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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