21
46) Arrojo Corporation manufactures two products: Product X71B and Product C91I. The
company uses a plantwide overhead rate based on direct labor-hours. It is considering
implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to
four cost pools. The following additional information is available for the company as a whole and
for Products X71B and C91I.
Activity Measure
Total Cost
Total Activity
Machine-hours
$
275,000
11,000
MHs
Number of setups
$
210,000
350
setups
Number of products
$
48,000
2
products
Direct labor-hours
$
300,000
10,000
DLHs
Activity Measure
Product X71B
Product C91I
Machine-hours
5,000
6,000
Number of setups
220
130
Number of products
1
1
Direct labor-hours
6,000
4,000
Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to
Product X71B?
A) $416,500
B) $499,800
C) $333,200
D) $372,000
47) Mayeux Corporation uses an activity-based costing system with three activity cost pools. The
company has provided the following data concerning its costs and its activity-based costing
system:
Costs:
Wages and salaries
$
320,000
Depreciation
160,000
Utilities
240,000
Total
$
720,000
Distribution of resource consumption:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
50%
40%
10%
100%
Depreciation
10%
55%
35%
100%
Utilities
15%
50%
35%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Setting Up activity
cost pool?
A) $360,000
B) $336,000
C) $288,000
D) $348,000
Costs:
Wages and salaries (40% × $320,000)
$
128,000
Depreciation (55% × $160,000)
Utilities (50% × $240,000)
120,000
Total
$
336,000
48) Hosley Corporation uses an activity-based costing system with three activity cost pools. The
company has provided the following data concerning its costs:
Costs:
Wages and salaries
$
360,000
Depreciation
100,000
Utilities
120,000
Total
$
580,000
The distribution of resource consumption across the three activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
50%
40%
10%
100%
Depreciation
10%
45%
45%
100%
Utilities
5%
60%
35%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost
pool?
A) $123,000
B) $174,000
C) $58,000
D) $203,000
Wages and salaries (10% × $360,000)
$
Depreciation (45% × $100,000)
Occupancy (35% × $120,000)
Total
$
123,000
49) Gutknecht Corporation uses an activity-based costing system with three activity cost pools.
The company has provided the following data concerning its costs and its activity-based costing
system:
Costs:
Wages and salaries
$
300,000
Depreciation
180,000
Utilities
240,000
Total
$
720,000
Distribution of resource consumption:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
35%
40%
25%
100%
Depreciation
5%
60%
35%
100%
Utilities
10%
60%
30%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Other activity cost
pool?
A) $138,000
B) $210,000
C) $180,000
D) $216,000
Costs:
Wages and salaries (25% × $300,000)
$
Depreciation (35% × $180,000)
Utilities (30% × $240,000)
Total
$
210,000
50) Perl Corporation uses an activity-based costing system with three activity cost pools. The
company has provided the following data concerning its costs:
Costs:
Wages and salaries
$
360,000
Depreciation
200,000
Occupancy
100,000
Total
$
660,000
The distribution of resource consumption across the three activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
15%
60%
25%
100%
Depreciation
20%
35%
45%
100%
Utilities
25%
50%
25%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Order Processing
activity cost pool?
A) $336,000
B) $319,000
C) $330,000
D) $396,000
Wages and salaries (60% × $360,000)
$
216,000
Depreciation (35% × $200,000)
Occupancy (50% × $100,000)
Total
$
336,000
51) Lakatos Corporation uses an activity-based costing system with three activity cost pools. The
company has provided the following data concerning its costs:
Costs:
Wages and salaries
$
420,000
Depreciation
240,000
Occupancy
220,000
Total
$
880,000
The distribution of resource consumption across the three activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
10%
75%
15%
100%
Depreciation
5%
50%
45%
100%
Utilities
30%
35%
35%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Fabricating activity
cost pool?
A) $88,000
B) $132,000
C) $264,000
D) $120,000
Wages and salaries (10% × $420,000)
$
Depreciation (5% × $240,000)
Utilities (30% × $220,000)
Total
$
120,000
52) Eccles Corporation uses an activity-based costing system with three activity cost pools. The
company has provided the following data concerning its costs and its activity-based costing
system:
Costs:
Wages and salaries
$
340,000
Depreciation
180,000
Utilities
200,000
Total
$
720,000
Distribution of resource consumption:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
20%
60%
20%
100%
Depreciation
15%
35%
50%
100%
Utilities
5%
55%
40%
100%
How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity
cost pool?
