Question : 71.              Addison Company manufactures two products, Regular and Supreme. Addison’s : 1311683

 

 

71.              Addison Company manufactures two products, Regular and Supreme. Addison’s overhead costs consist of machining, $2,500,000; and assembling, $1,250,000. Information on the two products is:

RegularSupreme

Direct labor hours10,00015,000

Machine hours10,00030,000

Number of parts90,000160,000

Overhead applied to Supreme using activity-based costing is

a.$1,075,000.

b.$1,500,000.

c.$2,250,000.

d.$2,675,000.

 

 

72.              Teller, Inc. produces 3 products: P1, Q2, and R3. P1 requires 400 purchase orders, Q2 requires 600 purchase orders, and R3 requires 1,000 purchase orders. Teller has identified an ordering and receiving activity cost pool with allocated overhead of $180,000 for which the cost driver is purchase orders. Direct labor hours used on each product are 50,000 for P1, 40,000 for Q2, and 110,000 for R3. How much ordering and receiving overhead is assigned to each product?

P1                     Q2                    R3

a.$60,000$60,000$60,000

b.$45,000$36,000$99,000

c.$36,000$54,000$90,000

d.$40,500$45,000$94,500

 

 

73.              Hagar Co. computed an overhead rate for machining costs ($1,500,000) of $15 per machine hour. Machining costs are driven by machine hours. If computed based on direct labor hours, the overhead rate for machining costs would be $30 per direct labor hour.  The company produces two products, Cape and Chap. Cape requires 60,000 machine hours and 20,000 direct labor hours, while Chap requires 40,000 machine hours and 30,000 direct labor hours. Using activity-based costing, machining costs assigned to each product is

Cape           Chap

a.$600,000$900,000

b.$750,000$750,000

c.$800,000$700,000

d.$900,000$600,000

 

 

74.              Wilder Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model requires 10,000 direct labor hours and the Luxury requires 30,000 direct labor hours. The company produces 3,400 units of the Basic model and 600 units of the Luxury model each year. The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced. The company expects to incur $84,600 of total inspecting costs this year. How much of the inspecting costs should be allocated to the Basic model using ABC costing?

a.$21,150

b.$30,600

c.$42,300

d.$71,910

 

 

75.              Ben Gordon, Inc. manufactures 2 products, wheels and seats. The company has estimated its overhead in the assembling department to be $330,000. The company produces 300,000 wheels and 600,000 seats each year. Each wheel uses 2 parts, and each seat uses 3 parts. How much of the assembly overhead should be allocated to wheels?

a.$  82,500.

b.$110,000.

c.$132,000

d.$141,428.

 

76.              Clemson Co. incurs $700,000 of overhead costs each year in its three main departments, machining ($400,000), inspections ($200,000) and packing ($100,000). The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year.  Information about Clemson’s two products is as follows:

Product XProduct Y

Machining hours1,0003,000

Inspections100500

Orders packed350650

Direct labor hours1,7001,800

 

If traditional costing based on direct labor hours is used, how much overhead is assigned to Product X this year?

a.$168,334

b.$242,308

c.$340,000

d.$350,000

 

 

77.              Clemson Co. incurs $700,000 of overhead costs each year in its three main departments, machining ($400,000), inspections ($200,000) and packing ($100,000). The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year.  Information about Clemson’s two products is as follows:

Product XProduct Y

Machining hours1,0003,000

Inspections100500

Orders packed350650

Direct labor hours1,7001,800

 

Using ABC, how much overhead is assigned to Product X this year?

a.$168,334

b.$242,308

c.$340,000

d.$350,000

 

 

78.              A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available:

Department    Expected use of Driver  Cost

Ordering and Receiving              2,000$   800,000

Mixing50,0001,000,000

Testing1,500900,000

MC 78.(Cont.)

 

Production information for Goo is as follows:

Department    Expected use of Driver

Ordering and Receiving400

Mixing20,000

Testing500

 

Compute the amount of overhead assigned to Goo.

a.$   675,000

b.$   860,000

c.$1,054,764

d.$1,350,000

 

 

79.A company incurs $2,700,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available:

Department    Expected use of Driver  Cost

Ordering and Receiving              2,000$  800,000

Mixing50,0001,000,000

Testing 1,500900,000

 

Production information for Slime is as follows:

Department    Expected use of Driver

Ordering and Receiving              1,600

Mixing30,000

Testing1,000

 

Compute the amount of overhead assigned to Slime.

a.$1,350,000

b.$1,645,234

c.$1,840,000

d.$2,025,000

 

 

80.              One of Hatch Company’s activity cost pools is machine setups, with estimated overhead of $300,000. Hatch produces sparklers (400 setups) and lighters (600 setups).  How much of the machine setup cost pool should be assigned to sparklers?

a.$300,000

b.$120,000

c.$150,000

d.$180,000