Exam 3: Activity-Based Costing

Lystra Corporation manufactures two products, Product B and Product H. Product H is of fairly recent origin, having been developed as an attempt to enter a market closely related to that of ProductB. Product H is produced on an automated production line. Overhead is currently assigned to the products on the basis of direct-labor-hours. The company estimated it would incur $450,000 in manufacturing overhead costs and produce 30,000 units of Product B and 7,500 units of Product H during the current year. Unit costs for materials and direct labor are: Required: a. Compute the predetermined overhead rate under the current costing method and determine the unit product cost of each product for the current year. b. The company's overhead costs can be attributed to four major activities. These activities and the amount of overhead cost attributable to each for the current year are given below: Using the data above and an activity-based costing approach, determine the unit product cost of each product for the current year. B. Product H is the more complex of the two products, requiring two hours of direct labor time per unit to manufacture compared to one hour of direct labor time for Product

Mellencamp, Inc., manufactures and sells two products: Product A3 and Product Y6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $24.20 per DLH. The direct materials cost per unit is $146.60 for Product A3 and $256.20 for Product Y6. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The unit product cost of Product A3 under activity-based costing is closest to:

Pachero, Inc., manufactures and sells two products: Product T1 and Product U6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: he direct labor rate is $15.90 per DLH. The direct materials cost per unit is $259.80 for Product T1 and $188.80 for Product U6. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:

Trezise, Inc., manufactures and sells two products: Product L7 and Product O3. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $15.60 per DLH. The direct materials cost per unit is $257.70 for Product L7 and $288.30 for Product O3. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a. Compute the activity rates under the activity-based costing system. b. Determine how much overhead would be assigned to each product under the activity-based costing system. c. Determine the unit product cost of each product under the activity-based costing method.

In the second-stage allocation in activity-based costing, overhead costs are allocated from activity cost pools to products.

In activity-based costing, unit product costs computed for external financial reports do NOT include:

An activity measure in activity-based costing expresses how much of an activity is carried out and it is used as the allocation base for assigning overhead costs to departments.

The plant manager's work is an example of a:

Angara Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: The activity rate for the batch setup activity cost pool is closest to:

Dace Company manufactures two products, Product F and ProductG. The company expects to produce and sell 3,200 units of Product F and 2,100 units of Product G during the current year. Data relating to the company's three activity cost pools are given below for the current year: Required: Using the activity-based costing approach, determine the overhead cost per unit for each product.

Malan Corporation has provided the following data from its activity-based costing accounting system: Required: Compute the activity rates for each of the three cost pools. Show your work!

Hewett, Inc., manufactures and sells two products: Product E7 and Product U7. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $29.50 per DLH. The direct materials cost per unit is $164.10 for Product E7 and $289.50 for Product U7. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The activity rate for the Production Orders activity cost pool under activity-based costing is closest to:

Mahaxay, Inc., manufactures and sells two products: Product P0 and Product L5. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $16.90 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a. The company currently uses a traditional costing method in which overhead is applied to products based solely on direct labor-hours. Compute the company's predetermined overhead rate under this costing method. b. How much overhead would be applied to each product under the company's traditional costing method? c. Determine the unit product cost of each product under the company's traditional costing method. d. Compute the activity rates under the activity-based costing system. e. Determine how much overhead would be assigned to each product under the activity-based costing system. f. Determine the unit product cost of each product under the activity-based costing method.

Finken, Inc., manufactures and sells two products: Product H9 and Product L0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $16.10 per DLH. The direct materials cost per unit is $256.40 for Product H9 and $125.00 for Product L0. The estimated total manufacturing overhead is $441,772. The unit product cost of Product L0 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Villeda Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Data concerning two products appear below: Required: How much overhead cost would be assigned to each of the two products using the company's activity-based costing system?

Marchan, Inc., manufactures and sells two products: Product K1 and Product S6. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The activity rate for the General Factory activity cost pool under activity-based costing is closest to:

Filosa, Inc., manufactures and sells two products: Product W9 and Product F8. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The total overhead applied to Product W9 under activity-based costing is closest to:

Neldon, Inc., manufactures and sells two products: Product S3 and Product K2. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $18.00 per DLH. The direct materials cost per unit for each product is given below: The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a. Determine the unit product cost of each product under the company's traditional costing method. b. Determine the unit product cost of each product under the activity-based costing method.

Moul, Inc., manufactures and sells two products: Product Y8 and Product Z9. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $18.80 per DLH. The direct materials cost per unit is $116.30 for Product Y8 and $187.40 for Product Z9. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: In all computations involving dollars in the following requirements, round off your answer to the nearest whole cent. a. Compute the activity rates under the activity-based costing system. b. Determine how much overhead would be assigned to each product under the activity-based costing system. c. Determine the unit product cost of each product under the activity-based costing method.

Betenbaugh, Inc., manufactures and sells two products: Product E4 and Product L8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: The direct labor rate is $29.00 per DLH. The direct materials cost per unit is $223.90 for Product E4 and $122.30 for Product L8. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the predetermined overhead rate would be closest to: