Deck 4: Activity Based Costing

Question 1

A plantwide factory overhead rate is computed by dividing total budgeted factory overhead costs by the plantwide allocation base.

Answer 1

True

Question 2

When a plantwide factory overhead rate is used, the total overhead costs allocated to all products are the same.

Answer 2

False

Question 3

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the factory overhead rate for the month is $68.65 (if the allocation is based on direct labor hours).

Answer 3

False

Question 4

Zorn Co. budgeted $600,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Zorn's plantwide factory overhead rate is $6.00 per unit.

Question 5

If the budgeted factory overhead cost is $460,000, the budgeted direct labor hours is 80,000, and the actual direct labor hours is 6,700 for the month, the amount of factory overhead to be allocated is $38,525 (if the allocation is based on direct labor hours).

Question 6

Which of the following does not rely on managerial decisions involving accurate product costing?

A) product constraints
B) emphasis of a product line
C) product mix
D) product price

Question 7

Managers depend on product costing to make decisions regarding continuing operations and product mix.

Question 8

A plantwide factory overhead rate assumes that all overhead is directly related to one activity representing the entire plant.

Question 9

A single plantwide overhead rate method is very expensive to apply.

Question 10

Pinacle Corp. budgeted $700,000 of overhead cost for the current year. Actual overhead costs for the year were $650,000. Pinacle's plantwide allocation base, machine hours, was budgeted at 100,000 hours. Actual machine hours were 80,000. A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced. Pinacle's plantwide factory overhead rate for the current year is:

A) $8.13 per machine hour
B) $7.00 per machine hour
C) $6.50 per machine hour
D) $8.75 per machine hour

Question 11

Which of the following is not a factory overhead allocation method?

A) single plantwide rate
B) multiple departmental rates
C) factory costing
D) activity-based costing

Question 12

The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost.

Question 13

Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are different across different departments and products.

Question 14

If the activities causing overhead costs are different across different departments and products, use of a plantwide factory overhead rate will cause distorted product costs.

Question 15

Bob's Biscuit Corporation budgeted $1,200,000 of factory overhead cost for the coming year. Its plantwide allocation base, machine hours, is budgeted at 100,000 hours. Budgeted units to be produced are 200,000 units. Bob's plantwide factory overhead rate is $12.00 per machine hour.

Question 16

Managers depend on accurate factory overhead allocation to make decisions regarding product mix and product price.

Question 17

Everest Co. uses a plantwide factory overhead rate based on direct labor hours. Overhead costs would be overcharged to which of the following departments?

A) A labor-intensive department
B) A capital-intensive department
C) A materials-intensive department
D) All of the above

Question 18

Product costing consists of only direct materials and direct labor.

Question 19

Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are the same across all departments and products.

Question 20

When a plantwide factory overhead rate is used, overhead costs are applied to all products by a single rate.

Question 21

Tulip Company produces two products, T and U. The indirect labor costs include the following two items:
The following activity-base usage and unit production information is available for the two products:
(a) Determine the single plantwide factory overhead rate, using direct labor hours as the activity base.
(b) Determine the factory overhead cost per unit for Products T and U, using the single plantwide factory overhead rate.
(c) Determine the activity rate for plant supervision and setup labor, assuming that the activity base for supervision is direct labor hours and the activity base for setup labor is number of setups.
(d) Determine the factory overhead cost per unit for Products T and U, using activity-based costing.
(e) Why is the factory overhead cost per unit different for the two products under the two methods?

Question 22

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?

A) $77.00
B) $39.00
C) $19.50
D) $59.92

Question 23

Kettle Factory produces two similar products - gloves and mittens.  The total plant budget is $1,050,000 with  600,000 estimated direct labor hours.  It is further estimated that glove production will require 375,000 direct labor hours and mitten production will require 225,000 direct labor hours.
(a) Determine the single plant factory overhead rate based on direct labor hours.
(b) How much is the factory overhead cost per pair of gloves if each pair requires 2 hours to produce?
(c) How much is the factory overhead cost per pair of mittens if each pair takes 1.5 hours to produce?
(d) How much total factory overhead will be allocated to glove production if 187,500 pairs are budgeted and 190,000 pairs are actually produced during the period?
(e) How much total factory overhead will be allocated to mitten production if 150,000 pairs are budgeted and 140,000 pairs are actually produced during the period?

