost pools' consumption of resources. Equipment depreciation totals $53,000 and indirect labor
totals $3,000. Data concerning the distribution of resource consumption across activity cost pools
appear below:
Processing
Setting Up
Other
Equipment depreciation
0.60
0.10
0.30
Indirect labor
0.20
0.10
0.70
Required:
Assign overhead costs to activity cost pools using activity-based costing.
187) Figge and Mathews PLC, a consulting firm, uses an activity-based costing in which there
are three activity cost pools. The company has provided the following data concerning its costs
and its activity-based costing system:
Costs:
Wages and salaries
$
420,000
Travel expenses
120,000
Other expenses
180,000
Total
$
720,000
Distribution of resource consumption:
Activity Cost Pools
Working On
Engagements
Business
Development
Other
Total
Wages and salaries
50%
20%
30%
100%
Travel expenses
45%
45%
10%
100%
Other expenses
15%
45%
40%
100%
Required:
a. How much cost, in total, would be allocated to the Working On Engagements activity cost
pool?
b. How much cost, in total, would be allocated to the Business Development activity cost pool?
c. How much cost, in total, would be allocated to the Other activity cost pool?
188) Hagy Corporation has an activity-based costing system with three activity cost pools--
Processing, Setting Up, and Other. The company's overhead costs, which consist of factory
utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools'
consumption of resources. Data concerning the company's costs and activity-based costing
system appear below:
Factory utilities (total)
$
97,000
Indirect labor (total)
$
8,000
Distribution of Resource Consumption Across Activity Cost Pools
Processing
Setting Up
Other
Factory utilities
0.20
0.50
0.30
Indirect labor
0.10
0.30
0.60
Required:
Assign overhead costs to activity cost pools using activity-based costing.
191
189) Groleau Corporation has an activity-based costing system with three activity cost pools--
Processing, Setting Up, and Other. The company's overhead costs, which consist of factory
utilities and indirect labor, are allocated to the cost pools in proportion to the activity cost pools'
consumption of resources. Costs in the Processing cost pool are assigned to products based on
machine-hours (MHs) and costs in the Setting Up cost pool are assigned to products based on the
number of batches. Costs in the Other cost pool are not assigned to products. Data concerning the
two products and the company's costs and activity-based costing system appear below:
Factory utilities (total)
$
24,000
Indirect labor (total)
$
3,000
Distribution of Resource Consumption Across Activity Cost Pools
Processing
Setting Up
Other
Factory utilities
0.30
0.40
0.30
Indirect labor
0.10
0.40
0.50
MHs
Batches
Product S8
2,200
700
Product F1
7,800
300
Total
10,000
1,000
Product S8
Product F1
Sales (total)
$
64,000
$
68,700
Direct materials (total)
$
28,000
$
19,800
Direct labor (total)
$
25,300
$
36,700
Required:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-
based costing.
d. Determine the product margins for each product using activity-based costing.
194
190) Howell Corporation's activity-based costing system has three activity cost pools--
Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment
depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost
pools' consumption of resources.
Equipment depreciation (total)
$
86,000
Indirect labor (total)
$
5,000
Distribution of Resource Consumption Across Activity Cost Pools
Machining
Setting Up
Other
Equipment depreciation
0.20
0.50
0.30
Indirect labor
0.20
0.40
0.40
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products.
MHs
Batches
Product S4
3,700
600
Product C0
6,300
400
Total
10,000
1,000
Additional data concerning the company's products appears below:
a. Assign overhead costs to activity cost pools using activity-based costing.
b. Calculate activity rates for each activity cost pool using activity-based costing.
c. Determine the amount of overhead cost that would be assigned to each product using activity-
based costing.
d. Determine the product margins for each product using activity-based costing.
191) Kretlow Corporation has provided the following data from its activity-based costing
accounting system:
Activity Cost Pool
Total Cost
Total Activity
Designing products
$
700,502
3,746
product design hours
Setting up batches
$
12,400
620
batch set-ups
Assembling product
$
125,440
8,960
assembly hours
Required:
Compute the activity rates for each of the three cost pools.
192) Data concerning three of Kilmon Corporation's activity cost pools appear below:
Activity Cost Pool
Total Cost
Total Activity
Assembling products
$
150,300
8,350
assembly hours
Designing products
$
1,177,535
7,597
product design hours
Setting up batches
$
14,400
600
batch set-up
Required:
Compute the activity rates for each of the three cost pools.
193) Sukhu Corporation's activity-based costing system has three activity cost pools—
Fabricating, Setting Up, and Other. The company's overhead costs have already been allocated to
these cost pools as follows:
Fabricating
$
3,800
Setting Up
$
19,900
Other
$
10,300
Costs in the Fabricating cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs
in the Other cost pool are not assigned to products. The following table shows the machine-hours
and number of batches associated with each of the company's two products:
MHs
Batches
Product M0
7,500
300
Product P9
2,500
700
Total
10,000
1,000
Required:
Calculate activity rates for each activity cost pool using activity-based costing
194) Clenney Corporation uses a plantwide overhead rate based on direct labor-hours. It is
considering implementing an activity-based costing (ABC) system that allocates all of its
manufacturing overhead to the four activity cost pools shown below.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$114,000
6,000
MHs
Machine setups
Number of setups
$100,000
200
setups
Product design
Number of products
$96,000
2
products
General factory
Direct labor-hours
$330,000
10,000
DLHs
Required:
a. Under the proposed ABC system, what is the activity rate for the Machining activity cost
pool?
b. Under the proposed ABC system, what is the activity rate for the Machine Setups activity cost
pool?
c. Under the proposed ABC system, what is the activity rate for the Product Design activity cost
pool?
d. Under the proposed ABC system, what is the activity rate for the General Factory activity cost
pool?
