Test Bank for Managerial Accounting 16th edition By Garrison

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Test Bank for Managerial Accounting 16th edition By Garrison

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WITH ANSWERS

 

Test Bank of Managerial Accounting 16th edition By Garrison

 

Managerial Accounting, 16e (Garrison)

Appendix 2A  Activity-Based Absorption Costing

 

1) Feauto 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, I63E and E76I, about which it has provided the following data:

 

Direct materials per unit $ 19.90   $ 54.40  
Direct labor per unit $ 12.00   $ 31.50  
Direct labor-hours per unit   0.80     2.10  
Annual production (units)   30,000     10,000  

 

The companys estimated total manufacturing overhead for the year is $2,063,250 and the companys estimated total direct labor-hours for the year is 45,000.

 

The company is considering using a form 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)   263,250  
Product support (product variations)   1,080,000  
Total $ 2,063,250  

 

  Expected Activity
  I63E E76I Total
DLHs 24,000 21,000 45,000
Batches 1,080 675 1,755
Product variations 2,115 1,485 3,600

 

The manufacturing overhead that would be applied to a unit of product I63E under the companys traditional costing system is closest to:

  1. A) $12.80
  2. B) $39.35
  3. C) $76.03
  4. D) $36.68

 

Answer:  D

Explanation:

Product I63E 30,000 units 0.80 direct labor-hours per unit 24,000
Product E76I 10,000 units 2.10 direct labor-hours per unit 21,000
Total direct labor-hours 45,000

 

Predetermined overhead rate = $2,063,250 45,000 direct labor-hours = $45.85 per direct labor-hour

 

Overhead applied to a unit of product I63E = $45.85 per direct labor-hours 0.80 direct labor-hours per unit = $36.68 per unit

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

2) Feauto 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, I63E and E76I, about which it has provided the following data:

 

  I63E E76I  
Direct materials per unit $ 19.90   $ 54.40  
Direct labor per unit $ 12.00   $ 31.50  
Direct labor-hours per unit   0.80     2.10  
Annual production (units)   30,000     10,000  

 

The companys estimated total manufacturing overhead for the year is $2,063,250 and the companys estimated total direct labor-hours for the year is 45,000.

 

The company is considering using a form 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)   263,250  
Product support (product variations)   1,080,000  
Total $ 2,063,250  

 

  Expected Activity
  I63E E76I Total
DLHs 24,000 21,000 45,000
Batches 1,080 675 1,755
Product variations 2,115 1,485 3,600

 

The manufacturing overhead that would be applied to a unit of product E76I under the activity-based costing system is closest to:

  1. A) $88.28
  2. B) $96.29
  3. C) $184.57
  4. D) $10.13

 

Answer:  A

Explanation:  The activity rates for each activity cost pool are computed as follows:

 

  Total Cost Total Activity Activity Rate  
Assembling products $ 720,000 45,000 DLHs $ 16 per DLH
Preparing batches   263,250 1,755 batches $ 150 per batch
Product support $ 1,080,000 3,600 variations $ 300 per variation

 

The overhead cost charged to Product E76I is:

 

  Total Per Unit Percent of Sales  
Assembling products $ 16 per DLH 21,000 DLHs $ 336,000
Preparing batches $ 150 per batch 675 batches   101,250
Product support $ 300 per variation 1,485 variations   445,500
            $ 882,750

 

Manufacturing overhead applied to a unit of product E76I = $882,750 10,000 units = $88.28 per unit

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

3) Coudriet 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, P93S and N40S, about which it has provided the following data:

 

  P93S N40S  
Direct materials per unit $ 21.90   $ 54.80  
Direct labor per unit $ 8.80   $ 13.20  
Direct labor-hours per unit   0.80     1.20  
Annual production (units)   35,000     15,000  

 

The companys estimated total manufacturing overhead for the year is $2,172,580 and the companys estimated total direct labor-hours for the year is 46,000.

 

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) $ 552,000  
Setting up machines (setups)   419,980  
Part administration (part types)   1,200,600  
Total $ 2,172,580  

 

  Expected Activity  
  P93S N40S Total
DLHs 28,000 18,000 46,000
Setups 2,162 1,656 3,818
Part types 1,886 2,116 4,002

 

The unit product cost of product P93S under the companys traditional costing system is closest to:

  1. A) $68.48
  2. B) $63.26
  3. C) $30.70
  4. D) $40.30

 

Answer:  A

Explanation:  Direct labor-hour calculation:

 

Product P93S 35,000 units 0.80 direct labor-hours per unit 28,000
Product R28K 15,000 units 1.20 direct labor-hours per unit 18,000
Total direct labor-hours 46,000

 

Predetermined overhead rate = $2,172,580 46,000 direct labor-hours = $47.23 per direct labor-hour

 

Overhead per unit of product P93S = $47.23 per direct labor-hour 0.80 direct labor-hours per unit = $37.78 per unit

 

Direct materials $ 21.90  
Direct labor   8.80  
Overhead   37.78  
Unit product cost $ 68.48  

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

4) Coudriet 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, P93S and N40S, about which it has provided the following data:

 

  P93S N40S  
Direct materials per unit $ 21.90   $ 54.80  
Direct labor per unit $ 8.80   $ 13.20  
Direct labor-hours per unit   0.80     1.20  
Annual production (units)   35,000     15,000  

 

The companys estimated total manufacturing overhead for the year is $2,172,580 and the companys estimated total direct labor-hours for the year is 46,000.

 

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) $ 552,000  
Setting up machines (setups)   419,980  
Part administration (part types)   1,200,600  
Total $ 2,172,580  

 

  Expected Activity  
  P93S N40S Total
DLHs 28,000 18,000 46,000
Setups 2,162 1,656 3,818
Part types 1,886 2,116 4,002

 

The unit product cost of product N40S under the activity-based costing system is closest to:

  1. A) $68.00
  2. B) $68.86
  3. C) $124.68
  4. D) $136.86

 

Answer:  D

Explanation:  The activity rates for each activity cost pool are computed as follows:

 

  Total Cost Total Activity Activity Rate  
Direct labor support $ 552,000 46,000 DLHs $ 12 per DLH
Setting up machines $ 419,980 3,818  per setup $ 110  per setup
Part administration $ 1,200,600 4,002  per part type $ 300  per part type

 

The overhead cost charged to Product N40S is:

 

  Activity Rate Activity ABC Cost  
Direct labor support $ 12 per DLH 18,000 DLHs $ 216,000
Setting up machines $ 110  per setup 1,656  per setup   182,160
Part administration $ 300  per part type 2,116  per part type   634,800
              1,032,960

 

Overhead cost per unit of Product N40S = $1,032,960 15,000 units = $68.86 per unit

 

   
Direct materials $ 54.80  
Direct labor   13.20  
Overhead   68.86  
Unit product cost $ 136.86  

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

5) Poma 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, R78S and N32Y, about which it has provided the following data:

 

  R78S N32Y  
Direct materials per unit $ 27.20   $ 54.70  
Direct labor per unit $ 8.80   $ 22.00  
Direct labor-hours per unit   0.4     1.0  
Annual production (units)   35,000     10,000  

 

The companys estimated total manufacturing overhead for the year is $1,427,040 and the companys estimated total direct labor-hours for the year is 24,000.

 

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) $ 672,000  
Preparing batches (batches)   255,840  
Product support (product variations)   499,200  
Total $ 1,427,040  

 

  Expected Activity
  R78S N32Y Total
DLHs 14,000 10,000 24,000
Batches 816 1,152 1,968
Product variations 840 408 1,248

 

The unit product cost of product R78S under the companys traditional costing system is closest to:

  1. A) $36.00
  2. B) $59.83
  3. C) $47.20
  4. D) $59.78

 

Answer:  D

Explanation:  Direct labor-hour calculation:

 

Product R78S 35,000 units 0.4 direct labor-hours per unit 14,000
Product N32Y 10,000 units 1.0 direct labor-hours per unit 10,000
Total direct labor-hours 24,000

 

Predetermined overhead rate = $1,427,040 24,000 direct labor-hours = $59.46 per direct labor-hour

 

Overhead applied to each unit of product R78S = $59.46 per direct labor-hour 0.4 direct labor-hours per unit = $23.78 per unit

 

Direct materials $ 27.20  
Direct labor   8.80  
Overhead   23.78  
Unit product cost $ 59.78  

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

6) Poma 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, R78S and N32Y, about which it has provided the following data:

 

  R78S N32Y  
Direct materials per unit $ 27.20   $ 54.70  
Direct labor per unit $ 8.80   $ 22.00  
Direct labor-hours per unit   0.4     1.0  
Annual production (units)   35,000     10,000  

 

The companys estimated total manufacturing overhead for the year is $1,427,040 and the companys estimated total direct labor-hours for the year is 24,000.

