84. Lamar Corporation uses departmental manufacturing overhead rates to apply overhead. Direct labor cost is
used to apply manufacturing overhead in Department A and machine hours are used for Department B.
Dept. A
Dept. B
direct labor cost
$66,000
$33,000
factory overhead
$79,200
$60,000
direct labor hours
8,000
9,000
machine hours
4,000
15,000
What predetermined overhead rate would be used for departments A and B respectively?
85. The Sterling Company applies manufacturing overhead. At the end of the year the following data were
available:
actual manufacturing overhead
$115,000
estimated manufacturing overhead
$110,000
applied manufacturing overhead
$100,000
The following accounts had the unadjusted balances:
raw materials inventory
$100,000
work-in-process inventory
$100,000
finished goods inventory
$100,000
cost of goods sold
$300,000
What is the journal entry if the amount is considered material?
86. Figure 4-7
The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted
balances:
Raw Materials
$20,000
Work in Process
$40,000
Finished Goods
$10,000
Cost of Goods Sold
$50,000
Refer to Figure 4-7. If overhead is underapplied by $12,000 and considered immaterial, the journal entry would be
87. Figure 4-7
The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted
balances:
Raw Materials
$20,000
Work in Process
$40,000
Finished Goods
$10,000
Cost of Goods Sold
$50,000
Refer to Figure 4-7. If Manufacturing overhead was $12,000 overapplied and considered immaterial, what is the journal entry?
88. Figure 4-7
The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted
balances:
Raw Materials
$20,000
Work in Process
$40,000
Finished Goods
$10,000
Cost of Goods Sold
$50,000
Refer to Figure 4-7. If Manufacturing overhead was $12,000 overapplied and considered material, what is the journal entry?
89. Figure 4-7
The Cherokee Company uses a predetermined overhead rate. The following accounts have these unadjusted
balances:
Raw Materials
$20,000
Work in Process
$40,000
Finished Goods
$10,000
Cost of Goods Sold
$50,000
Refer to Figure 4-7. If Manufacturing overhead was $12,000 underapplied and considered material, what is the journal entry?
90. Products might consume overhead in different proportions due to differences in
91. The proportion of an overhead activity consumed by a product is the
92. More accurate product costing information is produced by assigning costs using
93. Thaisom Company applies manufacturing overhead. At the end of the year the following data were
available:
actual manufacturing overhead
$115,000
estimated manufacturing overhead
$120,000
applied manufacturing overhead
$118,000
What is the journal entry if the amount of under- or over-applied overhead is considered small?
94. Figure 4-8
Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into
three cost pools that use the following activity drivers:
Product
Number of Setups
Machine Hours
Packing Orders
D
10
500
75
F
10
2,000
175
Cost per pool
$11,000
$60,000
$18,750
Refer to Figure 4-8. Using functional-based costing, what is the amount of overhead cost to be assigned to Product D using machine hours as the
allocation base?
95. Figure 4-8
Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into
three cost pools that use the following activity drivers:
Product
Number of Setups
Machine Hours
Packing Orders
D
10
500
75
F
10
2,000
175
Cost per pool
$11,000
$60,000
$18,750
Refer to Figure 4-8. What is the allocation rate per setup using activity-based costing?
96. Figure 4-8
Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into
three cost pools that use the following activity drivers:
Product
Number of Setups
Machine Hours
Packing Orders
D
10
500
75
F
10
2,000
175
Cost per pool
$11,000
$60,000
$18,750
Refer for Figure 4-8. What is the allocation rate per packing order using activity-based costing?
97. Figure 4-8
Tandem Company manufactures two products (D and F). The overhead costs ($84,000) have been divided into
three cost pools that use the following activity drivers:
Product
Number of Setups
Machine Hours
Packing Orders
D
10
500
75
F
10
2,000
175
Cost per pool
$11,000
$60,000
$18,750
Refer to Figure 4-8. If the number of machine hours is used to assign machine hour cost, determine the amount of machine hour cost to be assigned
to Product D.
98. Figure 4-9
Summer Manufacturing has four categories of overhead. The four categories and expected overhead costs for
each category for next year are listed as follows:
Maintenance
$255,000
Materials handling
125,000
Setups
30,000
Inspection
105,000
Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 100,000 direct labor hours are budgeted
for next year.
The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in
future years. Usually bids are based upon full manufacturing cost plus 10 percent.
