Question : 101. The It’s All Hair Salon uses an activity-based costing system : 1233951

 

101. The It’s All About Hair Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: 

Activity

Activity Rate

Hair Washing

$2.50

Conditioning

$3.00

Chemical Treatment

$25.00

Styling

$10.00

 

 

 

 

Hair Washing

Conditioning

Chemical Treatment

Styling

Hair Cut

1

1

0

0

Complete Style

1

1

0

1

Perms

2

3

1

1

Hi-Lights

3

4

2

1

 

 

 

 

 

Determine the cost of services for a hi-light? 

102. Arlon Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. The production process is relatively simple, and factory overhead costs are allocated to products using a single plant-wide factory rate based on direct labor hours. Information for the month of May 2000, Arlon’s first month of operations, follows: 

 

BudgetedUnit Volume

Direct LaborHours per unit

Fluffs

80,000 boxes

0.10

Crinkles

60,000 boxes

0.20

Snaps

20,000 boxes

1.00

 

 

 

Arlon has budgeted direct labor costs for May at $4.50 per hour. Budgeted direct materials costs for May are: Fluffs, $0.85/unit; Crinkles $0.40/unit; and Snaps $0.30/unit.Arlon’s budgeted overhead costs for May are: 

Indirect labor

$280,000

Utilities

65,000

Supplies

45,000

Depreciation

  30,000

Total

$420,000

 

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Assume that Arlon sells all the boxes it produces in May. 

(a)

Compute Arlon’s plant-wide factory overhead rate for May.

 

 

(b)

Compute May’s product cost for each type of cookie.

 

 

(c)

Does Arlon’s use of a plant-wide factory overhead rate in any way distort May’s product costs?

 

 

 

103. Nite Lite Factory produces two similar products – small lamps and desk lamps.  The total plant budget is $800,000 with  640,000 estimated direct labor hours.  It is further estimated that small lamp production will have 375,000 direct labor hours and desk lamp production will require 265,000 direct labor hours.

(a)

Determine the single plant factory overhead rate based on direct labor hours.

(b)

How much is the factory overhead cost per unit if each small lamp uses 3 hours per unit?

(c)

How much is the factory overhead cost per unit if each desk lamp uses 2.5 hours per unit?

(d)

How much total factory overhead will be allocated to the small lamp production if 130,000 units are produced during the period?

(e)

How much total factory overhead will be allocated to the desk lamp production if 104,000 are produced during the period?

 

 

 

104. Powell Co. manufactures two products, A and B, in two production departments, Assembly and Finishing. Powell Co. expects to produce 10,000 units of Product A and 20,000 units of Product B in the coming year. Budgeted factory overhead costs for the coming year are: 

Assembly

$310,000

Finishing

 245,000

Total

$555,000

 

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The machine hours expected to be used in the coming year are as follows: 

 

AssemblyDept.

FinishingDept.

Product A

15,100

 9,000

Product B

 4,900

11,000

  Total

20,000

20,000

 

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(a)

Compute the production department factory overhead rates.

(b)

Compute the factory overhead per unit for each product.