Question 24

Bugaboo Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. The production process is relatively simple, and factory overhead costs are allocated to products using a single plantwide factory rate based on direct labor hours. Information for the month of May, Bugaboo's first month of operations, follows:
Bugaboo has budgeted direct labor costs for May at $8.50 per hour. Budgeted direct materials costs for May are: Fluffs, $0.75/unit; Crinkles $0.40/unit; and Snaps $0.30/unit.
Bugaboo's budgeted overhead costs for May are:
Assume that Bugaboo sells all the boxes it produces in May.
(a) Compute Bugaboo's plantwide factory overhead rate for May.
(b) Compute the product cost in May for each type of cookie.
(c) Does Bugaboo's use of a plantwide factory overhead rate in any way distort the  product costs for May?

Question 25

Blackwelder Factory produces two similar products - small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours.
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to desk lamp production if actual direct hours for the period is 118,000?

A) $118,000
B) $200,000
C) $188,800
D) $125,000

Question 26

The Roget Factory has determined that its budgeted factory overhead budget for the year is $15,500,000.  They plan to produce 2,000,000 units.  Budgeted direct labor hours are 1,050,000 and budgeted machine hours are 750,000. Using the single plantwide factory overhead rate based on direct labor hours, calculate the factory overhead rate for the year.

A) $14.76
B) $20.67
C) $7.75
D) $77.50

Question 27

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs.  What would the single plantwide rate be if it was based on machine hours instead of labor hours?

A) $9.00 per machine hour
B) $19.50 per  machine hour
C) $7.43 per  machine hour
D) $4.00 per  machine hour

Question 28

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Using a single plantwide rate, determine the overhead rate per unit for Blue Ridge Marketing Inc.'s Product B.

A) $496.00
B) $144.00
C) $640.00
D) $320.00

Question 29

The total factory overhead for Big Light Company is budgeted for the year at $807,500. Big Light manufactures two different products - night lights and desk lamps. Night lights is budgeted for 60,000 units.  Each night light requires 1/2 hour of direct labor. Desk lamps is budgeted for 80,000 units.  Each desk lamp requires 2 hours of direct labor. Determine:
(a) the total number of budgeted direct labor hours for year
(b) the single plantwide factory overhead rate using direct labor hours as the allocation base
(c) the factory overhead allocated per unit for each product using the single plantwide factory overhead rate calculated in (b).

Question 30

The Botosan Factory has determined that its budgeted factory overhead budget for the year is $13,500,000 and budgeted direct labor hours are 10,000,000. If the actual direct labor hours for the period are 350,000, how much overhead would be allocated to the period?

A) $675,000
B) $470,630
C) $472,500
D) $236,250

Question 31

Adirondak Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. Calculate the plantwide factory overhead rate for Adirondack Marketing Inc.

A) $25.00 per dlh
B) $0.07 per dlh
C) $14.77 per dlh
D) $ 6.25 per dlh

Question 32

Common allocation bases are

A) direct labor dollars, direct labor hours, direct material dollars
B) direct labor dollars, direct labor hours, machine hours
C) direct labor dollars, direct labor hours, machine dollars
D) machine dollars, direct labor dollars, direct labor hours

Question 33

The Sawtooth Leather Company manufactures leather handbags and moccasins. For simplicity, the company has decided to use a single plantwide factory overhead rate method to allocate factory overhead. Calculate the amount of factory overhead to be allocated to each unit using direct labor hours.
Handbags = 60,000 units, 2 hours of direct labor
Moccasins= 40,000 units, 3 hours of direct labor
Total budgeted factory overhead cost = $360,000

Question 34

Multiple production department factory overhead rates are most useful when production departments significantly differ in their manufacturing processes.

Question 35

Adirondak Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. Calculate the overhead rate per unit for Product A in the painting department of Adirondack Marketing Inc.

A) $236.32 per unit
B) $325.00 per unit
C) $147.70 per unit
D) $161.00 per unit

Question 36

Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit.
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to deluxe widget production if budgeted production for the period is 50,000 units and actual production for the period is 58,000 units?

A) $391,500
B) $225,000
C) $261,000
D) $337,500

Question 37

Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit.
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to regular widget production if budgeted production for the period is 75,000 units and actual production for the period is 72,000 units?

A) $168,750
B) $324,000
C) $162,000
D) $337,500

Question 38

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Blinks?

A) $78.00
B) $19.50
C) $37.45
D) $56.00

Question 39

Blackwelder Factory produces two similar products - small lamps and desk lamps. The total plant overhead budget is $640,000 with 400,000 estimated direct labor hours. It is further estimated that small lamp production will require 275,000 direct labor hours and desk lamp production will need 125,000 direct labor hours.
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Blackwelder Factory allocate to small lamp production if actual direct hours for the period is 285,000?

A) $275,000
B) $285,000
C) $440,000
D) $456,000

Question 40

Condelezza Co. manufactures two products, A and B, in two production departments, Assembly and Finishing. Condelezza Co. expects to produce 10,000 units of Product A and 20,000 units of Product B in the coming year. Budgeted factory overhead costs for the coming year are:
The machine hours expected to be used in the coming year are as follows:
(a) Compute the plantwide factory overhead rate.
Compute the production department factory overhead rates.
(b) Compute the factory overhead per unit for each product using (1) the single plantwide rate and (2) production department factory overhead rates.
(c)      Which method is better (plantwide or department)?  Why?

Question 41

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours. If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, how much factory overhead will the Kaumajet Factory allocate to each unit of desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours?

A) $11.10
B) $4.91
C) $5.00
D) $7.20

Question 42

Scoresby Co. uses 6 machine hours and 2 direct labor hours to produce Product X. It uses 8 machine hours and 16 direct labor hours to produce Product Y. Scoresby's Assembly and Finishing departments have factory overhead rates of $240 per machine hour and $160 per direct labor hour, respectively. How much overhead cost will be charged to the two products?

A) Product X = $3,200; Product Y = $9,600
B) Product X = $800; Product Y = $800
C) Product X = $1,760; Product Y = $4,480
D) Product X = $1,440; Product Y = $2,560

Question 43

Use of a plantwide factory overhead rate distorts product costs when there are differences in the factory overhead rates across different production departments and when products require different ratios of allocation-base usage in each production department.

Question 44

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments-Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the Assembly Department overhead rate per labor hour?

A) $10.50
B) $19.50
C) $3.75
D) $4.38

Question 45

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Determine the overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system.

A) $425.60 per unit
B) $115.20 per unit
C) $214.40 per unit
D) $320.00 per unit

Question 46

When production departments differ significantly in their manufacturing process, it is recommended that the single plantwide factory overhead rate be used for allocating factory overhead.

Question 47

Use of a plantwide factory overhead rate does not distort product costs when there are differences in the factory overhead rates across different production departments.

Question 48

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Determine the overhead in the Painting Department for each unit of Product B if Blue Ridge Marketing Inc. uses a multiple department rate system.

A) $49.60 per unit
B) $99.20 per unit
C) $28.80 per unit
D) $64.00 per unit

Question 49

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours. If the budget estimates that a table lamp will require 2 hours of finishing and 1 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to table lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 75,000 units are produced?

A) $368,250
B) $540,000
C) $832,500
D) $475,000

Question 50

Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

Question 51

Using a plantwide factory overhead rate distorts product costs when:

A) products require different ratios of allocation-base usage in each production department
B) significant differences exist in the factory overhead rates used across different production departments
C) both A and B are true
D) neither A nor B are true

Question 52

Using multiple department factory overhead instead of a single plantwide factory overhead rate:

A) results in more accurate product costs
B) results in distorted product costs
C) is simpler and less expensive to compute than a plantwide rate
D) applies overhead costs to all departments equally

Question 53

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Determine the overhead in the Finishing Department for each unit of Product A if Blue Ridge Marketing Inc. uses a multiple department rate system.

A) $99.20 per unit
B) $49.60 per unit
C) $64.00 per unit
D) $28.80 per unit

Question 54

In an effort to simplify the multiple production department factory overhead rate method, the same rate can be used for all departments.

Question 55

Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Determine the overhead from both production departments allocated to each unit of Product A if Blue Ridge Marketing Inc. uses a multiple department rate system.

A) $396.80 per unit
B) $425.60 per unit
C) $320.00 per unit
D) $214.40 per unit

Question 56

Multiple production department factory overhead rates are less accurate than are plantwide factory overhead rates.

Question 57

Multiple production department factory overhead rates are more accurate than are plantwide factory overhead rates.

Question 58

Multiple production department factory overhead rates are most useful when production departments are very similar in their manufacturing processes.

Question 59

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours. If the budget estimates that a desk lamp will require 1 hours of finishing and 2 hours of production, what is the total amount of factory overhead the Kaumajet Factory will allocate to desk lamps using the multiple production department factory overhead rate method with an allocation base of direct labor hours, if 26,000 units are produced?

A) $540,000
B) $187,200
C) $475,000
D) $288,600

Question 60

The Kaumajet Factory produces two products - table lamps and desk lamps. It has two separate departments - Finishing and Production. The overhead budget for the Finishing Department is $550,000, using 500,000 direct labor hours. The overhead budget for the Production Department is $400,000 using 80,000 direct labor hours. If the budget estimates that a table lamp will require 2 hours of finishing and 1 hours of production, how much factory overhead will the Kaumajet Factory allocate to each unit of table lamp using the multiple production department factory overhead rate method with an allocation base of direct labor hours?