Estimates for the proposed job are as follows:
Direct materials
$15,000
Direct labor (8,000 hours)
$12,000
Number of material moves
100
Number of inspections
120
Number of setups
24
Number of machine hours
4,000
The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity
drivers that would be used are:
Machine hours
60,000
Material moves
20,000
Setups
3,000
Quality inspections
12,000
Refer to Figure 4-9. What is the amount of overhead allocated to the proposed job if Winter Manufacturing uses direct labor hours as its only
activity driver?
99. Figure 4-9
Summer Manufacturing has four categories of overhead. The four categories and expected overhead costs for
each category for next year are listed as follows:
Maintenance
$255,000
Materials handling
125,000
Setups
30,000
Inspection
105,000
Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 100,000 direct labor hours are budgeted
for next year.
The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in
future years. Usually bids are based upon full manufacturing cost plus 10 percent.
Estimates for the proposed job are as follows:
Direct materials
$15,000
Direct labor (8,000 hours)
$12,000
Number of material moves
100
Number of inspections
120
Number of setups
24
Number of machine hours
4,000
The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity
drivers that would be used are:
Machine hours
60,000
Material moves
20,000
Setups
3,000
Quality inspections
12,000
Refer to Figure 4-9. What is the total cost of the proposed job if Winter Manufacturing uses direct labor hours as its only activity driver?
100. Unit-level cost drivers create distortions when
101. The use of unit-based activity drivers to assign costs tends to
102. Which of the following is NOT a limitation of a plantwide overhead rate?
103. A possible solution to overcome distortions caused by unit level rates is
104. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. What is the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours?
105. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. Manoli Company uses departmental overhead rates: Molding uses machine hours and Assembly uses labor hours. What is the
unit product cost for sweepers if departmental overhead rates are used?
106. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. What are the consumption ratios for rug cleaners and sweepers respectively for the inspection of products activity?
107. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. What is the consumption ratio for the plantwide activity rate of direct labor hours?
108. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. What are the consumption ratios for rug cleaners for the departments on the basis of the departmental drivers
(molding;assembly)?
109. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. What is the activity rate for moving materials?
110. Figure 4-10
The Manoli Company has collected the following data for use in calculating product costs:
Activity Data: (expected and actual)
rug cleaners
sweepers
total
units produced
50,000
250,000
300,000
prime costs
$200,000
$750,000
$950,000
direct labor hours
10,000
40,000
50,000
machine hours
20,000
10,000
30,000
number of setups
25
75
100
inspection hours
1,200
2,800
4,000
number of moves
140
210
350
Departmental Data: (expected and actual)
molding
assembly
total
direct labor hours
rug cleaners
5,000
5,000
10,000
sweepers
5,000
35,000
40,000
total
10,000
40,000
50,000
machine hours
rug cleaners
17,000
3,000
20,000
sweepers
3,000
7,000
10,000
total
20,000
10,000
30,000
overhead costs
machining
$120,000
$ 30,000
$150,000
moving materials
40,000
30,000
70,000
setting up
70,000
10,000
80,000
inspecting products
20,000
30,000
50,000
total
250,000
$100,000
$350,000
Refer to Figure 4-10. What is the unit product cost for rug cleaners using activity based costing?
111. An activity-based costing system uses which of the following procedures?
112. If a firm has implemented activity-based procedures for home office expenses, it will
113. The system that first traces costs to activities and then to products is called:
114. Activity-based costing assigns cost to cost objects by first tracing costs to
115. The nonfinancial and financial data that describe individual activities is called:
116. The simple list of activities identified in an ABC system is called:
117. A secondary activity is
118. Figure 4-11
Longview Manufacturing Company manufactures two products (I and II). The overhead costs ($58,000) have
been divided into three cost pools that use the following activity drivers:
Number of Labor
Product
Number of Orders
Transactions
Labor Hours
I
15
50
500
II
10
150
2,000
Cost per pool
$12,500
$8,000
$40,000
Refer to Figure 4-11. What is the allocation rate per order using ABC?
119. Figure 4-11
Longview Manufacturing Company manufactures two products (I and II). The overhead costs ($58,000) have
been divided into three cost pools that use the following activity drivers:
Number of Labor
Product
Number of Orders
Transactions
Labor Hours
I
15
50
500
II
10
150
2,000
Cost per pool
$12,500
$8,000
$40,000
Refer to Figure 4-11. What is the allocation rate per labor transaction using ABC?