73) Leber Enterprises makes a variety of products that it sells to other businesses. The company’s
activity-based costing system has four activity cost pools for assigning costs to products and
customers. Details concerning that ABC system are listed below:
Activity Cost Pool
Activity Measure
Activity Rate
Supporting assembly
Direct labor-hours (DLHs)
$
5.65
per DLH
Processing batches
Number of batches
$
180.00
per batch
Processing orders
Number of orders
$
68.55
per order
Serving customers
Number of customers
$
2,423.00
per customer
The cost of serving customers, $2,423.00 per customer, is the cost of serving a customer for one
year. Solecki Corporation buys only one of the company’s products. The details of last year’s
purchases of this product are listed below:
Number of units purchased
units
Number of batches
batches
Number of orders
order
Direct labor-hour requirement
DLHs per unit
Selling price
$
per unit
Direct materials cost
$
per unit
Direct labor cost
$
per unit
According to the ABC system, the total overhead cost for this customer this past year was closest
to:
A) $1,805.55
B) $4,228.55
C) $13,678.55
D) $9,450.00
Overhead Costs:
unit×900 units)
$
Processing batches ($180.00 per batch×4 batches)
Processing orders ($68.55 per order×1order)
Servicing customers ($2,423.00 per customer× 1 customer)
Total overhead cost
$
74) Hane Corporation uses the following activity rates from its activity-based costing to assign
overhead costs to products:
Activity Cost Pool
Activity Rate
Assembling products
$
8.90
per assembly hour
Processing customer orders
$
31.23
per customer order
Setting up batches
$
43.72
per batch
Data for one of the company’s products follow:
Product U94W
Number of assembly hours
389
Number of customer orders
53
Number of batches
61
How much overhead cost would be assigned to Product U94W using the activity-based costing
system?
A) $42,176.55
B) $83.85
C) $7,784.21
D) $2,666.92
Assembling products
$
8.90
per assembly hour
389
hours
Processing customer orders
$
31.23
per customer order
orders
Setting up batches
$
43.72
per batch
batches
Total overhead cost
75) Larry Enterprises makes a variety of products that it sells to other businesses. The company’s
activity-based costing system has four activity cost pools for assigning costs to products and
customers. Details concerning that ABC system are listed below:
Activity Cost Pool
Activity Measure
Activity Rate
Supporting assembly
Direct labor-hours (DLHs)
$
2.55
per DLH
Processing batches
Number of batches
$
138.35
per batch
Processing orders
Number of orders
$
77.00
per order
Serving customers
Number of customers
$
1,913.00
per customer
The cost of serving customers, $1,913.00 per customer, is the cost of serving a customer for one
year. Prosonic Corporation buys only one of the company’s products. The details of last year’s
purchases of this product are listed below:
Number of units purchased
900
units
Number of batches
4
batches
Number of orders
1
order
Direct labor-hour requirement
0.10
DLHs per unit
Selling price
$
29.95
per unit
Direct materials cost
$
6.40
per unit
Direct labor cost
$
1.85
per unit
According to the ABC system, the total cost of the activity “Processing batches” for this customer
this past year was closest to:
A) $138.35
B) $553.40
C) $77.00
D) $630.40
76) Mustafa Enterprises makes a variety of products that it sells to other businesses. The
company’s activity-based costing system has four activity cost pools for assigning costs to
products and customers. Details concerning that ABC system are listed below:
Activity Cost Pool
Activity Measure
Activity Rate
Supporting assembly
Direct labor-hours (DLHs)
$
7.50
per DLH
Processing batches
Number of batches
$
111.65
per batch
Processing orders
Number of orders
$
86.00
per order
Serving customers
Number of customers
$
2,737.00
per customer
The cost of serving customers, $2,737.00 per customer, is the cost of serving a customer for one
year. Dahle Corporation buys only one of the company’s products. The details of last year’s
purchases of this product are listed below:
Number of units purchased
800
units
Number of batches
16
batches
Number of orders
4
order
Direct labor-hour requirement
0.40
DLHs per unit
Selling price
$
24.25
per unit
Direct materials cost
$
7.45
per unit
Direct labor cost
$
7.85
per unit
According to the ABC system, the total cost of the activity “Supporting assembly” for this
customer this past year was closest to:
A) $6,000.00
B) $3.00
C) $320.00
D) $2,400.00
77) Activity rates from Lippard Corporation’s activity-based costing system are listed below. The
company uses the activity rates to assign overhead costs to products:
Activity Cost Pool
Activity Rate
Processing customer orders
$
31.62
per customer order
Assembling products
$
2.86
per assembly hour
Setting up batches_$_46.61
per
bat
ch
Last year, Product H50E involved 9 customer orders, 666 assembly hours, and 77 batches. How
much overhead cost would be assigned to Product H50E using the activity-based costing system?
A) $60,979.68
B) $3,588.97
C) $5,778.31
D) $81.09
Activity Rate
orders
hours
Setting up batches
Total overhead cost
78) Cumberland Enterprises makes a variety of products that it sells to other businesses. The
company’s activity-based costing system has four activity cost pools for assigning costs to
products and customers. Details concerning that ABC system are listed below:
Activity Cost Pool
Activity Measure
Activity Rate
Supporting assembly
Direct labor-hours (DLHs)
$
5.65
per DLH
Processing batches
Number of batches
$
146.65
per batch
Processing orders
Number of orders
$
80.05
per order
Serving customers
Number of customers
$
2,663.00
per customer
The cost of serving customers, $2,663.00 per customer, is the cost of serving a customer for one
year.
Steckman Corporation buys only one of the company’s products which Cumberland Enterprises
sells for $22.05 per unit. Last year Steckman Corporation ordered a total of 1,200 units of this
product in 4 orders. To fill the orders, 8batches were required. The direct materials cost is $7.65
per unit and the direct labor cost is $5.20 per unit. Each unit requires 0.30 DLHs.