A) $6.33
B) $4.91
C) $5.00
D) $7.20

Question 61

Ratchford Clocks manufactures alarm clocks and wall clocks and allocates overhead based on direct labor hours. The production process is set up in three departments: Assembly, Finishing, and Calibrating. The following is information regarding the direct labor used to produce one unit of the two clocks:
The budget includes the following factory overhead by department:
Ratchford Clocks is planning to manufacture 50,000 alarm clocks and 10,000 wall clocks.
(a) Determine the total number of hours that will be needed by department.
(b) Determine the factory overhead rate by department using the multiple production department factory overhead rate method.
(c) Determine the amount of factory overhead to be allocated to each unit of alarm clocks and wall clocks.
(d) Determine the amount of total factory overhead to be allocated to the alarm clocks and wall clocks.

Question 62

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate per production order for scheduling.

A) $200.00
B) $20.00
C) $29.41
D) $10.42

Question 63

Estimated activity-base usage quantities are the total activity-base quantities related to each product.

Question 64

All of the following can be used as an allocation base for calculating factory overhead rates except:

A) direct labor dollars
B) direct labor hours
C) machine hours
D) total units produced

Question 65

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments-Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the overhead cost per unit for Rings?

A) $65.25
B) $23.25
C) $44.10
D) $64.50

Question 66

Explain why it is imperative that proper factory overhead be allocated in factories that produce multiple products.

Question 67

Activity rates are computed by dividing the cost budgeted for each activity pool by the estimated activity base for that pool.

Question 68

Activity cost pools are assigned to products, using factory overhead rates for each activity.

Question 69

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate for product development per change.

A) $73,000
B) $8,588
C) $30,417
D) $16,222

Question 70

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate for production per machine hour.

A) $62.50
B) $150.00
C) $75.00
D) $176.47

Question 71

Direct labor hours is not a cost pool that is regularly used in the activity-based costing method.

Question 72

The Anazi Leather Company manufactures leather handbags and moccasins.  The company has been using the factory overhead rate method but has decided to evaluate the multiple production department factory overhead rate to allocate factory overhead.  The factory overhead estimated per unit together with direct materials and direct labor will help determine selling prices.
Handbags = 60,000 units, 3 hours of direct labor
Moccasins= 40,000 units, 2 hours of direct labor
Total budgeted factory overhead cost = $360,000
The company has two different production departments: Cutting and Sewing.  The Cutting Department has a factory overhead budget of $80,000.  Each unit will require 1 direct labor hour or a total of 100,000 direct labor hours.
The Sewing Department estimates factory overhead in the amount of  $280,000.  Handbags require 2 hours of sewing time and Moccasins require 1 hour for a total of 160,000 labor hours.
Calculate the total factory overhead to be allocated to each product using direct labor hours.

Question 73

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate for materials handling per move.

A) $58.82
B) $50.00
C) $20.83
D) $80.65

Question 74

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments-Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the overhead cost per unit for Dings?

A) $65.25
B) $56.75
C) $23.25
D) $64.50

Question 75

Activity-based costing is much easier to apply than single plantwide factory overhead allocation.

Question 76

Which of the following are the two most common allocation bases for factory overhead?

A) Total overhead dollars and machine hours
B) Direct labor hours and machine hours
C) Direct labor hours and factory expenses
D) Machine hours and factory expenses

Question 77

Activity cost pools are cost accumulations associated with a given activity.

Question 78

Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Determine the activity rate for procurement per purchase order.

A) $43.53
B) $18.50
C) $15.42
D) $37.00

Question 79

The Aleutian Company produces two products, Rings and Dings. They are manufactured in two departments-Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication Department, which has an estimated overhead of $90,000. All of the labor hours take place in the Assembly Department, which has an estimated total overhead of $105,000.
The Aleutian Company uses departmental overhead rates. The Fabrication Department uses machine hours for an allocation base, and the Assembly Department uses labor hours.
What is the Fabrication Department overhead rate per machine hour?

A) $10.50
B) $9.00
C) $8.12
D) $3.75

Question 80

The Camper's Edge Factory produces two products - canopies and tents. It has two separate departments - Cutting and Sewing. The budget is $350,000 for the Cutting Department and $400,000 for the Sewing Department. Each canopy requires 2 hours of cutting and 1 hour of sewing. Each tent requires 1 hour of cutting and 6 hours of sewing. The budget estimates that 20,000 canopies and 10,000 tents will be manufactured during the year. Determine (a) the total number of budgeted direct labor hours for the year in each department, (b) the departmental factory overhead rates for both departments, and (c) the factory overhead allocated per unit of each product using the department factory overhead allocation rates using direct labor hours as the base.