Exam 7: Cost Assignment

Zang Company manufactures two products (X and Y). The overhead costs (£84,000) have been divided into three cost pools that use the following activity drivers/allocation bases: What is the amount of overhead cost to be assigned to Product X using machine hours as the allocation base?

The predetermined overhead rate is usually calculated

Examples of producing departments include all of the following EXCEPT

Holbrook, Inc., has identified the following overhead costs and cost drivers for next year: The following are two of the jobs completed during the year: The company's normal activity is 40,000 direct labour hours. Required:

Yang Manufacturing Company manufactures two products (A and B). The overhead costs (£58,000) have been divided into three cost pools that use the following activity cost drivers/location bases: What is the amount of overhead cost to be assigned to Product B using labour hours as the allocation base?

Figure 3 Ray Manufacturing has four categories of overhead. The four categories and the expected overhead costs for each category for next year are as follows: Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labour hours. For next year, 100,000 direct labour hours are budgeted. The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 10 percent. Estimates for the proposed job are as follows: The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Expected activity for the four activity-based cost drivers that would be used are as follows: -Refer to Figure 3 above. If Ray Manufacturing used direct labour hours as the cost driver and the company's bid is full cost plus 10 percent, the company's bid would be

A possible causal factor to use when allocating cafeteria costs would be

Figure 5 Peach, Inc., has identified the following overhead costs and cost drivers for next year: The following are two of the jobs completed during the year: The company's normal activity is 4,000 direct labour hours. Refer to Figure 5. If Peach, Inc., used direct labour hours to assign overhead, the unit cost for Job 401 would be

Which of the following is a key consideration in selecting an allocation base?

Which of the following characteristics is a consequence of the implementation of a plant-wide allocation rate?

The Underhill plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: The plant currently applies overhead using direct labour hours and expected capacity of 70,000 direct labour hours. The following data has been assembled for use in developing a bid for a proposed job: Total expected machine hours for all jobs during the year are 25,000, and the total expected number of inspections is 1,900. Using direct labour hours to assign overhead, the total cost of the potential job would be

Why is it important to have an accurate and reliable product costing system?

Which of the following would be the most appropriate base for allocating the costs of the maintenance department?

Figure 1 Harrison Co. produces two products, AB and XY. Information about the current period's production is as follows: Harrison uses a plantwide rate of £4 per machine hour to apply overhead to production. Budgeted overhead was £392,000, but actual overhead was £376,000. -Refer to Figure 1 above. How much of Harrison Company's overhead was applied to product AB?

Crow Company applies factory overhead in its two producing departments using a predetermined rate based on budgeted machine hours in the Mixing Department and based on budgeted labour hours in the Packaging Department. Variable cafeteria costs are allocated to the producing departments based on budgeted number of employees, and fixed costs are allocated based on the capacity number of employees. Variable maintenance costs are allocated on the budgeted number of direct labour hours, and fixed costs are allocated on labour hour capacity. The data concerning next year's operations are as follows: Required: a. Prepare a schedule showing the allocation of budgeted support department costs to producing departments. b. Determine the predetermined overhead rate for the producing departments.

A(n) _____ system first traces costs to activities and then to products.

Kramer Company has decided to use a predetermined rate to assign factory overhead to production. The following predictions have been made for 2004: Required: a. Compute the predetermined factory overhead rate under three different bases: (1) direct labour hours, (2) direct labour costs, and (3) machine hours. b. Assume that actual factory overhead was £152,500 and that Kramer elected to apply factory overhead to Work in Process based on direct labour hours. If actual direct labour was 42,000 hours for 2004, was factory overhead overapplied or underapplied? By how much?

The Jewell plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: The plant currently applies overhead using direct labour hours and expected capacity of 100,000 direct labour hours. The following data has been assembled for use in developing a bid for a proposed job. Bid prices are calculated as full manufacturing cost plus a 20 percent markup. Total expected machine hours for all jobs during the year is 60,000, and the total expected number of inspections is 4,000. Required:

The Dewey Company uses a predetermined overhead rate to apply manufacturing overhead to production. The rate is based on direct labour hours. Estimates for the year just ended are as follows: During the year Dewey Company used 37,000 direct labour hours. At the end of the year, Dewey Company records revealed the following information: Required: a. Calculate the predetermined overhead rate for the year. b. Determine the amount of overhead applied during the year. c. Determine the amount of underapplied or overapplied manufacturing overhead for the year.

Which of the following accurately describes advantages and disadvantages of employing a system of allocation that uses a plant-wide rate.