According to the ABC system, the customer margin for this customer this past year was closest to:
A) $20,269.60
B) $4,849.60
C) $17,280.00
D) $11,040.00
67
79) Nourse Enterprises makes a variety of products that it sells to other businesses. The company’s
activity-based costing system has four activity cost pools for assigning costs to products and
customers. Details concerning that ABC system are listed below:
Activity Cost Pool
Activity Measure
Activity Rate
Supporting assembly
Direct labor-hours (DLHs)
$
3.50
per DLH
Processing batches
Number of batches
$
114.05
per batch
Processing orders
Number of orders
$
66.95
per order
Serving customers
Number of customers
$
2,026.00
per customer
The cost of serving customers, $2,026.00 per customer, is the cost of serving a customer for one
year. Koerner Corporation buys only one of the company’s products. The details of last year’s
purchases of this product are listed below:
Number of units purchased
900
units
Number of batches
13
batches
Number of orders
4
order
Direct labor-hour requirement
0.10
DLHs per unit
Selling price
$
25.75
per unit
Direct materials cost
$
7.95
per unit
Direct labor cost
$
1.50
per unit
According to the ABC system, the customer margin for this customer this past year was closest to:
A) $14,670.00
B) $10,578.55
C) $16,020.00
D) $19,083.55
80) Meli Corporation manufactures two products: Product L61P and Product B60E. 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
L61P and B60E.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$
280,000
14,000
MHs
Machine setups
Number of setups
$
225,000
450
setups
Product design
Number of products
$
84,000
2
products
Order size
Direct labor-hours
$
310,000
10,000
DLHs
Activity Measure
Product L61P
Product
B60E
Machine-hours
6,000
8,000
Number of setups
290
160
Number of products
1
1
Direct labor-hours
7,000
3,000
Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to
Product L61P is closest to:
A) 50.00%
B) 31.37%
C) 10.34%
D) 70.00%
81) Meli Corporation manufactures two products: Product L61P and Product B60E. 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
L61P and B60E.
Activity Cost Pool
Activity Measure
Total Cost
Total Activity
Machining
Machine-hours
$
280,000
14,000
MHs
Machine setups
Number of setups
$
225,000
450
setups
Product design
Number of products
$
84,000
2
products
Order size
Direct labor-hours
$
310,000
10,000
DLHs
Activity Measure
Product L61P
Product
B60E
Machine-hours
6,000
8,000
Number of setups
290
160
Number of products
1
1
Direct labor-hours
7,000
3,000
Using the plantwide overhead rate, the percentage of the total overhead cost that is allocated to
Product B60E is closest to:
A) 31.37%
B) 30.00%
C) 10.34%
D) 50.00%
82) What is the company’s plantwide overhead rate?
A) $180.50 per DLH
B) $27.00 per DLH
C) $72.20 per DLH
D) $120.33 per DLH
83) Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product H95V?
A) $361,000
B) $433,200
C) $288,800
D) $293,000
84) Using the plantwide overhead rate, how much manufacturing overhead cost would be
allocated to Product V93N?
A) $429,000
B) $433,200
C) $288,800
D) $361,000
85) Tomasini Corporation has provided the following data from its activity-based costing
accounting system:
Supervisory wages
$
660,000
Factory supplies
$
280,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
Batch Processing
Unit Processing
Other
Total
Supervisory wages
20%
70%
10%
100%
Factory supplies
45%
35%
20%
100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
How much supervisory wages and factory supplies cost would be assigned to the Batch Processing
activity cost pool?
A) $940,000
B) $470,000
C) $305,500
D) $258,000
Supervisory wages (20% × $660,000)
$
132,000
Factory supplies (45% × $280,000)
126,000
Total
$
258,000
86) Tomasini Corporation has provided the following data from its activity-based costing
accounting system:
Supervisory wages
$
660,000
Factory supplies
$
280,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
Batch Processing
Unit Processing
Other
Total
Supervisory wages
20%
70%
10%
100%
Factory supplies
45%
35%
20%
100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
How much supervisory wages and factory supplies cost would NOT be assigned to products using
the activity-based costing system?
A) $122,000
B) $660,000
C) $280,000
D) $0
Supervisory wages (10% × $660,000)
$
Factory supplies (20% × $280,000)
Total
$
122,000
87) The following data have been provided by Letze Corporation from its activity-based costing
accounting system:
Factory supervision
$
460,000
Indirect factory labor
$
220,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
Batch Set-Up
Expediting
Other
Total
Factory supervision
55%
35%
10%
100%
Indirect factory labor
60%
20%
20%
100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
How much factory supervision and indirect factory labor cost would be assigned to the Batch
Set-Up activity cost pool?
A) $680,000
B) $385,000
C) $391,000
D) $340,000
Factory supervision (55% × $460,000)
253,000
Indirect factory labor (60% × $220,000)
132,000
Total
385,000
88) The following data have been provided by Letze Corporation from its activity-based costing
accounting system:
Factory supervision
$
460,000
Indirect factory labor
$
220,000
Distribution of Resource Consumption across Activity Cost Pools:
Activity Cost Pools
Batch Set-Up
Expediting
Other
Total
Factory supervision
55%
35%
10%
100%
Indirect factory labor
60%
20%
20%
100%
The “Other” activity cost pool consists of the costs of idle capacity and organization-sustaining
costs that are not assigned to products.
How much factory supervision and indirect factory labor cost would NOT be assigned to products
using the activity-based costing system?
A) $220,000
B) $90,000
C) $0
D) $460,000
Factory supervision (10% × $460,000)
46,000
Indirect factory labor (20% × $220,000)
44,000
Total
90,000