9-81
98.
Russell 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, Slow and Fast, about which it
has provided the following data:
Slow
Fast
Direct materials
per unit
$14.10
$43.40
Direct labor per
unit
$3.20
$25.60
Direct labor-
hours per unit
0.20
1.60
Annual
production
30,000
15,000
The company’s estimated total manufacturing overhead for the year is $1,526,700 and the
company’s estimated total direct labor-hours for the year is 30,000.
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)
$720,000
Preparing batches
(batches)
362,700
Product support (product
variations)
444,000
Total
$1,526,700
Expected Activity
Fast
Total
DLHs
24,000
30,000
Batches
1,410
2,790
Product variations
540
1,110
Total direct labor-hours
9-83
99.
Russell 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, Slow and Fast, about which it
has provided the following data:
Slow
Fast
Direct materials
per unit
$14.10
$43.40
Direct labor per
unit
$3.20
$25.60
Direct labor-
hours per unit
0.20
1.60
Annual
production
30,000
15,000
The company’s estimated total manufacturing overhead for the year is $1,526,700 and the
company’s estimated total direct labor-hours for the year is 30,000.
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)
$720,000
Preparing batches
(batches)
362,700
Product support (product
variations)
444,000
Total
$1,526,700
Expected Activity
Fast
Total
9-84
DLHs
24,000
30,000
Batches
1,410
2,790
Product variations
540
1,110
9-86
100.
Upton 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, Long and Short, about which it
has provided the following data:
Long
Short
Direct materials per unit
$14.20
$48.30
Direct labor per unit
$16.80
$50.40
Direct labor-hours per unit
0.80
2.40
Annual production
45,000
10,000
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:
Activities and Activity
Measures
Estimated
Overhead Cost
Direct labor support
(DLHs)
$1,740,000
Setting up machines
(setups)
422,400
Part administration (part
types)
1,008,000
Total
$3,170,400
Expected Activity
Long
Short
Total
DLHs
36,000
24,000
60,000
Setups
1,140
1,500
2,640
Part types
900
2,460
3,360
9-87
101.
Upton 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, Long and Short, about which it
has provided the following data:
9-88
Long
Short
Direct materials per unit
$14.20
$48.30
Direct labor per unit
$16.80
$50.40
Direct labor-hours per unit
0.80
2.40
Annual production
45,000
10,000
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:
Activities and Activity
Measures
Estimated
Overhead Cost
Direct labor support
(DLHs)
$1,740,000
Setting up machines
(setups)
422,400
Part administration (part
types)
1,008,000
Total
$3,170,400
Expected Activity
Long
Short
Total
DLHs
36,000
24,000
60,000
Setups
1,140
1,500
2,640
Part types
900
2,460
3,360
9-91
102.
Cassidy 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, VIP and Kommander, about
which it has provided the following data:
VIP
Kommander
Direct materials per unit
$27.50
$62.10
Direct labor per unit
$15.60
$52.00
Direct labor-hours per unit
0.60
2.00
Annual production
40,000
15,000
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:
Activities and Activity
Measures
Estimated
Overhead Cost
Assembling products
(DLHs)
$918,000
Preparing batches
(batches)
397,440
Product support (product
variations)
1,134,000
Total
$2,449,440
Expected Activity
VIP
Kommander
Total
DLHs
24,000
30,000
54,000
Batches
1,458
1,026
2,484
Product variations
2,592
1,188
3,780
9-92
103.
Cassidy 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, VIP and Kommander, about
which it has provided the following data:
9-93
VIP
Kommander
Direct materials per unit
$27.50
$62.10
Direct labor per unit
$15.60
$52.00
Direct labor-hours per unit
0.60
2.00
Annual production
40,000
15,000
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:
Activities and Activity
Measures
Estimated
Overhead Cost
Assembling products
(DLHs)
$918,000
Preparing batches
(batches)
397,440
Product support (product
variations)
1,134,000
Total
$2,449,440
Expected Activity
VIP
Kommander
Total
DLHs
24,000
30,000
54,000
Batches
1,458
1,026
2,484
Product variations
2,592
1,188
3,780
The unit product cost of Product Kommander under the activity-based costing system is
closest to:
9-94
104.
Miracle 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:
Activity Cost
Pool
Activity Measure
Estimated
Cost
General
service
% of time devoted
to branch
$700,000
Research
service
Computer time
$140,000
Estimated branch data for next year is as follows:
% of time
Computer time
Portland
30%
200,000 minutes
Dallas
60%
150,000 minutes
Miami
10%
50,000 minutes
How much of the headquarters cost allocation should the Dallas office expect to receive
next year?
Total
105.
A basic assumption of activity based costing (ABC) is that:
106.
In an activity-based costing (ABC) system, what should be used to assign departmental
manufacturing overhead costs to products produces in varying lot sizes?
107.
Mission Company is preparing its annual profit plan. As part of its analysis of the
profitability of individual products, the controller estimates the amount of overhead that
should be allocated to the individual product lines from the information provided below.
(CMA based)
Wall
Mirrors
Specialty
Windows
Units Produced
40
20
Material moves per
product line
5
15
Direct labor hours per
product line
200
300
Budgeted material handling costs: $50,000
Under a traditional costing system that allocates overhead on the basis of direct labor
hours, the materials handling costs allocated to one unit of wall mirrors would be:
108.
Mission Company is preparing its annual profit plan. As part of its analysis of the
profitability of individual products, the controller estimates the amount of overhead that
should be allocated to the individual product lines from the information provided below.
(CMA based)
Wall
Mirrors
Specialty
Windows
Units Produced
40
20
Material moves per
product line
5
15
Direct labor hours per
product line
200
300
Budgeted material handling costs: $50,000
Under a traditional costing system that allocates overhead on the basis of direct labor
hours, the materials handling costs allocated to one unit of specialty windows would be:
109.
Mission Company is preparing its annual profit plan. As part of its analysis of the
profitability of individual products, the controller estimates the amount of overhead that
should be allocated to the individual product lines from the information provided below.
(CMA based)
Wall
Mirrors
Specialty
Windows
Units Produced
40
20
Material moves per
product line
5
15
Direct labor hours per
product line
200
300
Budgeted material handling costs: $50,000
Under an activity-based costing (ABC) system, the materials handling costs allocated to
one unit of wall mirrors would be: