Question :
41. A company produces heating elements that go through two : 1256569
41. A company produces heating elements that go through two operations, casting and assembling, before they are complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for the assembling department based on direct labor hours is $5 per direct labor hour.
Casting
Assembling
Direct labor hours
1,875 DLH
7,500 DLH
Machine hours
12,500 MH
3,750 MH
Overhead costs
$75,000
$37,500
42. A company produces paint that goes through two operations, operation A and operation B, before it is complete. Expected costs and activities for the two departments are shown below. Given this information, the departmental overhead rate for Department B based on machine hours is $4 per machine hour.
Department
A
Department
B
Machine hours
50,000 MH
60,000 MH
Direct labor hours
78,500 DLH
100,800 DLH
Overhead costs
$392,500
$403,200
43. A company produces computer chips that go through two operations, operation A1 and operation B2, before they are complete. Expected costs and activities for the two departments are shown below. Departmental overhead rates are based on machine hours in department A1 and direct labor hours in department B2. Therefore, the overhead rates for department A1 and department B2 are $3.62 per machine hour and $5.73 per direct labor hour, respectively.
Department
A1
Department
B2
Machine hours
40,000 MH
30,000 MH
Direct labor hours
36,200 DLH
28,650 DLH
Overhead costs
$144,800
$171,900
44. A company produces garden benches that go through two operations, operation 1A1 and operation 2B2, before they are complete. Expected costs and activities for the two departments are shown below. Both departments have departmental overhead rates based on machine hours. Therefore, the overhead rates for department 1A1 and department 2B2 are the same.
Department
1A1
Department
2B2
Machine hours
70,000 MH
60,000 MH
Direct labor hours
56,350 DLH
50,160 DLH
Overhead costs
$225,400
$250,800
45. A company produces surgical equipment that goes through threes processes, 1A1, 2B2, and 3C3, before they are complete. Expected costs and activities for the three departments are shown below. All departments have departmental overhead rates based on direct labor hours. Therefore, the overhead rate for each department is $5 per direct labor hour.
Department
1A1
Department
2B2
Department
3C3
Machine hours
15,000 MH
25,000 MH
20,000 MH
Direct labor hours
22,830 DLH
10,650 DLH
29,200 DLH
Overhead costs
$114,150
$213,000
$73,000
46. Activity-based costing involves four steps: (1) identify activities and the costs they cause, (2) group similar activities into cost pools, (3) determine an activity rate for each activity cost pool, and (4) allocate overhead costs to products using those activity rates.
47. The more activities tracked by activity-based costing, the more accurately overhead costs are assigned.
48. In activity-based costing, an activity can involve several related tasks.
49. Activities causing overhead cost in an organization are typically separated into four levels: (1) direct activities, (2) indirect activities, (3) batch level activities, and (4) facility level activities.
50. Machine setup costs are an example of a batch level activity.
