Question : 16) Leonard Industries uses departmental overhead rates to allocate its : 1186284

 

16) Leonard Industries uses departmental overhead rates to allocate its manufacturing overhead to jobs. The company has two departments: Building and Inspection. The Building Department uses a departmental overhead rate of $18 per machine hour, while the Inspection Department uses a departmental overhead rate of $15 per direct labour hour. Job 611 used the following direct labour hours and machine hours in the two departments:

 

Actual results

Building Department

Inspection

Department

Direct labour hours used

6

2

Machine hours used

10

0

 

The cost for direct labour is $25 per direct labour hour and the cost of the direct materials used by Job 611 is $1,500.

 

What was the total cost of Job 611 if Leonard Industries used the departmental overhead rates to allocate manufacturing overhead?

A) $1,700

B) $1,844

C) $1,880

D) $1,838

E) $1,910

 

Answer the following question(s) using the information below.

 

Ernsting Printers has contracts to complete weekly supplements required by forty-six customers. For the year 2012, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 12 million pages.

 

For 2012 Ernsting Printers has decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:

 

Cost pool

Manufacturing overhead costs

Activity level

Design changes

$60,000

300 design changes

Setups

320,000

5,000 setups

Inspections

    40,000

8,000 inspections

   Total manufacturing overhead costs

$420,000

 

 

During 2012, two customers, Wealth Managers and Health Systems, are expected to use the following printing services:

 

Activity

Wealth Managers

Health Systems

Pages

60,000

76,000

Design changes

10

0

Setups

20

10

Inspections

30

38

 

17) What is the cost driver rate if manufacturing overhead costs are considered one large cost pool and are assigned based on 12 million pages of production capacity?

A) $0.05 per page

B) $0.035 per page

C) $0.35 per page

D) $0.025 per page

E) $0.045 per page

 

18) Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Wealth Managers during 2012?

A) $2,500

B) $21,000

C) $1,500

D) $2,700

E) $2,100

 

19) Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?

A) $200 per change, $64 per setup, $5 per inspection

B) $180 per change, $76 per setup, $4 per inspection

C) $150 per change, $64 per setup, $4 per inspection

D) $180 per change, $76 per setup, $5 per inspection

E) $200 per change, $5 per setup, $64 per inspection

20) Using activity-based costing to allocate overhead costs, what is the total manufacturing overhead cost estimate for Wealth Managers during 2012?

A) $6,850

B) $3,250

C) $4,020

D) $3,430

E) $5,096

 

21) When selling price is cost plus 25% and costs are assigned using the single cost driver, number of pages printed, then

A) Ernsting Printers will want to drop Wealth Managers as a customer.

B) Wealth Managers will likely seek to do business with competitors.

C) Wealth Managers is unfairly over billed for its use of printing resources.

D) Wealth Managers is under billed for the job, while other jobs will be unfairly over billed.

E) All customers will be under billed for their jobs.

 

Answer the following question(s) using the information below.

 

Wallace Printing has contracts to complete weekly supplements required by forty-six customers. For the year 2012, manufacturing overhead cost estimates total $420,000 for an annual production capacity of 10 million pages.

 

For 2012 Wallace Printing decided to evaluate the use of additional cost pools. After analyzing manufacturing overhead costs, it was determined that number of design changes, setups, and inspections are the primary manufacturing overhead cost drivers. The following information was gathered during the analysis:

 

Cost pool

Manufacturing overhead costs

Activity level

Design changes

$60,000

200 design changes

Setups

320,000

4,000 setups

Inspections

    40,000

16,000 inspections

   Total manufacturing overhead costs

$420,000

 

 

During 2012, two customers, Wayward Insurance and Hapless Systems, are expected to use the following printing services:

 

Activity

Wayward Insurance

Hapless Systems

Pages

60,000

76,000

Design changes

10

2

Setups

20

10

Inspections

30

38

 

22) If manufacturing overhead costs are considered one large cost pool and are assigned based on 10 million pages of production capacity, what is the cost driver rate?

A) $0.25 per page

B) $0.05 per page

C) $0.025 per page

D) $0.042 per page

E) $0.42 per page

 

23) Using pages printed as the only overhead cost driver, what is the manufacturing overhead cost estimate for Hapless Systems during 2012?

A) $19,000

B) $3,800

C) $1,900

D) $2,520

E) $3,192

 

24) Assuming activity-cost pools are used, what are the activity-cost driver rates for design changes, setups, and inspections cost pools?

A) $300 per change, $80 per setup, $2.50 per inspection

B) $250 per change, $80 per setup, $3.75 per inspection

C) $210 per change, $2.50 per setup, $26.25 per inspection

D) $300 per change, $125 per setup, $4.00 per inspection

E) $300 per change, $2.50 per setup, $80 per inspection

25) Using activity-based costing to allocate overhead costs, what is the total manufacturing overhead cost estimate for Hapless Systems during 2012?

A) $3,113.75

B) $1,495.00

C) $2,068.00

D) $3,412.50

E) $3,665.00

 

 

 

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