A) $144,000
B) $96,000
C) $36,000
D) $105,000
Wages and salaries (20% × $340,000)
$
Depreciation (15% × $180,000)
Utilities (5% × $200,000)
Total
$
105,000
53) Bennette Corporation has provided the following data concerning its overhead costs for the
coming year:
Wages and salaries
$
340,000
Depreciation
120,000
Rent
140,000
Total
$
600,000
The company has an activity-based costing system with the following three activity cost pools and
estimated activity for the coming year:
Activity Cost Pool
Total Activity
Assembly
30,000 labor-hours
Order processing
500 orders
Other
Not applicable
The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of
idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
40%
35%
25%
100%
Depreciation
15%
45%
40%
100%
Utilities
35%
30%
35%
100%
The activity rate for the Order Processing activity cost pool is closest to:
A) $430 per order
B) $420 per order
C) $360 per order
D) $440 per order
54) Huelskamp Corporation has provided the following data concerning its overhead costs for the
coming year:
Wages and salaries
$
360,000
Depreciation
120,000
Rent
180,000
Total
$
660,000
The company has an activity-based costing system with the following three activity cost pools and
estimated activity for the coming year:
Activity Cost Pool
Total Activity
Assembly
60,000 labor-hours
Order processing
400 orders
Other
Not applicable
The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of
idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
25%
65%
10%
100%
Depreciation
15%
45%
40%
100%
Utilities
35%
40%
25%
100%
The activity rate for the Assembly activity cost pool is closest to:
A) $2.65 per labor-hour
B) $3.85 per labor-hour
C) $2.85 per labor-hour
D) $2.75 per labor-hour
55) Leaper Corporation uses an activity-based costing system with the following three activity cost
pools:
Activity Cost Pool
Total Activity
Fabrication
40,000 machine-hours
Order processing
200 orders
Other
Not applicable
The Other activity cost pool is used to accumulate costs of idle capacity and
organization-sustaining costs.
The company has provided the following data concerning its costs:
Wages and salaries
$
360,000
Depreciation
140,000
Occupancy
160,000
Total
$
660,000
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
35%
40%
25%
100%
Depreciation
5%
55%
40%
100%
Utilities
30%
45%
25%
100%
The activity rate for the Order Processing activity cost pool is closest to:
A) $1,485 per order
B) $1,540 per order
C) $1,465 per order
D) $1,320 per order
56) Tatman Corporation uses an activity-based costing system with the following three activity
cost pools:
Activity Cost Pool
Total Activity
Fabrication
10,000 machine-hours
Order processing
800 orders
Other
Not applicable
The Other activity cost pool is used to accumulate costs of idle capacity and
organization-sustaining costs.
The company has provided the following data concerning its costs:
Wages and salaries
$
320,000
Depreciation
220,000
Occupancy
120,000
Total
$
660,000
The distribution of resource consumption across activity cost pools is given below:
Activity Cost Pools
Assembly
Setting Up
Other
Total
Wages and salaries
20%
65%
15%
100%
Depreciation
15%
35%
50%
100%
Utilities
5%
70%
25%
100%
The activity rate for the Fabrication activity cost pool is closest to:
A) $3.30 per machine-hour
B) $13.20 per machine-hour
C) $10.30 per machine-hour
D) $8.80 per machine-hour
Wages and salaries (20% × $320,000)
Depreciation (15% × $220,000)
Occupancy (5% × $120,000)
Total
57) Millner Corporation has provided the following data from its activity-based costing
accounting system:
Activity Cost Pool
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:
A) $101 per product design hour
B) $1,372,448 per product design hour
C) $176 per product design hour
D) $57 per product design hour
58) 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:
Total Activity
Activity Cost Pool
Total Cost
Product A
Product B
Total
Activity 1
$
32,600
700
300
1,000
Activity 2
$
17,600
600
200
800
Activity 3
$
52,500
400
100
500
The activity rate under the activity-based costing system for Activity 3 is closest to:
A) $525.00
B) $44.65
C) $105.00
D) $205.00
59) Data concerning three of the activity cost pools of Salcido LLC, a legal firm, have been
provided below:
Activity Cost Pool
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:
A) $95 per meeting hour
B) $61 per meeting hour
C) $163 per meeting hour
D) $1,182,239 per meeting hour
60) Paparo Corporation has provided the following data from its activity-based costing system:
Activity Cost Pool
Total Cost
Total Activity
Assembly
$
846,040
52,000
machine-hours
Processing orders
$
64,056
1,700
orders
Inspection
$
102,408
1,360
inspection hours
Data concerning the company’s product Q79Y appear below:
Annual unit production and sales
450
Annual machine-hours
1,080
Annual number of orders
70
Annual inspection hours
20
Direct materials cost
$
44.00
per unit
Direct labor cost
$
41.03
per unit
According to the activity-based costing system, the average cost of product Q79Y is closest to:
A) $133.29 per unit
B) $85.03 per unit
C) $127.43 per unit
D) $129.94 per unit