Exam 3: Activity-Based Costing

Olide, Inc., manufactures and sells two products: Product B9 and Product C8. The annual production and sales of Product of B9 is 300 units and of Product C8 is 100 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 B9 under activity-based costing is closest to:

Swagg Jewelry Corporation manufactures custom jewelry. In the past, Swagg has been using a traditional overhead allocation system based solely on direct labor-hours. Sensing that this system was distorting costs and selling prices, Swagg has decided to switch to an activity-based costing system using three activity cost pools. Information on these activity cost pools are as follows: Job #309 incurred $900 of direct material, 30 hours of direct labor at $40 per hour, 80 machine hours, and 5 inspections. Required: a. What is the cost of the job under the activity-based costing system? b. Relative to the activity-based costing system, would Job #309 have been overcosted or undercosted under the traditional system and by how much?

Ermitanio, Inc., manufactures and sells two products: Product U8 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 $18.50 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: 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. g. What is the difference between the overhead per unit under the traditional costing method and the activity-based costing system for each of the two products? h. What is the difference between the unit product costs under the under the traditional costing method and the activity-based costing system for each of the two products

Paolello, Inc., manufactures and sells two products: Product P5 and Product N5. 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 $24.60 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: The overhead applied to each unit of Product P5 under activity-based costing is 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 O8 under the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours is closest to:

Bohringer, Inc., manufactures and sells two products: Product A1 and Product X5. 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 $28.20 per DLH. The direct materials cost per unit is $256.50 for Product A1 and $165.20 for Product X5. The company has 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:

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 E4 under activity-based costing is closest to:

Whiteley, Inc., manufactures and sells two products: Product M5 and Product P4. 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 $27.50 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per Unit Product M5 \ 185.20 Product P4 \ 244.20 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 P4 under activity-based costing is closest to:

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: 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 T9 would be 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 Machine Setups activity cost pool 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 overhead applied to each unit of Product L8 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: The activity rate for the Labor-Related activity cost pool under activity-based costing is closest to:

Batch-level activities are performed each time a batch of goods is processed. The cost of a batch-level activity is proportional to the number of units in the batch.

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: Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

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 the company's traditional costing method in which all overhead is allocated on the basis of direct labor-hours 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 activity rate for the General Factory activity cost pool 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 predetermined overhead rate would be closest to:

Scarff, Inc., manufactures and sells two products: Product O6 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 $23.20 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:

In activity-based costing, unit product costs computed for external financial reports include direct materials, direct labor, and only a part of manufacturing overhead costs.

Meiler, Inc., manufactures and sells two products: Product T6 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 $15.90 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. 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.