 

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) $ 672,000  
Preparing batches (batches)   255,840  
Product support (product variations)   499,200  
Total $ 1,427,040  

 

  Expected Activity
  R78S N32Y Total
DLHs 14,000 10,000 24,000
Batches 816 1,152 1,968
Product variations 840 408 1,248

 

The unit product cost of product N32Y under the activity-based costing system is closest to:

  1. A) $136.00
  2. B) $76.70
  3. C) $59.30
  4. D) $136.16

 

Answer:  A

Explanation:  The activity rates for each activity cost pool are computed as follows:

 

  Total Cost Total Activity Activity Rate  
Assembling products $ 672,000 24,000 DLHs $ 28 per DLH
Preparing batches $ 255,840 1,968 batches $ 130 per batch
Product support $ 499,200 1,248 variations $ 400 per variation

 

 

The overhead cost charged to Product N32Y is:

 

  Activity Rate Activity ABC Cost  
Assembling products $ 28 per DLH 10,000 DLHs $ 280,000
Preparing batches $ 110 per setup 1,656 per setup   182,160
Product support $ 400 per variation 408 variations   163,200
              592,960

 

Overhead per unit of Product N32Y = $592,960 10,000 units = $59.30 per unit

 

Direct materials $ 54.70  
Direct labor   22.00  
Overhead   59.30  
Unit product cost $ 136.00  

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

7) Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 1,000 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756.

 

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost poolsActivity 1, Activity 2, and General Factorywith estimated overhead costs and expected activity as follows:

 

    Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 31,031 1,000 300 1,300
Activity 2 $ 22,249 1,600 300 1,900
General Factory $ 15,476 200 200 400
Total $ 68,756      

 

(Note: The General Factory activity cost pools costs are allocated on the basis of direct labor-hours.)

 

The predetermined overhead rate under the traditional costing system is closest to:

  1. A) $11.71
  2. B) $38.69
  3. C) $171.89
  4. D) $23.87

 

Answer:  C

Explanation:  Direct labor-hour calculation:

 

Product A 500 units 0.4 direct labor-hours 200
Product B 1,000 units 0.2 direct labor-hours 200
Total direct labor-hours 400

 

Predetermined overhead rate = Total estimated overhead Total estimated direct labor-hours

= $68,756 400 direct labor-hours = $171.89 per direct labor-hour

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

8) Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 1,000 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756.

 

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost poolsActivity 1, Activity 2, and General Factorywith estimated overhead costs and expected activity as follows:

 

    Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 31,031 1,000 300 1,300
Activity 2 $ 22,249 1,600 300 1,900
General Factory $ 15,476 200 200 400
Total $ 68,756      

 

(Note: The General Factory activity cost pools costs are allocated on the basis of direct labor-hours.)

 

The overhead cost per unit of Product B under the traditional costing system is closest to:

  1. A) $2.34
  2. B) $7.74
  3. C) $4.77
  4. D) $34.38

 

Answer:  D

Explanation:  Direct labor-hour calculation:

 

Product A 500 units 0.4 direct labor-hours 200
Product B 1,000 units 0.2 direct labor-hours 200
Total direct labor-hours 400

 

Predetermined overhead rate = Total estimated overhead Total estimated direct labor-hours

= $68,756 400 direct labor-hours = $171.89 per direct labor-hour

 

Overhead cost per unit of B = $171.89 per direct labor-hour 0.2 direct labor-hours per unit

= $34.38 per unit

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

9) Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 1,000 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756.

 

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost poolsActivity 1, Activity 2, and General Factorywith estimated overhead costs and expected activity as follows:

 

    Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 31,031 1,000 300 1,300
Activity 2 $ 22,249 1,600 300 1,900
General Factory $ 15,476 200 200 400
Total $ 68,756      

 

(Note: The General Factory activity cost pools costs are allocated on the basis of direct labor-hours.)

 

The predetermined overhead rate (i.e., activity rate) for Activity 2 under the activity-based costing system is closest to:

  1. A) $13.91
  2. B) $11.71
  3. C) $74.16
  4. D) $36.19

 

Answer:  B

Explanation:  Activity rate for Activity 2 = $22,249 1,900 = $11.71

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

10) Adelberg Corporation makes two products: Product A and Product B. Annual production and sales are 500 units of Product A and 1,000 units of Product B. The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products. Product A requires 0.4 direct labor-hours per unit and Product B requires 0.2 direct labor-hours per unit. The total estimated overhead for next period is $68,756.

 

The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports. The new activity-based costing system would have three overhead activity cost poolsActivity 1, Activity 2, and General Factorywith estimated overhead costs and expected activity as follows:

 

    Expected Activity
Activity Cost Pool Estimated Overhead Costs Product A Product B Total
Activity 1 $ 31,031 1,000 300 1,300
Activity 2 $ 22,249 1,600 300 1,900
General Factory $ 15,476 200 200 400
Total $ 68,756      

 

(Note: The General Factory activity cost pools costs are allocated on the basis of direct labor-hours.)

 

The overhead cost per unit of Product B under the activity-based costing system is closest to:

  1. A) $45.84
  2. B) $7.74
  3. C) $34.38
  4. D) $18.41

 

Answer:  D

Explanation:  The activity rates for each activity cost pool are computed as follows:

 

  Total Cost Total Activity Activity Rate  
Activity 1 $ 31,031   1,300 $ 23.87    
Activity 2 $ 22,249   1,900 $ 11.71    
General Factory $ 15,476      400 $ 38.69    

 

The overhead cost charged to Product B is:

 

  Activity Rate Activity ABC Cost    
Activity 1 $ 23.87   300 $ 7,161    
Activity 2 $ 11.71   300 $ 3,513    
General Factory $ 38.69   200 $ 7,738    
          $ 18,412    

 

Overhead cost per unit of Product B = $18,412 1,000 units = $18.41 per unit

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

11) Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows:

 

Activity Cost Pool Activity Measure Estimated Activity Estimated Overhead Cost    
Machine Setups Number of setups 400 $ 150,000    
Quality Control Number of inspections 1,500 $ 180,000    
Other Overhead Machine hours 30,000 $ 480,000    
     

 

Information (on a per unit basis) related to three popular products at Njombe are as follows:

 

  Model #19 Model #36 Model #58
Direct material cost $ 400   $ 540   $ 310  
Direct labor cost $ 810   $ 600   $ 220  
Number of setups   2     3     1  
Number of inspections   1     3     1  
Number of machine hours   4     8     10  

 

Under the traditional costing system, what would be the selling price of one unit of Model #36?

  1. A) $2,536
  2. B) $2,712
  3. C) $4,080
  4. D) $5,506

 

Answer:  C

Explanation:

Direct materials $ 540  
Direct labor   600  
Manufacturing overhead (1.5 $600)   900  
Unit product cost $ 2,040  
Selling price (2.00 $2,040) $ 4,080  

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

12) Njombe Corporation manufactures a variety of products. In the past, Njombe has been using a traditional costing system in which the predetermined overhead rate was 150% of direct labor cost. Selling prices had been set by multiplying total product cost by 200%. Sensing that this system was distorting costs and selling prices, Njombe has decided to switch to an activity-based costing system for manufacturing overhead costs that uses the three activity cost pools listed below. Selling prices are still to be set at 200% of unit product cost under the new system. Information on these cost pools for next year are as follows:

 

Activity Cost Pool Activity Measure Estimated Activity Estimated Overhead Cost    
Machine Setups Number of setups 400 $ 150,000    
Quality Control Number of inspections 1,500 $ 180,000    
Other Overhead Machine hours 30,000 $ 480,000    
     

 

Information (on a per unit basis) related to three popular products at Njombe are as follows:

 

  Model #19 Model #36 Model #58
Direct material cost $ 400   $ 540   $ 310  
Direct labor cost $ 810   $ 600   $ 220  
Number of setups   2     3     1  
Number of inspections   1     3     1  
Number of machine hours   4     8     10  

 

Under the activity-based costing system, what would be the selling price of one unit of Model #36?

  1. A) $2,536
  2. B) $2,712
  3. C) $4,080
  4. D) $5,506

 

Answer:  D

Explanation:  The activity rates are computed as follows:

 

Activity Cost Pools Total Cost Total Activity Activity Rate  
Machine Setups $ 150,000 400  setups $ 375  per setup
Quality Control $ 180,000 1,500  inspections $ 120  per inspection
Other Overhead $ 480,000 30,000  machine-hours $ 16  per machine-hour

 

 

The overhead cost charged to Model #36 is:

 

Activity Cost Pools Activity Rate Activity ABC Cost
Machine Setups $ 375  per setup 3  setups $ 1,125  
Quality Control $ 120  per inspection 3  inspections   360  
Other Overhead $ 16  per machine-hour 8  machine-hours   128  
Total overhead cost           $ 1,613  

 

Direct materials $ 540  
Direct labor   600  
Manufacturing overhead (1.5 $600)   1,613  
Unit product cost $ 2,753  
Selling price (2.00 $2,753) $ 5,506  

 

Difficulty: 2 Medium

Topic:  Activity-Based Absorption Costing

Learning Objective:  02-05 (Appendix 2A) Use activity-based absorption costing to compute unit product costs.

Blooms:  Apply

AACSB:  Analytical Thinking

AICPA:  FN Measurement; BB Critical Thinking

 

 

13) Njombe Corporation manufactures a variety

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