Exam 3: Activity-Based Costing

Jaure, Inc., manufactures and sells two products: Product H4 and Product I3. 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 $29.40 per DLH. The direct materials cost per unit is $244.70 for Product H4 and $206.20 for Product I3. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Required: 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.

Direct labor is an appropriate allocation base for overhead when overhead costs and direct labor are highly correlated.

Brenneis, Inc., manufactures and sells two products: Product T9 and Product T2. 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 $18.10 per DLH. The direct materials cost per unit is $115.20 for Product T9 and $221.40 for Product T2. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product T9 under activity-based costing is closest to:

Swimm Company allocates materials handling cost to the company's two products using the below data: The total materials handling cost for the year is expected to be $72,065. If the materials handling cost is allocated on the basis of material moves, the total materials handling cost allocated to the modular homes is closest to:

Kamerling, Inc., manufactures and sells two products: Product H0 and Product Q8. 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 $16.50 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 overhead applied to each unit of Product Q8 under activity-based costing is closest to:

Schoeninger, Inc., manufactures and sells two products: Product X1 and Product I6. The company has 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:

Parody, Inc., manufactures and sells two products: Product W5 and Product V5. 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 $16.30 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.

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: 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 U7 would be closest to:

Klasinski, Inc., manufactures and sells two products: Product C2 and Product V1. 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 $26.40 per DLH. The direct materials cost per unit is $106.80 for Product C2 and $131.40 for Product V1. The company has 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.

When a company changes from a traditional costing system to an activity-based costing system, the unit product costs of low-volume products typically change more than the unit product costs of high-volume products.

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 F8 under activity-based costing is closest to:

Kuperman, Inc., manufactures and sells two products: Product V1 and Product D8. The production of Product V1 is 400 units and of Product D8 is 200 units. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product V1 under activity-based costing is closest to:

In activity-based costing, unit product costs computed for external financial reports include direct materials costs.

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: The 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 unit product cost of Product U6 under activity-based costing is closest to:

Serva, Inc., manufactures and sells two products: Product R4 and Product N4. 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 $24.70 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 R4 would be closest to:

Masiclat, Inc., manufactures and sells two products: Product K2 and Product O8. 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 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 K2 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Abbe, Inc., manufactures and sells two products: Product O9 and Product A3. 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 $24.40 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 O9 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Frogge, Inc., manufactures and sells two products: Product H0 and Product N3. 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 $23.60 per DLH. The direct materials cost per unit is $160.60 for Product H0 and $240.30 for Product N3. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: The overhead applied to each unit of Product N3 under activity-based costing is closest to:

Tesh, Inc., manufactures and sells two products: Product P9 and Product I9. 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 Labor-Related activity cost pool under activity-based costing is closest to:

Swimm Company allocates materials handling cost to the company's two products using the below data: The total materials handling cost for the year is expected to be $72,065. If the materials handling cost is allocated on the basis of direct labor-hours, the total materials handling cost allocated to the prefab barns is closest to: