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120. 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. If the number of labor hours is used to assign labor costs from the cost pool, determine the amount of overhead cost to be
assigned to Product I.
121. 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. Using functional-based costing, what is the amount of overhead cost to be assigned to Product II using labor hours as the
allocation base?
122. Which of the following quantities is an example of an activity driver in activity-based costing?
123. Figure 4-12
The Gardenview Corporation has identified the following overhead costs and activity drivers for next year:
Expected
Expected
Overhead Item
Cost
Activity Driver
Quantity
Setup costs
$200,000
Number of setups
250
Ordering costs
80,000
Number of orders
1,600
Maintenance
400,000
Machine hours
2,000
Power
40,000
Kilowatt hours
40,000
The following are two of the jobs completed during the year:
Job 6A
Job 8B
Direct materials
$3,000
$4,000
Direct labor
$2,800
$4,800
Units completed
100
160
Direct labor hours
50
80
Number of setups
1
4
Number of orders
4
5
Machine hours
20
25
Kilowatt hours
30
50
The company's normal activity is 2,000 direct labor hours.
Refer to Figure 4-12. If the number of setups is used to assign setup costs, the amount of setup costs assigned to Job 6A would be
124. Figure 4-12
The Gardenview Corporation has identified the following overhead costs and activity drivers for next year:
Expected
Expected
Overhead Item
Cost
Activity Driver
Quantity
Setup costs
$200,000
Number of setups
250
Ordering costs
80,000
Number of orders
1,600
Maintenance
400,000
Machine hours
2,000
Power
40,000
Kilowatt hours
40,000
The following are two of the jobs completed during the year:
Job 6A
Job 8B
Direct materials
$3,000
$4,000
Direct labor
$2,800
$4,800
Units completed
100
160
Direct labor hours
50
80
Number of setups
1
4
Number of orders
4
5
Machine hours
20
25
Kilowatt hours
30
50
The company's normal activity is 2,000 direct labor hours.
Refer to Figure 4-12. If the four activity drivers are used to allocate overhead costs, total overhead allocated to Job 6A would be
125. Figure 4-12
The Gardenview Corporation has identified the following overhead costs and activity drivers for next year:
Expected
Expected
Overhead Item
Cost
Activity Driver
Quantity
Setup costs
$200,000
Number of setups
250
Ordering costs
80,000
Number of orders
1,600
Maintenance
400,000
Machine hours
2,000
Power
40,000
Kilowatt hours
40,000
The following are two of the jobs completed during the year:
Job 6A
Job 8B
Direct materials
$3,000
$4,000
Direct labor
$2,800
$4,800
Units completed
100
160
Direct labor hours
50
80
Number of setups
1
4
Number of orders
4
5
Machine hours
20
25
Kilowatt hours
30
50
The company's normal activity is 2,000 direct labor hours.
Refer to Figure 4-12. If kilowatt hours are used to assign power costs, the amount of power costs assigned to Job 6A would be
126. The activity that aids management in achieving objectives such as product or customer costing, continuous
improvement and environmental management is called:
127. Figure 4-13
The Molotov plant of Kaboom Industries has two categories of overhead: maintenance and inspection.
Costs expected for these categories for the coming year are as follows:
Maintenance
$50,000
Inspection
75,000
The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours. The following data have been
assembled for use in developing a bid for a proposed job:
Direct materials
$500
Direct labor
$2,000
Machine hours
500
Number of inspections
4
Direct labor hours
800
Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
Refer to Figure 4-13. Using activity-based costing and the appropriate activity drivers, the total cost of the potential job would be
128. Figure 4-13
The Molotov plant of Kaboom Industries has two categories of overhead: maintenance and inspection.
