Kamrock applies manufacturing overhead costs to

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College Accounting, Chapters 1-27
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Chapter 26 / Exercise 2
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19. Kamrock applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials of $50,000; 600 direct manufacturing labor-hours at $20 per hour; and a 20% markup rate on total manufacturing costs. Manufacturing overhead cost estimates for this special order total ________. A. $46,000 B. $34,000 C. $36,000 D. $40,000 Answer: Explanation: C) $60 × 600 dlh = $36,000 C
20. Mark Papers employs 15 full-time employees and 10 trainees. Direct and indirect costs are applied on a professional labor-hour basis that includes both employee and trainee hours. Following is information for 2014: Budget Actual Indirect costs $200,000 $300,000 Annual salary of each employee $100,000 $110,000 Annual salary of each trainee $ 25,000 $ 30,000 Total professional labor-hours 50,000 dlh 60,000 dlh What are the budgeted direct-cost rate and the budgeted indirect-cost rate, respectively, per professional labor-hour? B
21. If the common cost is over-allocated to A, then it is necessarily under-allocated to B. In product costing settings, when this happens, it is termed______
22. Which following case is likely to benefit from ABC systems?
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College Accounting, Chapters 1-27
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Chapter 26 / Exercise 2
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23. Overcosting a particular product may result in ________. A. loss of market share B. pricing the product too low C. operating efficiencies D. understating total product costs Answer: A
24. Aqua Company produces two products–Alpha and Beta. Alpha has a high market share and is produced in bulk. Production of Beta is based on customer orders and is custom designed. Also, 55% of Beta's cost is shared between design and setup costs, while Alpha's major portions of costs are direct costs. Alpha is using a single cost pool to allocate indirect costs. Which of the following statements is true of Aqua? C

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