Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
9-176
149.
Merkel Industries 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, Large and Small, about which it has provided the
following data:
Large
Small
Direct materials
per unit
$17.80
$55.40
Direct labor per
unit
$16.10
$55.20
Direct labor-
hours per unit
0.70
2.40
Annual
production
30,000
15,000
The company's estimated total manufacturing overhead for the year is $1,793,790 and the
company's estimated total direct labor-hours for the year is 57,000.
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:
Activities and Activity
Measures
Estimated
Overhead Cost
Supporting direct labor
(DLHs)
$285,000
Setting up machines
(setups)
437,190
Parts administration (part
types)
1,071,600
Total
$1,793,790
Activities
Large
Small
Total
Supporting direct labor
21,000
36,000
57,000
9-177
Setting up machines
798
2,565
3,363
Parts administration
1,539
1,140
2,679
9-180
150.
JamMaster Audio 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, Boom and Wow, about which it
has provided the following data:
Boom
Wow
Direct materials per unit
$14.90
$44.30
Direct labor per unit
$4.20
$25.20
Direct labor-hours per unit
0.20
1.20
Annual production
40,000
15,000
The company's estimated total manufacturing overhead for the year is $1,809,600 and the
company's estimated total direct labor-hours for the year is 26,000.
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:
Activities and Activity
Measures
Estimated Overhead
Cost
Assembling products
(DLHs)
$702,000
Preparing batches
(batches)
132,600
Engrave (MHs)
975,000
Total
$1,809,600
Activities
Boom
Wow
Total
Assembling
products
8,000
18,000
26,000
Preparing
batches
884
442
1,326
Engrave
702
1,248
1,950
9-181
151.
Smithville Industries 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, Manual and Power, about which it has provided
the following data:
Manual
Power
Direct materials per unit
$27.50
$64.90
Direct labor per unit
$7.80
$23.40
Direct labor-hours per unit
0.60
1.80
Annual production
40,000
15,000
The company's estimated total manufacturing overhead for the year is $2,675,460 and the
company's estimated total direct labor-hours for the year is 51,000.
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:
Activities and Activity
Measures
Estimated
Overhead Cost
Supporting direct labor
(DLHs)
$1,326,000
Setting up machines
(setups)
456,960
Parts administration (part
types)
892,500
Total
$2,675,460
Manual
Power
Total
Supporting
direct labor
24,000
27,000
51,000
Setting up
machines
2,346
510
2,856
Parts
administration
1,122
663
1,785
Required:
9-185
152.
Matchbox Manufacturing has a traditional costing system in which it applies
9-186
manufacturing overhead to its products using a predetermined overhead rate based on
direct labor-hours (DLHs). The company has two products, Utility and Super, about which
it has provided the following data:
Utility
Super
Direct materials per unit
$34.10
$52.70
Direct labor per unit
$16.10
$39.10
Direct labor-hours per unit
0.70
1.70
Annual production
30,000
10,000
The company's estimated total manufacturing overhead for the year is $1,527,600 and the
company's estimated total direct labor-hours for the year is 38,000.
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:
Activities and Activity
Measures
Estimated Overhead
Cost
Assembling products
(DLHs)
$608,000
Preparing batches
(batches)
197,600
Axial milling (MHs)
722,000
Total
$1,527,600
Utility
Super
Total
Assembling products
21,000
17,000
38,000
Preparing batches
456
1,520
1,976
Axial milling
570
874
1,444
Required:
a. Determine the manufacturing overhead cost per unit of each of the company's two
9-187
9-189
153.
The manager of the Personnel Department at King Enterprises has been reading about
time-driven ABC and wants to apply it to her department. She has identified four basic
activities where her employees spend the most time: Interviewing; Hiring, Assessment,
and Separation Processing. The Department employs five staff who perform these
activities. The manager provides the following estimates for the amount of time it takes to
complete each of these activities:
• Interviewing: 40 minutes;
• Hiring: 60 minutes;
• Assessment: 85 minutes;
• Separation processing: 95 minutes.
Employees in Personnel work 35 hour weeks with four weeks for vacation. Of the 35 hours,
five are reserved for administrative tasks, training, and so on. The costs of the personnel
department, including any allocated costs from other staff functions is $1,404,000. During
the year, Personnel conducted 1,200 interviews, made 405 hires, made 2,850 assessments,
and had 235 separations.
Required:
a. What is the cost per minute for activities in Personnel?
b. What is the cost of interviewing and hiring one employee?
c. How many minutes of unused capacity did Personnel have for the year?
d. What was the cost of the unused capacity in Personnel?
