Exam 3: Activity-Based Costing

Sepulvado, Inc., manufactures and sells two products: Product N7 and Product D4. 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 $15.50 per DLH. The direct materials cost per unit is $197.00 for Product N7 and $290.50 for Product D4. 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 overhead assigned to each unit of Product D4 would be closest to:

Boutet, Inc., manufactures and sells two products: Product G5 and Product U1. 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 $21.10 per DLH. The direct materials cost per unit is $241.40 for Product G5 and $283.80 for Product U1. 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 overhead assigned to each unit of Product G5 would be 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:

In the past, Hypochondriac Hospital allocated all of its overhead costs to patients based on nursing time. Hypochondriac has decided to switch to an activity based costing system using three activity cost pools. Information related to the new system is as follows: Data concerning two patients follows: Under the new activity-based costing system, how much overhead cost would be assigned to each patient?

Mouret Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products. Last year, Product N79A required 28 batches, 6 customer orders, and 712 assembly hours. Required: How much overhead cost would be assigned to Product N79A using the company's activity-based costing system? Show your work!

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 Y6 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Dunnivan, Inc., manufactures and sells two products: Product T4 and Product A1. 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 $29.90 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: The unit product cost of Product T4 under activity-based costing is closest to:

Aboud, Inc., manufactures and sells two products: Product Q6 and Product Z7. 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 $25.90 per DLH. The direct materials cost per unit for each product is given below: 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 Z7 under activity-based costing is closest to:

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: The unit product cost of Product L8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Din, Inc., manufactures and sells two products: Product M5 and Product A9. 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 $26.60 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.

Accurso, Inc., manufactures and sells two products: Product J9 and Product S5. 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 $22.50 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: If the company allocates all of its overhead based on direct labor-hours using its traditional costing method, the overhead assigned to each unit of Product J9 would be closest to:

When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs:

Activity rates from Lippard Corporation's activity-based costing system are listed below. The company uses the activity rates to assign overhead costs to products: Last year, Product H50E involved 9 customer orders, 666 assembly hours, and 77 batches. How much overhead cost would be assigned to Product H50E using the activity-based costing system?

When designing an activity-based costing system, accountants should be tasked with identifying the activities they think are important and that consume most of the resources in the organization.

Material handling is an example of a:

Uson, Inc., manufactures and sells two products: Product Z2 and Product H9. 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 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.

The challenge in designing an activity-based costing system is to identify a reasonably small number of activities that explain the bulk of the variation in overhead costs.

In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:

Avella, Inc., manufactures and sells two products: Product C2 and Product T1. 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's expected total manufacturing overhead is $775,080. If the company allocates all of its overhead based on direct labor-hours, the overhead assigned to each unit of Product T1 would be closest to:

Joanette, Inc., manufactures and sells two products: Product A0 and Product Q0. 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 $18.90 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: Determine the unit product cost of each product under the activity-based costing method.