155. Lemon Yellow Company produces children’s clothing that requires two processes, cutting and sewing, to complete. The company is concerned about one product, a hooded jacket, which hasn’t been selling as well as it had in past years. Information related to the 20,000 jackets produced annually is shown in the following table:
Direct materials
$26,000
Direct labor
Cutting Department (200 DLH x $20 per DLH)
$4,000
Sewing Department (2,000 DLH x $22 per DLH)
$44,000
Machine hours
Cutting Department
160 MH
Sewing Department
1,500 MH
Lemon Yellow’s total expected overhead costs and related overhead data are shown below. The company uses departmental overhead rates based on direct labor hours in the Cutting Department and machine hours in the Sewing Department.
Cutting Department
Sewing
Department
Direct labor hours
16,000 DLH
175,000 DLH
Machine hours
3,200 MH
30,000 MH
Manufacturing overhead costs
$480,000
$240,000
Assume this jacket currently sells for $10. How much profit does the company make per jacket?
156. A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company’s three activity cost pools are shown below.
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$140,000
7,500
4,000
6,000
Activity 2
$54,000
2,500
2,000
1,500
Activity 3
$28,000
15,000
25,000
30,000
Compute the company’s activity rates under activity-based costing for each of the three activities.
157. A company uses activity-based costing to determine the costs of its three products: A, B, and C. The budgeted cost and activity for each of the company’s three activity cost pools are shown in the following table:
Budgeted Activity
Activity Cost Pool
Budgeted Cost
Product A
Product B
Product C
Activity 1
$425,000
1,700
680
1,870
Activity 2
$144,900
1,890
1,575
2,835
Activity 3
$85,000
2,400
1,000
1,600
Compute the company’s activity rates under activity-based costing for each of the three activities.
158. A company uses activity-based costing to determine the costs of its three products: A, B, and C. The activity rates and activity levels for each of the company’s three activity cost pools are shown below.
Budgeted Activity
Activity Cost Pool
Activity Rate
Product A
Product B
Product C
Activity 1
$19
700
1,150
650
Activity 2
$27
2,400
2,100
1,500
Activity 3
$62
600
1,350
1,050
Compute the company’s budgeted cost for each of the three activities under activity-based costing.
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