Deck 26: Using a Modified Form of Activity-Based Costing to

Question 1

Poma Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, R78S and N32Y, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,427,040 and the company's estimated total direct labor-hours for the year is 24,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The unit product cost of product N32Y under the activity-based costing system is closest to:

A) $136.00
B) $76.70
C) $59.30
D) $136.16

Answer 1

A

Question 2

Poma Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, R78S and N32Y, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,427,040 and the company's estimated total direct labor-hours for the year is 24,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The unit product cost of product R78S under the company's traditional costing system is closest to:

A) $36.00
B) $59.83
C) $47.20
D) $59.78

Answer 2

D

Question 3

Herne Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, G58O and E80Z, about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $1,116,900 and the company's estimated total direct labor-hours for the year is 30,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Required:
a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.

Answer 3

a. Traditional Manufacturing Overhead Costs
Predetermined overhead rate = $1,116,900 30,000 DLHs = $37.23 per DLH

Question 4

The predetermined overhead rate (i.e., activity rate) for Activity 1 under the activity-based costing system is closest to:

A) $28.97
B) $13.17
C) $83.66
D) $24.15

Question 5

Lorello Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, L05J and Y22F, about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $1,248,600 and the company's estimated total direct labor-hours for the year is 30,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Required:
a. Determine the manufacturing overhead cost per unit of each of the company's two products under the traditional costing system.
b. Determine the manufacturing overhead cost per unit of each of the company's two products under activity-based costing system.

Question 6

Fraize Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, B21P and O11L, about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $2,870,100 and the company's estimated total direct labor-hours for the year is 54,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Required:
a. Determine the unit product cost of each of the company's two products under the traditional costing system.
b. Determine the unit product cost of each of the company's two products under activity-based costing system.

Question 7

Feauto Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, I63E and E76I, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,063,250 and the company's estimated total direct labor-hours for the year is 45,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The manufacturing overhead that would be applied to a unit of product I63E under the company's traditional costing system is closest to:

A) $12.80
B) $39.35
C) $76.03
D) $36.68

Question 8

Verne Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, F22S and C45U, about which it has provided the following data:
The company's estimated total manufacturing overhead for the year is $1,697,280 and the company's estimated total direct labor-hours for the year is 48,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
Required:
a. Determine the unit product cost of each of the company's two products under the traditional costing system.
b. Determine the unit product cost of each of the company's two products under activity-based costing system.

Question 9

Look Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, N06D and M09K, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,532,200 and the company's estimated total direct labor-hours for the year is 44,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The manufacturing overhead that would be applied to a unit of product M09K under the activity-based costing system is closest to:

A) $76.73
B) $92.08
C) $11.00
D) $168.81

Question 10

The overhead cost per unit of Product A under the activity-based costing system is closest to:

A) $86.97
B) $70.79
C) $81.20
D) $11.24

Question 11

Cabell Company manufactures two products, Product C and Product D. The company estimated it would incur $99,590 in manufacturing overhead costs during the current period. Overhead currently is applied to the products on the basis of direct labor-hours. Data concerning the current period's operations appear below:
Required:
a. Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year.
b. The company is considering using an activity-based costing system to compute unit product costs for external financial reports instead of its traditional system based on direct labor-hours. The activity-based costing system would use three activity cost pools. Data relating to these activities for the current period are given below:
Determine the unit product cost of each product for the current period using the activity-based costing approach.

Question 12

Look Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, N06D and M09K, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,532,200 and the company's estimated total direct labor-hours for the year is 44,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The manufacturing overhead that would be applied to a unit of product N06D under the company's traditional costing system is closest to:

A) $28.78
B) $10.00
C) $63.31
D) $34.53

Question 13

The overhead cost per unit of Product B under the traditional costing system is closest to:

A) $54.13
B) $7.49
C) $4.32
D) $2.63

Question 14

Feauto Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, I63E and E76I, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,063,250 and the company's estimated total direct labor-hours for the year is 45,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The manufacturing overhead that would be applied to a unit of product E76I under the activity-based costing system is closest to:

A) $88.28
B) $96.29
C) $184.57
D) $10.13

Question 15

Coudriet Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, P93S and N40S, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,172,580 and the company's estimated total direct labor-hours for the year is 46,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The unit product cost of product N40S under the activity-based costing system is closest to:

A) $68.00
B) $68.86
C) $124.68
D) $136.86

Question 16

Coudriet Manufacturing Corporation has a traditional costing system in which it applies manufacturing overhead to its products using a predetermined overhead rate based on direct labor-hours (DLHs). The company has two products, P93S and N40S, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $2,172,580 and the company's estimated total direct labor-hours for the year is 46,000.
The company is considering using a variation of activity-based costing to determine its unit product costs for external reports. Data for this proposed activity-based costing system appear below:
The unit product cost of product P93S under the company's traditional costing system is closest to:

A) $68.48
B) $63.26
C) $30.70
D) $40.30

Question 17

The predetermined overhead rate under the traditional costing system is closest to:

A) $37.46
B) $21.60
C) $13.17
D) $270.66