9-82
94. Scholes Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, L45Y and F91I, about which it has provided
the following data:
The company’s estimated total manufacturing overhead for the year is $3,170,400 and the
company’s estimated total direct labor-hours for the year is 60,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
The unit product cost of product F91I under the activity-based costing system is closest to:
9-83
9-84
95. Solum Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, V47Q and K41P, about which it has provided
the following data:
The company’s estimated total manufacturing overhead for the year is $2,449,440 and the
company’s estimated total direct labor-hours for the year is 54,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
The unit product cost of product V47Q under the company’s traditional costing system is closest
to:
9-86
96. Solum Manufacturing Corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on direct
labor-hours (DLHs). The company has two products, V47Q and K41P, about which it has provided
the following data:
The company’s estimated total manufacturing overhead for the year is $2,449,440 and the
company’s estimated total direct labor-hours for the year is 54,000.
The company is considering using a variation of activity-based costing to determine its unit
product costs for external reports. Data for this proposed activity-based costing system appear
below:
The unit product cost of product K41P under the activity-based costing system is closest to:
97. Personnel administration is an example of a:
98. Which of the following activities would be classified as a batch-level activity?
99. Would the following activities at a manufacturer of canned soup be best classified as unit–
level, batch-level, product-level, or organization-sustaining activities?
100. Property taxes are an example of a cost that would be considered to be:
9-91
101. Spendlove Corporation has provided the following data from its activity-based costing
system:
The company makes 430 units of product S78N a year, requiring a total of 1,120 machine-hours,
40 orders, and 30 inspection-hours per year. The product’s direct materials cost is $49.81 per unit
and its direct labor cost is $12.34 per unit. The product sells for $129.90 per unit.
According to the activity-based costing system, the product margin for product S78N is:
102. Maccarone Corporation has provided the following data from its activity-based costing
system:
Data concerning one of the company’s products, Product A43V, appear below:
According to the activity-based costing system, the product margin for product A43V is:
103. Reach Consulting Corporation has its headquarters in Chicago and operates from three
branch offices in Portland, Dallas, and Miami. Two of the company’s activity cost pools are
General Service and Research Service. These costs are allocated to the three branch offices using
an activity-based costing system. Information for next year follows:
Estimated branch data for next year is as follows:
How much of the headquarters cost allocation should Dallas expect to receive next year?
9-95
104. Drewniak Corporation has provided the following data from its activity-based costing
system:
The company makes 430 units of product O37W a year, requiring a total of 690 machine-hours, 40
orders, and 10 inspection-hours per year. The product’s direct materials cost is $35.72 per unit
and its direct labor cost is $29.46 per unit.
According to the activity-based costing system, the average cost of product O37W is closest to:
105. XYZ Company manufactures and distributes several different products. The company
currently uses a plantwide allocation method for allocating overhead at a rate of $10 per direct
labor hour. Department 1 produces Products X and Y. Department 1 has $262,000 in traceable
overhead. Department 2 manufactures Product Z. Department 2 has $128,000 in traceable
overhead. The product costs (per unit) and other information are as follows:
Required:
a. If XYZ changes its allocation basis to machine hours, what is the total product cost per unit for
Product X, Y, and Z?
b. If XYZ changes its overhead allocation to departmental rates, what are the product costs per
unit for Product X, Y, and Z, assuming Departments 1 and 2 use direct labor hours and machine
hours as their respective allocation bases?
9-97
106. XYZ Company manufactures and distributes several different products. The company
currently uses a plantwide allocation method for allocating overhead at a rate of $10 per direct
labor hour. Department 1 produces Products X and Y. Department 1 has $262,000 in traceable
overhead. Department 2 manufactures Product Z. Department 2 has $128,000 in traceable
overhead. The product costs (per unit) and other information are as follows:
Department 2 has recently purchased and installed new computerized equipment for Product Z.
This equipment will increase the overhead costs by $27,000 and decrease labor costs (due to time
savings) in Department 2 by $3.00 per case. Machine hours will not change.
Required:
a. If XYZ uses a plantwide rate based on direct labor hours, what are the revised overhead costs
per unit for Product X, Y, and Z?
b. If XYZ uses a plantwide rate based on machine hours, what are the revised overhead costs per
unit for Product X, Y, and Z?
c. XYZ uses departmental rates, allocating Departments 1 on direct labor hours and 2 on machine
hours. What are the overhead costs per unit for Product X, Y, and Z?
9-99
107. Acme Enterprises has identified the following overhead costs and cost drivers for the
coming year:
Budgeted direct labor cost was $200,000 and budgeted direct material cost was $300,000. The
following information was collected on three jobs that were completed during the month:
Required:
a. If the company uses traditional costing and allocates overhead using direct labor cost, how
much overhead cost should be assigned to Job A, B, and C?
b. If the company uses activity-based costing (ABC), how much overhead cost should be assigned
to Job A, B, and C?