Costs expected for these categories for the coming year are as follows:
Maintenance
$50,000
Inspection
75,000
The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours. The following data have been
assembled for use in developing a bid for a proposed job:
Direct materials
$500
Direct labor
$2,000
Machine hours
500
Number of inspections
4
Direct labor hours
800
Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
Refer to Figure 4-13. Using direct labor hours to assign overhead, the total cost of the potential job would be
129. Figure 4-14
Lawson Manufacturing has four categories of overhead. The four categories and expected overhead costs for
each category for next year are as follows:
Maintenance
$180,000
Materials handling
27,000
Setups
24,000
Inspection
90,000
Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 20,000 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 15 percent. Estimates for the proposed job are as follows:
Direct materials
$3,000
Direct labor (600 hours)
$9,000
Number of material moves
4
Number of inspections
6
Number of setups
8
Number of machine hours
80
In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based activity driver, direct labor hours. 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
5,000
Material moves
600
Setups
200
Quality inspections
1,000
Refer to Figure 4-14. If material moves are used to assign material handling costs, the amount of material handling costs allocated to the proposed
job would be
130. Figure 4-14
Lawson Manufacturing has four categories of overhead. The four categories and expected overhead costs for
each category for next year are as follows:
Maintenance
$180,000
Materials handling
27,000
Setups
24,000
Inspection
90,000
Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labor hours. 20,000 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 15 percent. Estimates for the proposed job are as follows:
Direct materials
$3,000
Direct labor (600 hours)
$9,000
Number of material moves
4
Number of inspections
6
Number of setups
8
Number of machine hours
80
In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based activity driver, direct labor hours. 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
5,000
Material moves
600
Setups
200
Quality inspections
1,000
Refer to Figure 4-14. If the number of inspections is used to assign inspection costs, the amount of inspection costs allocated to the proposed job
would be
131. Bienvenue, Inc., has identified the following overhead costs and activity drivers for next year:
Expected
Expected
Overhead Item
Cost
Activity Driver
Quantity
Setup costs
$100,000
Number of setups
500
Ordering costs
40,000
Number of orders
3,200
Maintenance
200,000
Machine hours
4,000
Power
20,000
Kilowatt hours
80,000
The following are two of the jobs completed during the year:
Job CC
Job DD
Direct materials
$375
$1,000
Direct labor
$350
$1,200
Units completed
100
160
Direct labor hours
50
80
Number of setups
1
4
Number of orders
4
5
Machine hours
20
25
Kilowatt hours
30
50
The company's normal activity is 4,000 direct labor hours.
If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job DD would be
132. Figure 4-15
Carriage Manufacturing uses an activity-based costing system. The company produces
Model 21 and Model 22. Information relating to the two products is as follows:
Model 21
Model 22
Units produced
24,000
30,000
Machine hours
7,500
8,500
Direct labor hours
8,000
12,000
Material handling (number of moves)
4,000
6,000
Setups
5,000
7,000
The following costs are reported:
Material handling
$ 40,000
Labor-related overhead
120,000
Setups
60,000
Refer to Figure 4-15. Setup costs assigned to Model 22 are
133. Figure 4-15
Carriage Manufacturing uses an activity-based costing system. The company produces
Model 21 and Model 22. Information relating to the two products is as follows:
Model 21
Model 22
Units produced
24,000
30,000
Machine hours
7,500
8,500
Direct labor hours
8,000
12,000
Material handling (number of moves)
4,000
6,000
Setups
5,000
7,000
The following costs are reported:
Material handling
$ 40,000
Labor-related overhead
120,000
Setups
60,000
Refer to Figure 4-15. Labor-related overhead costs assigned to Model 21 are
134. Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in
the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process
1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes
through Process 1 while Product M goes through Process 2. The product relational table for Special Products is
as follows:
Product L:
Activity Driver #
and Name
Activity Usage
1
Units
200,000
2
Purchase orders
250
3
Machine hours
80,000
4
Engineering hours
1,250
Product M:
Activity Driver #
and Name
Activity Usage
1
Units
25,000
2
Purchase orders
125
3
Machine hours
10,000
4
Engineering hours
1,500
Refer to Figure 4-16. What is the unit cost of Product M?
135. Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in
the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process
1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes
through Process 1 while Product M goes through Process 2. The product relational table for Special Products is
as follows:
Product L:
Activity Driver #
and Name
Activity Usage
1
Units
200,000
2
Purchase orders
250
3
Machine hours
80,000
4
Engineering hours
1,250
Product M:
Activity Driver #
and Name
Activity Usage
1
Units
25,000
2
Purchase orders
125
3
Machine hours
10,000
4
Engineering hours
1,500
Refer to Figure 4-16. How much purchasing overhead cost will be assigned to Product L using the number of purchase orders?
136. Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in
the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process
1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes
through Process 1 while Product M goes through Process 2. The product relational table for Special Products is
as follows:
Product L:
Activity Driver #
and Name
Activity Usage
1
Units
200,000
2
Purchase orders
250
3
Machine hours
80,000
4
Engineering hours
1,250
Product M:
Activity Driver #
and Name
Activity Usage
1
Units
25,000
2
Purchase orders
125
3
Machine hours
10,000
4
Engineering hours
1,500
Refer to Figure 4-16. How much engineering overhead cost will be assigned to Product M using engineering hours?
137. Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in
the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process
1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes
through Process 1 while Product M goes through Process 2. The product relational table for Special Products is
as follows:
Product L:
Activity Driver #
and Name
Activity Usage
1
Units
200,000
2
Purchase orders
250
3
Machine hours
80,000
4
Engineering hours
1,250
Product M:
Activity Driver #
and Name
Activity Usage
1
Units
25,000
2
Purchase orders
125
3
Machine hours
10,000
4
Engineering hours
1,500
Refer to Figure 4-16. How much machine overhead cost will be assigned to Product L using Process 1?
138. Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in
the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process
1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes
through Process 1 while Product M goes through Process 2. The product relational table for Special Products is
as follows:
Product L:
Activity Driver #
and Name
Activity Usage
1
Units
200,000
2
Purchase orders
250
3
Machine hours
80,000
4
Engineering hours
1,250
Product M:
Activity Driver #
and Name
Activity Usage
1
Units
25,000
2
Purchase orders
125
3
Machine hours
10,000
4
Engineering hours
1,500
Refer to Figure 4-16. How much machine overhead cost will be assigned to Product M using Process 2?
139. Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in
the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process
1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes
through Process 1 while Product M goes through Process 2. The product relational table for Special Products is
as follows:
Product L:
Activity Driver #
and Name
Activity Usage
1
Units
200,000
2
Purchase orders
250
3
Machine hours
80,000
4
Engineering hours
1,250
Product M:
Activity Driver #
and Name
Activity Usage
1
Units
25,000
2
Purchase orders
125
3
Machine hours
10,000
4
Engineering hours
1,500
Refer to Figure 4-16. What is the unit cost of Product L?
140. Figure 4-17
X-TREME Corporation has the following activities: creating bills of materials (BOM), studying manufacturing
capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger
accounts reveal the following expenditures for manufacturing engineering:
Salaries
$ 75,000
Equipment
40,000
Supplies
10,000
Total
$125,000
The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for
improving processes and 65 percent is used for designing tools. The salaries are for two engineers. One is paid $50,000, while the other earns
$25,000. The $50,000 engineer spends 40 percent of his time training employees in new processes and 60 percent of his time on improving
processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions:
Creating BOMs
25%
Studying capabilities
10%
Improving processes
20%
Training employees
25%
Designing tooling
20%
Refer to Figure 4-17. What is the cost assigned to the creating BOMs activity?
141. Figure 4-17
X-TREME Corporation has the following activities: creating bills of materials (BOM), studying manufacturing
capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger
accounts reveal the following expenditures for manufacturing engineering:
Salaries
$ 75,000
Equipment
40,000
Supplies
10,000
Total
$125,000
The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for
improving processes and 65 percent is used for designing tools. The salaries are for two engineers. One is paid $50,000, while the other earns
$25,000. The $50,000 engineer spends 40 percent of his time training employees in new processes and 60 percent of his time on improving
processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions:
Creating BOMs
25%
Studying capabilities
10%
Improving processes
20%
Training employees
25%
Designing tooling
20%
Refer to Figure 4-17. What is the cost assigned to the improving processes activity?
142. Figure 4-17
X-TREME Corporation has the following activities: creating bills of materials (BOM), studying manufacturing
capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger
accounts reveal the following expenditures for manufacturing engineering:
Salaries
$ 75,000
Equipment
40,000
Supplies
10,000
Total
$125,000
The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for
improving processes and 65 percent is used for designing tools. The salaries are for two engineers. One is paid $50,000, while the other earns
$25,000. The $50,000 engineer spends 40 percent of his time training employees in new processes and 60 percent of his time on improving
processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions:
Creating BOMs
25%
Studying capabilities
10%
Improving processes
20%
Training employees
25%
Designing tooling
20%
Refer to 4-17. What is the cost assigned to the training employees activity?
143. Figure 4-17
X-TREME Corporation has the following activities: creating bills of materials (BOM), studying manufacturing
capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger
accounts reveal the following expenditures for manufacturing engineering:
Salaries
$ 75,000
Equipment
40,000
Supplies
10,000
Total
$125,000
The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for
improving processes and 65 percent is used for designing tools. The salaries are for two engineers. One is paid $50,000, while the other earns
$25,000. The $50,000 engineer spends 40 percent of his time training employees in new processes and 60 percent of his time on improving
processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions:
Creating BOMs
25%
Studying capabilities
10%
Improving processes
20%
Training employees
25%
Designing tooling
20%
Refer to 4-17. What is the cost assigned to the designing tooling activity?
144. Which of the following quantities is an example of an activity driver in activity-based costing?
145. If activity-based costing is used, materials handling would be classified as a
146. If activity-based costing is used, security is an example of a
147. If activity-based costing is used, modifications made by engineering to the product design of several
products would be classified as a
148. If activity-based costing is used, insurance on the plant would be classified as a
149. If activity-based costing is used, set-ups would be classified as a
150. If activity-based costing is used, set-ups would be classified as a
151. Maintenance of the production equipment would be classified as a
