Deck 5: Activity-Based Absorption Costing

Question 1

The unit product cost of product U86Y under the company's traditional costing system is closest to:

A)$71.15
B)$55.50
C)$75.86
D)$38.00

Answer 1

C

Question 2

Guinta 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, O48C and G94Z, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,102,500 and the company's estimated total direct labor-hours for the year is 42,000.
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.

Answer 2

a. Traditional Unit Product Costs
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $1,102,500 ÷ 42,000 DLHs = $26.25 per DLH b. ABC Unit Product Costs Overhead cost for O48C Overhead cost for G94Z

Question 3

The manufacturing overhead that would be applied to a unit of product C43S under the activity-based costing system is closest to:

A)$71.04
B)$138.96
C)$67.92
D)$11.04

Answer 3

A

Question 4

Cabat Company manufactures two products, Product C and Product D. The company estimated it would incur $177,910 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. General factory overhead is allocated based on direct labor-hours.

Question 5

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

A)$67.66
B)$21.94
C)$48.23
D)$41.55

Question 6

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

A)$23.05
B)$13.83
C)$34.58
D)$135.04

Question 7

The manufacturing overhead that would be applied to a unit of product R58G under the company's traditional costing system is closest to:

A)$6.74
B)$16.10
C)$22.84
D)$2.90

Question 8

The manufacturing overhead that would be applied to a unit of product R09O under the activity-based costing system is closest to:

A)$113.46
B)$255.00
C)$141.54
D)$17.28

Question 9

The unit product cost of product M91F under the activity-based costing system is closest to:

A)$95.20
B)$121.57
C)$216.77
D)$197.95

Question 10

Delaware 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, W36M and U45D, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,746,000 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 11

Hoffhines 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, E00X and E71U, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,021,200 and the company's estimated total direct labor-hours for the year is 20,000.
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 12

Riha 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, Y47R and G13V, about which it has provided the following data: The company's estimated total manufacturing overhead for the year is $1,879,960 and the company's estimated total direct labor-hours for the year is 43,000.
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 13

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

A)$103.88
B)$13.83
C)$54.86
D)$8.91

Question 14

The manufacturing overhead that would be applied to a unit of product P85G under the company's traditional costing system is closest to:

A)$89.67
B)$45.28
C)$44.39
D)$23.20

Question 15

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

A)$21.94
B)$3.56
C)$5.53
D)$41.55

Question 16

The unit product cost of product D00B under the activity-based costing system is closest to:

A)$111.81
B)$133.82
C)$81.20
D)$30.61

Question 17

The unit product cost of product R21V under the company's traditional costing system is closest to:

A)$34.02
B)$24.40
C)$41.36
D)$23.50